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 Rhode Island, when a client provides a fee deposit or advance payment to an attorney for future legal services, this money is considered to remain the client's property until the attorney has actually earned it by performing the agreed-upon services. Consequently, attorneys are required to deposit these unearned fees into a trust or escrow account, rather than their own operating accounts, to ensure that the funds are not used until the work is done. If the attorney-client relationship is terminated before the attorney has fully earned the fee, the attorney is generally obligated to refund the unearned portion to the client. However, the specific terms of the engagement letter or agreement between the attorney and the client can affect the attorney's duty to return these unearned fees. Therefore, it is crucial for clients to carefully review and understand the terms of any such agreement before entering into it.