Can a lawyer add interest to a bill that goes unpaid for 30 days?

Plain-English summary

Opinion E-80-13 asked whether a lawyer may add an interest charge to a bill that remains unpaid for 30 days. The committee explained that until 1974 ABA ethics opinions uniformly prohibited lawyers from charging interest, on the view that the profession is a branch of the administration of justice rather than a money-getting trade (Canon 12, ABA Formal Opinion 151, Informal Decision C-741). ABA Formal Opinion 338 (1974) changed that, stating 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 adopted that view: interest may be charged provided the client knows of the charge and agrees to it. It added that typical statement language indicating a "finance charge" or "late charge" would be imposed is not sufficient to support charging interest absent a clear agreement by the client. The committee noted the client's remaining questions were legal in nature and cautioned that any lawyer charging interest, or using installment payments of more than four installments (with or without interest), must comply with the Truth in Lending provisions of the federal Consumer Credit Protection Act and other applicable laws.

Currency note

This opinion was issued in 1980, 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 fee provision. The reasonableness of fees and fee terms is now governed by SCR 20:1.5 / Model Rule 1.5, and the cited federal Truth in Lending requirements may have changed. 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 Treat this page as historical context, not current guidance.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 charge interest on overdue bills at all?

A: Yes. The committee concluded interest may be charged, provided the client knows of the charge in advance and agrees to it.

Q: Is a "finance charge" notice printed on the bill enough?

A: No. The committee said typical "finance charge" or "late charge" language is not sufficient to support charging interest absent a clear agreement by the client.

Q: Are there other laws to watch?

A: The committee cautioned that charging interest, or using more than four installment payments, must comply with the federal Truth in Lending provisions of the Consumer Credit Protection Act and other applicable laws.

Background and rules framework

The opinion applied the former Wisconsin fee provision (SCR 20.12) and followed ABA Formal Opinion 338's reversal of the older bar on charging interest. The current counterpart is the fee-reasonableness rule (SCR 20:1.5 / Model Rule 1.5).

Citations and references

Rules of Professional Conduct:

• Wis. SCR 20.12 (fees) (former Code)
• Model Rule 1.5 (reasonableness of fees)

Other opinions cited:

• ABA Formal Opinion 338 (1974): interest permitted with the client's advance agreement
• ABA Formal Opinion 151 and Canon 12: earlier prohibition on charging interest

See also

• WI Ethics Op. E-90-4: Interest Charges on Delinquent Accounts
• WI Ethics Op. E-82-5: Contingent Fees and Client Control of Settlement
• WI Ethics Op. E-80-14: Attorney's Fees Charged to a Ward's Estate

Source

• Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
• Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-80-13.pdf