Can a lawyer charge clients a surcharge to cover credit card processing fees?

Plain-English summary

The Committee was asked whether a lawyer who accepts credit cards may charge a surcharge to cover the processing fee charged by the card issuer, that is, pass that fee to the client as a cost. It concludes a lawyer may do so, provided the charge is reasonable and the client consents upon full disclosure.

The opinion explains that a card transaction typically carries a fee (for example, 3% of the charge). A lawyer may absorb that fee as overhead, but if the lawyer wants the client to reimburse it, the lawyer must obtain the client's fully informed consent. Drawing on the Committee's Opinion 85-5 (credit cards are a permissible payment method) and Opinion 95-4 (standards for charging clients for out-of-pocket costs and disbursements), the opinion treats the processing fee like other expenses: a lawyer must explicitly disclose the client's liability for the charge and the basis on which it will be computed.

Under Rule 1.5(a), which bars an unreasonable fee or unreasonable charge for expenses, the surcharge is permissible so long as it is reasonable, and to be reasonable the lawyer may pass on only the actual out-of-pocket cost of the surcharge, not a marked-up profit center. The opinion stresses that the fee agreement should spell out explicitly whether the client will be charged for card transaction fees; without an express disclosure, the client may assume those fees are absorbed in the lawyer's fee. It notes some card networks contractually prohibit surcharging, which is a matter between the lawyer and the vendor.

In practice

Under this opinion, as the Alaska rule stood at the time, a lawyer may pass a credit card processing fee to the client only if the charge is reasonable, meaning limited to the actual cost the lawyer incurs, and only if the client has consented after full disclosure, with the fee agreement stating explicitly that card transaction fees will be charged. The opinion treats an undisclosed surcharge as improper, since absent express disclosure the client may assume the fee is absorbed, and it cautions against using the surcharge as a disguised profit center. It notes a card network's own rules may separately bar surcharging.

Common questions

Q: Can a lawyer add a credit card surcharge to a client's bill?

A: Yes, if it is reasonable and disclosed. The opinion concludes a lawyer may pass on the processing fee provided the charge is reasonable and the client consents after full disclosure.

Q: How much can the lawyer charge?

A: Only the actual cost. The opinion says that to be reasonable under Rule 1.5(a), the lawyer may pass on only the actual out-of-pocket processing cost and may not turn it into a profit center.

Q: Does the fee agreement have to mention it?

A: Yes. The opinion says the fee agreement should explicitly state whether card transaction fees will be charged; without that disclosure, the client may assume the fee is absorbed in the lawyer's fee.

Q: What if the card company prohibits surcharges?

A: The opinion notes some card networks contractually bar passing on transaction fees, which it treats as a matter of contract between the lawyer and the vendor.

Background and rules framework

The opinion interprets Alaska Rule of Professional Conduct 1.5(a) (reasonableness of fees and expense charges, analog of Model Rule 1.5(a)), applied to credit card processing surcharges. It builds on the Committee's prior Opinions 85-5 (accepting credit cards) and 95-4 (charging clients for costs and disbursements).

Citations and references

Rules of Professional Conduct:

• Alaska RPC 1.5(a) (unreasonable fees and expense charges)

Other opinions cited:

• Alaska Ethics Opinions 85-5 (credit cards) and 95-4 (costs and disbursements)
• DC Bar Op. 348 (2009); Louisiana State Bar Public Op. 12-RPCC-019; Washington State Bar Advisory Op. 2214 (2012)

See also

• ABA Formal Op. 00-419: Credit Card Payment of Legal Fees
• AK Bar Ethics Op. 2023-2: Modifying a Credit Card Preauthorization
• ABA Formal Op. 93-379: Billing for Fees and Expenses

Source

• Landing page: https://alaskabar.org/ethics-discipline/ethics-opinions/adopted-ethics-opinions-chronological/
• Original PDF: https://alaskabar.org/wp-content/uploads/2014-1.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

ALASKA BAR ASSOCIATION
ETHICS OPINION NO. 2014-1
MAY LAWYERS CHARGE THEIR CLIENTS A SURCHARGE TO USE
THEIR CREDIT CARDS TO PAY FOR LEGAL SERVICES?
QUESTION PRESENTED
The Committee has been asked to give an opinion as to whether it is
permissible for a lawyer who accepts a credit card as payment for services
to charge a surcharge to process the payment. Stated differently, may the
lawyer pass on a processing fee charged by the credit card issuer as part of
his or her costs?
CONCLUSION
It is the Committee’s opinion that lawyers may charge a surcharge or
pass on a credit card processing fee provided the charge is reasonable and
the client consents upon full disclosure.
DISCUSSION
Credit and debit cards are ubiquitous in today’s society. More and
more clients are asking to use credit cards to pay for legal services. But the
use of the credit card typically involves a transaction fee which may be
calculated as a percentage of the transaction amount.1 For example, if a
lawyer submits a bill for $1,000 to a client, and the client pays by credit
card, the credit card vendor might charge a fee of 3% or $30. If the lawyer
treats the transaction fee as an overhead expense, then the lawyer has
simply incurred an expense for his own account. If however, the lawyer
treats the transaction fee as a client expense and expects the client to
reimburse it, then the lawyer must be certain the client has agreed to pay it
after giving fully informed consent.
Two previous opinions of the Committee provide guidance for the
present issue. In Ethics Opinion 85-5, the Committee was asked whether
lawyers could accept credit cards for payment of fees and expenses. That
opinion concluded “the use of credit cards is permissible, provided that any
plan is formulated and administered within the framework of all applicable
laws and ethical considerations.”2 The narrow issue involved in this
1 The Committee understands the bank or credit card vendor typically subtracts this

transaction fee from the amount to be remitted to the lawyer.
2 Ethics Opinion 85-5 at p. 1. The opinion also noted there may be situations in
which the acceptance of credit cards is not appropriate, noting that bankruptcy,
divorce and criminal cases might prove to be problematic.

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Opinion is simply whether a lawyer may pass on as a surcharge the
transaction fee charged by the vendor.
The Committee addressed standards for charging clients for a lawyer’s
out-of-pocket costs (disbursements) and expenses in Opinion 95-4.
It is permissible for a lawyer to require clients to pay for
actual out-of-pocket costs. In addition, clients may be charged a
reasonable amount for in-house services, such as photocopying.
Charges for certain overhead items are also permitted. With
regard to all of these charges, the lawyer is obligated to make
explicit disclosures to the client of
(a) the client's liability for the charges; and
(b) the basis on which the charges will be computed.3
Alaska Rule of Professional Conduct 1.5(a) provides: “A lawyer shall
not make an agreement for, charge, or collect an unreasonable fee or an
unreasonable amount for expenses.” So long as the charge for transaction
fees is “reasonable,” the Committee perceives no reason4 why the credit card
vendor’s transaction fee should be treated differently than other expenses.5
In order to be “reasonable,” the lawyer may only pass on the actual out-ofpocket cost incurred by the lawyer for the surcharge.
The lawyer’s fee agreement with the client should spell out explicitly
whether the lawyer intends to charge the client for credit card transaction
fees. So long as the fees are reasonable, and the client consents after full
disclosure, the Committee believes the surcharge may be passed on to the
client. In the absence of an express disclosure, the client has every right to
assume that credit card transaction fees will be subsumed in the lawyer's
fee.6

3 Ethics Opinion 95-4 at p. 1.
4 The Committee understands that some credit card companies prohibit the passing

on of transaction fees to consumers as part of their merchant agreements. This is a
matter of contract between the lawyer and the vendor.
5 At least three other state Bar Associations which have explicitly examined this
question have reached similar conclusions. See DC Bar Association Opinion 348
(March 2009); Louisiana State Bar Association Public Opinion 12-RPCC-019 (October
2012); Washington State Bar Association Advisory Opinion 2214 (2012).
6
Ethics Opinion 95-4 at p 3. The Committee is also mindful of the admonition in
Opinion 95-4 that surcharges for disbursements should not be disguised profit
centers.

2

Approved by the Alaska Bar Association Ethics Committee on March 6,
2014.
Adopted by the Board of Governors on May 5, 2014.
G:\Ds\COMM\ETHICS\ADOPTED AK BAR ETHICS OPINIONS\2014-1.docx

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