Can attorneys participate in a third-party plan that finances clients' legal fees through a revolving credit arrangement?

Plain-English summary

Opinion E-76-6 considered whether attorneys may participate in the credit plan of Financial Services, Inc., a firm proposing to market a revolving payment plan for financing clients' legal fees. The committee began from its prior Opinion E-75-1, which allowed charging interest on past-due client accounts with the client's consent and permitted credit-card payment of legal fees subject to guidelines, and noted that it had endorsed the Milwaukee Bar credit-card report and that the program had Board of Governors approval.

Reviewing the proposed plan, the committee noted several features. Before placing a client on the plan, the attorney must offer the client the option to pay cash, make other financial arrangements, or use the plan, and on existing accounts must obtain the client's written consent, so a specific agreement is reached and the client retains the option to arrange payment otherwise. The plan preserved the attorney-client privilege and was confidential: detailed billings showing the actual services and time would be issued only by the attorney to the client, while billings from Financial Services would show only the client's dollar obligation and balance, with no reference to specific work or files. Uncollectible accounts would be transferred back to the firm under a full-recourse arrangement, and Financial Services would take no legal action on delinquent accounts. All promotional materials and forms would be provided by Financial Services and require State Bar approval, and no directory of subscribing attorneys would be printed or publicly announced.

The committee found no features in the plan that were ethically objectionable, noted that the features accorded with its Opinion E-75-9, and concluded that the proposed plan was not objectionable from the standpoint of professional ethics. It added that the opinion did not address whether charging interest or participating in a credit-card plan might be subject to the Wisconsin Consumer Act or other federal or state statutes or administrative rules.

Currency note

This opinion was issued in 1976, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it applies the former Code together with the committee's earlier fee opinions E-75-1 and E-75-9. The current counterparts are SCR 20:1.5 / Model Rule 1.5 (fees) and SCR 20:1.6 / Model Rule 1.6 (confidentiality of information). The committee also expressly left open whether the arrangement is subject to consumer-credit and other statutes. 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 lawyer let a third-party plan finance a client's legal fees?

A: Yes. The committee found no ethically objectionable features in the proposed plan and concluded it was not objectionable from the standpoint of professional ethics.

Q: What conditions mattered to the committee?

A: The client had to be offered other payment options and give written consent; confidentiality had to be preserved so the financing company saw only the dollar balance and not the work performed; and the firm retained full recourse on uncollectible accounts.

Q: Did the committee address consumer-credit law?

A: No. It expressly noted the opinion did not cover whether charging interest or using a credit plan is subject to the Wisconsin Consumer Act or other statutes or administrative rules.

Background and rules framework

The opinion built on the committee's earlier fee opinions (E-75-1, E-75-9) on interest charges and credit-card payment, focusing on client consent and the confidentiality of billing information. The current counterparts are SCR 20:1.5 / Model Rule 1.5 (fees) and SCR 20:1.6 / Model Rule 1.6 (confidentiality).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5 / SCR 20:1.5 (fees)
• Model Rule 1.6 / SCR 20:1.6 (confidentiality of information)

Other opinions cited:

• Wisconsin Opinions E-75-1 and E-75-9: interest on past-due accounts and credit-card payment of fees

See also

• WI Ethics Op. E-80-13: Interest Charge on Delinquent Accounts
• WI Ethics Op. E-90-4: Interest Charges on Delinquent Accounts
• WI Ethics Op. E-09-03: Communicating Fees and Expenses to Clients

Source

• Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
• Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-76-6.pdf