Can a South Carolina law firm have clients pre-authorize charges to their credit cards for legal fees?

Plain-English summary

A firm that already accepted credit card payments asked whether it could let clients sign a pre-authorization form allowing the firm to charge the client's card directly, up to a client-set monthly limit or to pay the balance of fees, for use with fixed fees, retainers, and installment plans. The authorization would last no more than a year and could be canceled in writing at any time.

The committee concluded the policy is not prohibited. It had previously ruled that clients may use credit cards to pay legal fees (Adv. Op. 81-1), so a pre-authorized arrangement is permissible, subject to Rule 1.5(b), which requires that the basis or rate of the fee be communicated to a client the lawyer has not regularly represented, preferably in writing, before or within a reasonable time after starting the representation, and to Rule 1.5(a)'s requirement that the fee be reasonable. Because clients would incur interest on charged amounts, the committee stated that care should be taken to give clients an opportunity to review the firm's bill before it is charged to the card.

Currency note

This opinion was issued in 1996, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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, deadline, or requirement mentioned here.

Common questions

Q: Can a firm charge a client's credit card automatically for fees?

A: The committee concluded a pre-authorization policy is not prohibited, subject to the fee-disclosure and reasonableness requirements of Rule 1.5(b) and 1.5(a).

Q: Does the client need to see the bill first?

A: The committee said that because clients incur interest on charged amounts, care should be taken to give them an opportunity to review the firm's bill before it is charged to the card.

Background and rules framework

The opinion applied Rule 1.5(b) (communicating the basis or rate of the fee to a client the lawyer has not regularly represented) and Rule 1.5(a) (a lawyer's fee shall be reasonable), corresponding to Model Rule 1.5, and relied on the committee's earlier Adv. Op. 81-1 permitting credit card payment of legal fees.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 1.5(a) / Model Rule 1.5: a lawyer's fee shall be reasonable.
• South Carolina RPC 1.5(b) / Model Rule 1.5: communicating the basis or rate of the fee.

Other opinions cited:

• SC Bar Adv. Op. 81-1: clients may use credit cards to pay legal fees.

See also

• SC Bar Ethics Op. 96-05: Withdrawal and Quantum Meruit Fees
• SC Bar Ethics Op. 96-27: Mailing Fee Coupons to Clients

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-96-06/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 96-06

Law Firm has instituted a policy allowing its clients to use credit cards for payment of professional fees. Law Firm is also considering a policy that would allow its clients to pre-authorize charges on their credit cards. This procedure would consist of the client signing a pre-authorization form giving Law Firm authority to charge the client's card directly. The client would set the amount of charges authorized to be made on a monthly basis or to pay the balance of the client's professional fees. In no event would Law Firm be able to charge amounts in excess of the amount authorized by the client. It is anticipated that the pre-authorization form would be used in connection with fixed fee arrangements, retainer arrangements and installment payment plans. The pre-authorization would be valid for no more that one year and could be canceled by the client at any time through written notice to the firm.

Question:
Is the credit card pre-authorization policy considered by Law Firm prohibited by the Rules of Professional Conduct?

Summary:
Law Firm's credit card pre-authorization policy is not prohibited by the Rules of Professional Conduct.

Opinion:
This Committee has previously ruled that clients may use credit cards when paying fees to lawyers. Advisory Op. 81-1. Therefore, based upon the facts presented, it is not inappropriate for the client and lawyer to enter into an agreement whereby a pre-authorized amount may be charged to a client's credit card for services. Such a pre-authorized agreement is subject to the requirements of Rule 1.5(b): "When a lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation;" and of Rule 1.5(a): "A lawyer's fee shall be reasonable." Since clients will incur interest on amounts charged by the Law Firm, care should be taken to allow clients an opportunity to review Law Firm's bill for services before it is charged to the credit card.