82-F-28 - Charging interest on client billings

FORMAL ETHICS OPINION 82-F-28

Inquiry is made concerning the propriety of an attorney charging interest
on accounts more than 30 days delinquent if notice of the intent to charge
interest on such accounts is sent to all clients, and the charging of interest
is limited to billings made after such notification.


Formal Ethics Opinion 338 of the Committee on Ethics of the American Bar Association
states that there is no impropriety in the use of credit cards for payment of legal services
and expenses, provided certain conditions are fully and completely observed.
The opinion also states that a necessary corollary to the use of credit cards is the charging
of interest on delinquent accounts.


It is the opinion of this Committee that there is no impropriety in the use of credit card
plans for payment of legal services and expenses provided the following conditions are
fully and completely observed:


1. All publicity and advertising relating to a credit card plan
shall be subject to the prior approval in writing of the Ethics Committee of
the Board of Professional Responsibility.


2. No directory of any kind shall be printed or published of the
names of individual attorney members who subscribe to the credit card
plan.


3. No promotional materials of any kind will be supplied
except possibly a small insignia to be tactfully displayed in the attorney's
office indicating his participation in the use of the credit card plan.


4. A lawyer shall not encourage participation in the plan, but
his position must be that he accepts the plan as a convenience for clients
who desire it; and the lawyer may not, because of his participation,
increase his fee for legal services rendered the client.


5. Charges made by lawyers to clients pursuant to a credit card
plan shall be only for services actually rendered or cash actually paid on
behalf of a client.


6. In participating in a credit card program, the attorney shall
scrupulously observe his obligation to
 preserve the confidences and secrets of his client.


7. The maximum effective rate of interest utilized in the plan
shall not exceed the applicable formula rate specified in TCA 47-14-103
for written contracts signed by the party to be charged.


It is the opinion of this Committee that there is no impropriety in an attorney charging
interest on accounts more than 30 days delinquent, provided the following conditions are
fully and completely observed:


1. Notice of the intent to charge interest on such accounts
shall be sent to all clients.
2. The charging of interest is limited to statements made after
such notification.
3. The maximum effective rate of interest utilized in
computing such interest shall not exceed the rate specified in TCA 47-14-
121 as the rate of post-judgment interest.


In any and all events, an attorney shall not resort to overly zealous actions to obtain
payment of fees. Where procedures for arbitration of fee disputes exist, attorneys are
encouraged to utilize them rather than resorting to litigation or self-help measures which
may have the appearance of taking undue advantage of the lawyer-client relationship.

This 18th day of June , 1982.

ETHICS COMMITTEE:

William R. Willis, Chairman
F. Evans Harvill
John R. Rucker, Senator

APPROVED AND ADOPTED BY THE BOARD