Advance fees paid to attorneys for future legal services must be placed into a trust account until the money is earned or returned to a client, the American Bar Association said Wednesday.

The ABA released a formal opinion providing guidance on the proper handling of advance fees under the Model Rules of Professional Conduct. The opinion clarifies the proper methods for handling fees, including when to treat them as earned.

Advances are fees paid by clients to attorneys for legal services to be done in the future. This differs from a retainer, which is a fee paid by a client to an attorney to contractually keep the attorney on call to handle the client’s legal matters.

Attorneys must hold advances in an account separate from their own, according to the ABA opinion.

Client trust accounts have been getting closer attention, thanks in part to the high-profile criminal prosecution of Thomas V. Girardi. The disbarred California attorney is accused misappropriating millions in client settlement money and other funds.

The ABA said in the new opinion that advance fees placed in a trust account can be disbursed to an attorney when they are earned or expenses are incurred, in accordance with ABA Model Rule 1.15(a). The rule works in concert with Model Rule 1.16(d), which requires lawyers to refund any advances or expenses not earned or incurred when the representation is terminated.

The ABA also discouraged the practice of declaring advance fees as nonrefundable. Labels such as “nonrefundable retainers,” “nonrefundable fee,” or “earned on receipt” in a fee agreement violate Model Rule 1.5, which outlines that attorneys can’t ask or collect unreasonable fees from clients.

“An advance fee paid by a client to a lawyer for legal services to be provided in the future cannot be nonrefundable. Any unearned portion must be returned to the client,” the ABA said in the document.

The ABA recommends that attorneys use plain language when drafting a fee agreement, using the word “advance” instead of “retainer” and explain how the money will be held, used, and the cases where it will be refunded. Lawyers should also include language towards how advances will be handled when the representation is terminated.