May an attorney charge interest on past-due fees for services rendered and on expenses advanced for the client?

Plain-English summary

The committee was asked whether it is ethical for an attorney to charge interest on past-due fees for professional services and on advanced expenses. It answered yes. The committee noted that no specific provision of the Code of Professional Responsibility addressed the issue, that the OBA committee had never directly ruled on it, and that the ABA had published no formal opinion squarely on it.

The committee traced the ABA's position: ABA Informal Decision C-741 (1964) had held it improper to charge interest on an unpaid fee, but ABA Formal Opinion 338 (1974), setting guidelines for credit-card payment of fees, stated that a lawyer may charge a client interest provided the client is advised that the lawyer intends to charge interest and agrees to pay interest on accounts delinquent beyond a stated period. The committee read that language as overruling Informal Decision C-741 and sanctioning interest on past-due fees. It also pointed to its own Opinion 268 (1972), which, in the context of credit-card use and division of fees, approved a clearly and separately stated finance or interest charge with a right of prepayment without the charge.

Although no opinions addressed interest on advanced expenses specifically, the committee reasoned that because charging interest on past-due fees is proper, charging interest on past-due advanced expenses is likewise proper. It concluded that charging interest on overdue accounts for services or expenses is ethical and proper as long as there is an agreement with the client, and it noted that the Oklahoma Uniform Consumer Credit Code contains specific interest-disclosure requirements, suggesting that an attorney review those statutes before charging interest so as to comply with the requirements applicable to his situation.

In practice

Under this opinion, an Oklahoma attorney may charge interest on overdue fees and on advanced expenses, conditioned on an agreement with the client about the charges. Per the opinion, the controlling condition is the client agreement (the client is advised the lawyer intends to charge interest and agrees to it for accounts delinquent beyond a stated period), and the committee observed that the Oklahoma Uniform Consumer Credit Code imposes disclosure requirements the attorney must satisfy.

Currency note

This opinion was issued in 1975 under the Code of Professional Responsibility, before Oklahoma adopted the Oklahoma Rules of Professional Conduct (1988) and the later Ethics 2000 revisions. The fee rules have since been recast (compare Model Rule 1.5), and the Oklahoma Uniform Consumer Credit Code and federal truth-in-lending requirements the committee referenced may have changed. Treat this page as historical context, not current guidance. Verify against current rules and statutes before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can an Oklahoma lawyer charge interest on a client's overdue bill?

A: Yes. The committee concluded it is ethical to charge interest on overdue accounts for services rendered, provided there is an agreement with the client about the charge.

Q: Does the client have to agree to the interest in advance?

A: The committee's conclusion rests on a client agreement; it relied on ABA Formal Opinion 338's requirement that the client be advised the lawyer intends to charge interest and agree to it for accounts delinquent beyond a stated period.

Q: Can interest also be charged on advanced expenses?

A: Yes. The committee reasoned that because charging interest on past-due fees is proper, charging interest on past-due advanced expenses is likewise proper.

Q: Are there other rules to follow?

A: The committee noted the Oklahoma Uniform Consumer Credit Code has specific interest-disclosure requirements and suggested the attorney review those statutes before charging interest.

Background and rules framework

The committee found no specific Code of Professional Responsibility provision on point and instead relied on ABA authority (ABA Informal Decision C-741 (1964) and ABA Formal Opinion 338 (1974)) and on its own Opinion 268 (1972), to conclude that interest on overdue fees and expenses is permissible with client agreement. It also pointed to the disclosure requirements of the Oklahoma Uniform Consumer Credit Code. The opinion predates the Model Rules and made no Model Rule citation.

Citations and references

Rules of Professional Conduct:

• Code of Professional Responsibility: the committee noted no specific provision addresses charging interest on past-due fees.

Statutes:

• Oklahoma Uniform Consumer Credit Code: interest-disclosure requirements the committee directed attorneys to review.

Other opinions cited:

• ABA Formal Opinion 338 (1974); ABA Informal Decision C-741 (1964); OBA Opinion No. 268 (1972).

See also

• Okla. Bar Ethics Op. 268: Bar-sponsored credit-card fee financing
• Okla. Bar Ethics Op. 234: Withholding a divorce decree until the fee is paid
• Okla. Bar Ethics Op. 220: Habitual fee-cutting below the minimum fee schedule

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-286/

Original opinion text

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

Adopted May 16, 1975

INQUIRY

Is it ethical and proper for an attorney to charge interest on fees for professional services rendered and expenses advanced which are past due?

OPINION

The answer to the inquiry is yes for the reasons set out below.

There are no specific provisions in the code of Professional Responsibility which speak to the issue. The Legal Ethics Committee of the Oklahoma Bar Association has never directly ruled on the issue and the American Bar Association has never published a formal opinion concerning the issue.

The American Bar Association published Informal Decision C-741 (March 31, 1964) holding that it would be improper to charge an interest rate on a fee for professional services rendered which was not paid by the client within a specific period of time. In 1974, the American Bar Association published Formal Opinion 338 (November 16, 1974) creating the guidelines for the use of credit cards in paying fees for professional services rendered. At the conclusion of the opinion, the Committee stated:

“… a lawyer can charge his client interest providing the client is advised that the lawyer intends to charge interest and agrees to the payment of interest on accounts that are delinquent for more than a stated period of time.”

This language obviously overrules Informal Decision C-741 and sanctions the charging of interest on fees for professional services rendered which are past due.

The Legal Ethics Committee of the Oklahoma Bar Association published Opinion 268 (December 14, 1972) dealing with the use of credit cards to pay fees for professional services rendered and the Committee stated:

“… so long as the amount of the attorney’s fee is clearly stated and the amount of finance or interest charge is clearly and separately stated with the right of the client to prepay the obligation without payment of any finance or interest charge, there is no prohibited division of fees.”

Although the Committee’s statement is dealing with the issue of division of fees it is clear that the language approves the charging of interest on fees for professional services rendered when such fees have not been paid within a stated period of time.

There are no opinions dealing with the charging of interest on expenses advanced by the attorney which are past due, however in as much as it would be proper under the opinions to charge interest on fees for professional services rendered, it would be proper to charge interest on expenses advanced which are past due.

Therefore, the Legal Ethics Committee of the Oklahoma Bar Association finds that it is ethical and proper for an attorney to charge interest on overdue accounts for professional services rendered or expenses advanced as long as there has been an agreement made with the client concerning these charges.

In light of the Committee’s opinion it merits mention that there are specific requirements under the Oklahoma Uniform Consumer Credit Code providing for the disclosure of interest under various situations. It is suggested that the attorney review the statutes before proceeding with the charging of interest so that he fully complies with the requirements applicable to his situation.