Can an Alaska lawyer accept a client's pre-authorization to charge a credit card for fees as part of the engagement agreement?

Plain-English summary

This is a short modifying opinion. Bar Counsel asked the Committee to revisit Ethics Opinion 85-5, which required that credit card charges for attorney's fees and costs be made only by contemporaneous agreement of the client, and which therefore prohibited pre-authorizing credit card payments as part of an engagement agreement. The Committee noted that pre-authorizing credit card payments "may be no riskier than the practice of withdrawing funds from trust when a monthly invoice is sent to a client."

Rather than draft a comprehensive new opinion covering the many payment methods that have developed since 1985, the Committee decided to address only the narrow question before it. It withdrew the portion of Opinion 85-5 imposing the contemporaneous-agreement requirement: specifically, the second sentence of the second paragraph on page 1 and the portion beginning on page 3 under the header "Generally, Credit Card Charges May be Made Only by Contemporaneous Agreement." The opinion states that the remainder of Opinion 85-5 "remains valid."

In practice

Under this opinion, conduct that obtains a client's pre-authorization to charge a credit card for fees as part of an engagement agreement is no longer prohibited by Opinion 85-5. The Committee limited its action to the pre-authorization question and expressly declined to opine on the broader range of current and emerging payment methods, which it found too broad to resolve in this opinion. The parts of Opinion 85-5 outside the withdrawn passages continue to apply.

Common questions

Q: Can an Alaska lawyer take a client's advance authorization to charge a credit card for fees?

A: Yes. The opinion withdraws the part of Opinion 85-5 that had prohibited pre-authorizing credit card payments, removing that bar.

Q: Is all of Ethics Opinion 85-5 withdrawn?

A: No. The opinion withdraws only the contemporaneous-agreement passages (the second sentence of the second paragraph on page 1 and the section starting on page 3); the opinion states the remainder of Opinion 85-5 remains valid.

Q: Did the Committee address other electronic or app-based payment methods?

A: No. The Committee found that addressing the full range of current and emerging payment methods was too broad and declined to do so, limiting this opinion to the credit card pre-authorization question.

Background and rules framework

The opinion modifies a prior advisory opinion interpreting the Alaska Rules of Professional Conduct governing fees (ARPC 1.5) and the handling of client funds and property (ARPC 1.15). Opinion 85-5 had treated credit card charges for fees and costs under a contemporaneous-agreement requirement; this opinion removes that requirement as applied to pre-authorization, while leaving the rest of the earlier opinion's analysis in place.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5 / ARPC 1.5 (fees)
• Model Rule 1.15 / ARPC 1.15 (safekeeping property)

Other opinions cited:

• Alaska Ethics Op. 85-5: credit card charges for attorney's fees and costs (modified by this opinion)

See also

• CA Op. 2007-172: Credit Card Payments, Fees, and Costs
• ABA Formal Op. 00-419: Credit Card Payment of Legal Fees

Source

• Landing page: https://alaskabar.org/ethics-discipline/ethics-opinions/adopted-ethics-opinions-chronological/
• Original PDF: https://alaskabar.org/wp-content/uploads/2023-2-withdrawing-portion-of-85-5-9.27.23.pdf

Original opinion text

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

ALASKA BAR ASSOCIATION
ETHICS OPINION 2023-2
Modification of Alaska Bar Association Ethics Opinion 85-5
Whereas, the Committee was asked by Bar Counsel to review Alaska
Ethics Opinion 85-5 regarding the requirement that credit card charges for
attorney's fees and costs may only be made by contemporaneous agreement of
a client;
Whereas, the Committee was advised of the concerns of an attorney who
requested examination of Alaska Ethics Opinion 85-5 because of its prohibition
on pre-authorizing payments with a credit card as part of an engagement
agreement with a client;
Whereas, the Committee discussed that the pre-authorization of credit
card payments may be no riskier than the practice of withdrawing funds from
trust when a monthly invoice is sent to a client;
Whereas, the Committee discussed the challenges of drafting a new ethics
opinion that provides guidance on a broad range of payment methods that have
developed since 1985;
Whereas, the Committee decided the topic of addressing current and
emerging payment methods was too broad and would take too long to resolve
the current concerns of lawyers regarding the prohibition on pre-authorization
of credit card payments;
Whereas, the Committee determined to address only the narrow issue of
the prohibition of pre-authorization of credit card payments in Alaska Ethics
Opinion 85-5; and
Whereas, the Committee voted to withdraw the portion of Alaska Ethics
Opinion 85-5 that begins near the bottom of page 3, through the end.
As a result, Ethics Opinion 85-5 is modified as follows: The second
sentence of the second paragraph on page 1 of that opinion and the portion of
the opinion beginning on page 3, at the header: “Generally, Credit Card
Charges May be Made Only by Contemporaneous Agreement,” are hereby
withdrawn. The remainder of Ethics Opinion 85-5 remains valid.
Approved by the Alaska Bar Association Ethics Committee on May 12, 2023
and September 19, 2023.
Adopted by the Board of Governors on September 20, 2023.

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