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 Texas, when a client provides a fee deposit or advance payment to an attorney for future legal services, that money is considered to remain the client's property until the attorney has actually earned it by performing the agreed-upon services. Attorneys in Texas are required to place such unearned fees into a trust or escrow account, separate from their operating accounts. This ensures that the funds are not used until the work is done and the fee is earned. 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. However, the specific terms of the engagement letter or agreement between the attorney and the client can affect the obligation to return unearned fees. Therefore, it is crucial for clients to carefully read and understand the terms of any agreement before entering into an attorney-client relationship.
