A fee deposit or advance payment from a client to an attorney for services to be performed in the future remains the property of the client until it is earned by the attorney. Such an unearned fee deposit generally must be held in the attorney’s trust or escrow account and not deposited into the attorney’s operating account or otherwise accessed until the attorney has done the work and earned the fee.
If the client or the attorney terminates the representation at any time, the attorney generally must return the unearned portion of the fee to the client. The terms of the engagement letter or agreement between the attorney and client may impact the attorney's obligation to return unearned fees, and a potential client should read and understand it.
In Hawaii, as in many jurisdictions, a fee deposit or advance payment made by a client to an attorney for future legal services is considered the client's property until the attorney has earned it through work performed. Attorneys in Hawaii are required to hold such unearned fees in a trust or escrow account, separate from their operating accounts. This ensures that the funds are protected and cannot be used by the attorney until they have provided the agreed-upon services. If the attorney-client relationship is terminated before the attorney has fully earned the fee, the attorney is typically required to refund the unearned portion to the client. The specific terms of the refund may be governed by the engagement letter or agreement between the attorney and the client, which should clearly outline the conditions under which fees are earned and may be refunded. Clients are advised to carefully review and understand these terms before entering into an agreement with an attorney.