The Board of Professional Responsibility will be closed on Monday, May 27, 2019 in observance of Memorial Day.

 

82-F-28 - Charging interest on client billings

 

BOARD OF PROFESSIONAL RESPONSIBILITY OF THE SUPREME COURT OF TENNESSEE

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