Under what conditions could a Tennessee lawyer accept credit card payment for legal fees and charge interest on accounts more than 30 days delinquent?

Currency note

The Board of Professional Responsibility vacated this opinion on August 7, 2023 due to changes in the law or rules. It was also issued in 1982, before Tennessee's adoption of the 2003 Rules of Professional Conduct, which replaced the former Code of Professional Responsibility. For the current guidelines, see Formal Ethics Opinion 2023-F-170. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Plain-English summary

The Board addressed the propriety of an attorney charging interest on client accounts more than 30 days delinquent, where notice of the intent to charge interest was sent to all clients and the interest was limited to billings made after that notice.

The opinion drew on ABA Formal Ethics Opinion 338, which found no impropriety in the use of credit cards for payment of legal services and expenses subject to conditions, and which treated charging interest on delinquent accounts as a necessary corollary of accepting credit cards. Applying and extending that reasoning, the Committee held there was no impropriety in a credit card plan provided all of the following were fully observed: publicity and advertising about the plan required prior written approval of the Ethics Committee; no directory of participating attorneys could be printed or published; no promotional materials beyond a small office insignia were permitted; the lawyer could not encourage participation, only accept it as a client convenience, and could not increase fees because of participation; charges had to correspond only to services actually rendered or cash actually paid on the client's behalf; the lawyer had to scrupulously preserve client confidences and secrets; and the maximum effective interest rate could not exceed the formula rate specified in T.C.A. 47-14-103 for written contracts signed by the party to be charged.

Separately, the opinion held there was no impropriety in charging interest on accounts more than 30 days delinquent, provided notice of the intent to charge interest was sent to all clients, the interest applied only to statements made after that notice, and the maximum effective rate did not exceed the post-judgment interest rate specified in T.C.A. 47-14-121. The opinion closed by cautioning that an attorney must never resort to overly zealous fee-collection actions, and encouraged use of fee-dispute arbitration procedures where available rather than litigation or self-help measures that might appear to take undue advantage of the lawyer-client relationship.

Common questions

Q: Could a Tennessee lawyer accept credit cards for legal fees under this opinion?

A: Yes, subject to a detailed condition list. The opinion holds "there is no impropriety in the use of credit card plans for payment of legal services and expenses provided the following conditions are fully and completely observed," including that "all publicity and advertising relating to a credit card plan shall be subject to the prior approval in writing of the Ethics Committee" and that "the lawyer may not, because of his participation, increase his fee for legal services rendered the client."

Q: Could a lawyer charge interest on a client's overdue bill?

A: Yes, with advance notice. The opinion requires that "notice of the intent to charge interest on such accounts shall be sent to all clients" and that "the charging of interest is limited to statements made after such notification," with the rate capped at "the rate specified in TCA 47-14-121 as the rate of post-judgment interest."

Q: Is this opinion still good law?

A: No. It carries a vacatur notice: "Vacated by the Board of Professional Responsibility on August 7, 2023 due to changes in laws or rules." The Board's current guidance is Formal Ethics Opinion 2023-F-170.

Background and rules framework

The opinion applied Disciplinary Rule 2-106 (fees for legal services) of the Tennessee Code of Professional Responsibility, adopting and extending ABA Formal Ethics Opinion 338's framework for credit card plans, and cross-referenced T.C.A. 47-14-103 and T.C.A. 47-14-121 for permissible interest rates. The modern correlate is Model Rule 1.5 (fees), noted here as a navigational cross-reference; this vacated opinion should not be relied on for the current standard.

Citations and references

Rules of Professional Conduct:

• DR 2-106 (fees for legal services), Tennessee Code of Professional Responsibility
• Model Rule 1.5 (fees), modern correlate

Statutes:

• T.C.A. 47-14-103 (formula interest rate cap for credit card plans)
• T.C.A. 47-14-121 (post-judgment interest rate cap for delinquent accounts)

Cases:

• Ligon v. Ligon, 597 S.W.2d 310, cited elsewhere in the Board's contemporaneous fee opinions on the contractual nature of attorney fees

Other opinions cited:

• ABA Committee on Ethics, Formal Opinion 338: no impropriety in credit card plans subject to conditions; interest on delinquent accounts as a necessary corollary

See also

• Tennessee Op. 82-F-28(a): Amended Interest Caps for Lawyers' Credit Card and Delinquent-Account Plans
• Tennessee Op. 2023-F-170: Updated Guidelines for an Attorney's Acceptance of Credit Card Payments
• Tennessee Op. 82-F-30: A Lawyer Cannot Remit Interest Earned on the Lawyer's Own Fees to the Client

Source

• Landing page: https://www.tbpr.org/ethic_opinions/82-f-28

Original opinion text

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

82-F-28 - Vacated*

*Vacated by the Board of Professional Responsibility on August 7, 2023 due to changes in laws or rules.

FORMAL ETHICS OPINION 82-F-28

Inquiry is made concerning the propriety of an attorney charging interest on accounts more than 30 days delinquent if notice of the intent to charge interest on such accounts is sent to all clients, and the charging of interest is limited to billings made after such notification.

Formal Ethics Opinion 338 of the Committee on Ethics of the American Bar Association states that there is no impropriety in the use of credit cards for payment of legal services and expenses, provided certain conditions are fully and completely observed.

The opinion also states that a necessary corollary to the use of credit cards is the charging of interest on delinquent accounts.

It is the opinion of this Committee that there is no impropriety in the use of credit card plans for payment of legal services and expenses provided the following conditions are fully and completely observed:

• All publicity and advertising relating to a credit card plan shall be subject to the prior approval in writing of the Ethics Committee of the Board of Professional Responsibility.

• No directory of any kind shall be printed or published of the names of individual attorney members who subscribe to the credit card plan.

• No promotional materials of any kind will be supplied except possibly a small insignia to be tactfully displayed in the attorney's office indicating his participation in the use of the credit card plan.

• A lawyer shall not encourage participation in the plan, but his position must be that he accepts the plan as a convenience for clients who desire it; and the lawyer may not, because of his participation, increase his fee for legal services rendered the client.

• Charges made by lawyers to clients pursuant to a credit card plan shall be only for services actually rendered or cash actually paid on behalf of a client.

• In participating in a credit card program, the attorney shall scrupulously observe his obligation to preserve the confidences and secrets of his client.

• The maximum effective rate of interest utilized in the plan shall not exceed the applicable formula rate specified in TCA 47-14-103 for written contracts signed by the party to be charged.

It is the opinion of this Committee that there is no impropriety in an attorney charging interest on accounts more than 30 days delinquent, provided the following conditions are fully and completely observed:

• Notice of the intent to charge interest on such accounts shall be sent to all clients.

• The charging of interest is limited to statements made after such notification.

• The maximum effective rate of interest utilized in computing such interest shall not exceed the rate specified in TCA 47-14-121 as the rate of post-judgment interest.

In any and all events, an attorney shall not resort to overly zealous actions to obtain payment of fees. Where procedures for arbitration of fee disputes exist, attorneys are encouraged to utilize them rather than resorting to litigation or self-help measures which may have the appearance of taking undue advantage of the lawyer-client relationship.

This 18th day of June, 1982.

ETHICS COMMITTEE:

William R. Willis, Chairman

F. Evans Harvill

John R. Rucker, Senator

APPROVED AND ADOPTED BY THE BOARD