Can a law firm's retainer agreement give the firm 20 days to be paid and then automatically charge the client's credit card for the full unpaid balance?
NY State Bar Ethics Opinion 1112: Auto-billing a client's credit card for unpaid fees
Short answer: A retainer agreement may secure the lawyer's fees by credit card and provide that the lawyer will charge the card for legal fees, costs, or disbursements the client has not paid within 20 days of the bill, but only if the agreement expressly informs the client of the right to dispute any invoice and to request fee arbitration before any charge, and the lawyer never charges the client's card for any disputed portion of the bill.
Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York Rules of Professional Conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.
About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.
Plain-English summary
A firm wants to add a retainer clause authorizing it, if the client fails to pay a bill for fees, costs, or disbursements within 20 days, to charge the client's credit card for the full unpaid balance "without further notice." The firm asks whether such a 20-day automatic-charge provision is permitted.
The committee starts from settled ground: New York lawyers may accept credit card payment of legal fees under conditions set out in prior opinions (N.Y. State 1050, 763, 362; N.Y. City 2014-3; Nassau County 13-5). Those conditions are that the fee be reasonable, the lawyer protect the confidentiality of client information, the lawyer not let the credit card company compromise independent professional judgment, the lawyer notify the client before charges are billed and offer a chance to question billing errors, and the lawyer attempt to resolve any fee dispute amicably and comply with the fee dispute resolution program in 22 NYCRR Part 137 where applicable.
The committee then identifies the constraint that shapes the answer: a lawyer may not charge a credit card for any disputed portion of a bill, analogizing to Rule 1.15(b)(4), which bars withdrawing disputed funds from a trust account until the dispute is resolved. So the proposed 20-day clause is consistent with the Rules only if the retainer agreement also expressly informs the client of the right to dispute any invoice, and to request fee arbitration under the applicable court rules, before any disputed credit-card charge is imposed. With that disclosure built in and disputed amounts excluded, the 20-day auto-charge provision is permissible.
In practice
Under this opinion, a New York firm may include a retainer provision securing fees by credit card and auto-charging amounts left unpaid after 20 days, but the clause as drafted ("without further notice," full balance) cannot stand alone. The retainer must expressly disclose the client's right to dispute any invoice and to seek fee arbitration before a charge, and the firm must never run the card for any portion of a bill the client disputes. The other established conditions for credit-card fee payment also apply: a reasonable fee, protection of client confidentiality, no interference with the lawyer's independent judgment, advance notice with an opportunity to flag billing errors, and compliance with the Part 137 fee dispute program where applicable.
Common questions
Q: Can a retainer let the firm charge a client's credit card automatically after 20 days?
A: Yes, for the unpaid balance, but only if the retainer expressly informs the client of the right to dispute any invoice and seek fee arbitration before the charge, and the firm does not charge any disputed amount (Opinion 1112 ¶¶ 5-6).
Q: Can the firm charge the card for an amount the client disputes?
A: No. A lawyer may not charge a credit card for any disputed portion of a bill, by analogy to Rule 1.15(b)(4)'s bar on withdrawing disputed funds from a trust account (¶ 5).
Q: What other conditions apply to credit-card fee payment?
A: The fee must be reasonable, client confidentiality protected, the lawyer's independent judgment uncompromised, advance notice given with a chance to question errors, and the Part 137 fee dispute program followed where applicable (¶ 4).
Background and rules framework
The opinion applies Rule 1.5 (Model Rule 1.5) on reasonable fees and the basis of fees and expenses (Rule 1.5(a), (b)) and Rule 1.15 (Model Rule 1.15) on client property, reasoning by analogy from Rule 1.15(b)(4)'s treatment of disputed funds. It incorporates the conditions for credit-card fee payment developed in prior New York opinions and the fee dispute resolution program in 22 NYCRR Part 137.
Citations and references
Rules of Professional Conduct:
- New York Rule 1.5(a), (b) (Model Rule 1.5): reasonable fee; basis of fee and expenses
- New York Rule 1.15(b)(4) (Model Rule 1.15): no withdrawal of disputed funds until resolved (by analogy)
Court rules:
- 22 NYCRR Part 137: fee dispute resolution program
Other opinions cited:
- N.Y. State 1050 (2015); 763 (2003); 362 (1974): conditions for accepting credit-card fee payment
- N.Y. City 2014-3; Nassau County 13-5 (2013): no charging the disputed portion of a bill
See also
- NY State Bar Op. 1134: Credit card to secure fees in a divorce matter
- NY State Bar Op. 1118: Disclosing client confidences to collect a fee
- NY State Bar Op. 1127: Settlement funds in the attorney trust account
Source
- Landing page: https://nysba.org/ethics-opinion-1112/