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This is all frankly beyond belief.
There must be some missing facts.
I have the impression that you are dealing with a law firm that previously represented them, but maybe I'm misreading you. If it was lawyers -
Every American lawyer is bound by some very strident regulations concerning the holding of client property and the duty to return client property on request. The Code of Professional Responsibility is not some feel good, vague set of best practices. It is a code of law that can lead to any lawyer losing his livelihood in short order. Lawyers in every state get disbarred every year for far more subtle mishandling of client money in trust accounts.
Every American lawyer knows that, and that's why I question whether there are some other facts here that might make a difference.
The easiest approach is simply a letter signed by the domain owner, whose delivery is established by signature of the recipient, demanding the immediate and unconditional return of the possession and formal legal ownership of the domain, without delay or complication, and proposing the method of doing that, within a specified, few, number of days. The letter should state that the owner reserves the right to take any and all appropriate action, without limitation of any kind. A copy of the particular state's enactment of the Code section dealing with a lawyer's duty concerning client property can be attached and referenced in the letter. Should that fail to get the desired effect within a few days, the owner should report the facts to the state agency, court, or bar committee that is responsible for attorney misconduct in that state. They can be most persuasive and very helpful in this kind of matter.
But if you're not talking about lawyers, it's far more tricky and difficult. The most important issue is whether there is an agreement in place, perhaps a written contract, setting out the relationship. In fact, your client may have contracted so that ownership of the domains would be in that prior SEO and development firm, with a right only to rent or use the domain while purchasing that firm's services. It would be far from unusual to see that kind of contract, it's common, though the customers sometimes are too wrapped up into wishful thinking and what seems like a deal too good to be true to recognize what they actually have agreed to. Check that out before you go further. If that firm did the registration in its own name, and the question only arises after they get fired, and they refuse to transfer, the odds are that they believe that they are legitimate owners. They might be!
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Extremism in the defense of Liberty is no vice. . . Restraint in the pursuit of Justice is no virtue.
Senator Barry Goldwater, 1964
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