Can a lawyer charge a client interest on overdue bills or on litigation expenses the lawyer advanced?

Plain-English summary

The inquiry presented two situations: a lawyer advances litigation expenses the client is ultimately liable for, and a lawyer bills a client who fails to pay within the prescribed time. It asked whether the lawyer may charge interest on advanced expenses or on past-due statements.

The committee, grounding the discussion in EC 2-22 (avoiding fee controversies) and EC 5-1 (the lawyer's judgment focused on the client's benefit), concluded that charging interest is proper. It relied on Opinion 632, which held it professionally proper to charge interest or a handling charge on past-due legal-fee accounts when guidelines are followed, treating interest as an economic matter as acceptable as the original fee; Opinion 632 expressly rejected the contrary earlier Opinions 380 and 490. The committee extended that reasoning to advanced expenses, which are a client obligation that, with proper advance notice, should be treated like fees. It noted former Rule 5-103 limits a lawyer's financial assistance to a client to litigation expenses, and that EC 5-8 recognizes advancing such expenses is sometimes proper.

The committee set out guidelines: the client should be advised at or before billing that interest will be assessed; written fee contracts should define the relationship and a reasonable rate; a commercially reasonable time to pay should precede accrual; and if advances constitute "consumer credit," the federal Truth in Lending Act may require disclosures. It noted other jurisdictions permit reasonable finance charges (citing New York City Opinion 82-6, which also said a lawyer may not threaten to withdraw to enforce the agreement, ABA Formal Opinion 338, and a California opinion). Any interest agreement should be in writing before interest accrues, with timely statements so the client can pay before charges mount.

Currency note

This opinion was issued in March 1988, under the former Illinois Code of Professional Responsibility and before Illinois adopted the 1990 (and later 2010) Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in May 2010 as generally consistent with the 2010 Rule (Rule 1.5), while cautioning that the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Can a lawyer charge interest on a client's overdue legal bills?

A: The opinion concluded yes; charging interest on past-due fee accounts is professionally proper when the guidelines are followed, treating it as an economic matter like the original fee.

Q: Can the lawyer also charge interest on expenses he advanced?

A: Per the opinion, yes; advanced expenses are a client obligation that, with proper advance notice, should be treated the same as fees.

Q: What conditions did the committee attach to charging interest?

A: The opinion concluded the client should be told in advance (ideally in a written fee contract) at a reasonable rate, given a commercially reasonable time to pay before accrual, and that Truth in Lending disclosures may apply if the advance is consumer credit.

Background and rules framework

The opinion applied former Illinois Code Rule 5-103 (a lawyer's financial assistance to a client limited to litigation expenses) together with Ethical Considerations 2-22, 5-1, and 5-8, and considered the federal Truth in Lending Act (15 U.S.C. 1601-1666). The Board's 2010 affirmation maps the analysis to current Illinois Rule of Professional Conduct 1.5, corresponding to ABA Model Rule 1.5 on fees.

Citations and references

Rules of Professional Conduct:

• Illinois Code Rule 5-103; ECs 2-22, 5-1, 5-8 (former Code, applied in the opinion)
• Illinois RPC 1.5 (2010 equivalent per the Board's affirmation)
• MR 1.5 (fees)

Statutes:

• Federal Truth in Lending Act, 15 U.S.C. 1601-1666

Other opinions cited:

• ISBA Opinion Nos. 380 (overruled), 490 (overruled), and 632: charging interest on past-due fee accounts
• New York City Opinion 82-6; ABA Formal Opinion 338; California Opinion 308

See also

• ISBA Ethics Op. 87-05: Compensating and Reimbursing Witnesses
• ISBA Ethics Op. 88-04: Settling a Case When the Client Cannot Be Found

Source

• Landing page: https://www.isba.org/ethics/opinions/8710