Can a West Virginia lawyer charge interest or a finance charge on a client's overdue legal-fee balance?

Plain-English summary

In 1978, the Committee on Legal Ethics had issued L.E.I. 78-7, a formal opinion prohibiting an attorney from imposing finance charges on delinquent fee accounts. That earlier opinion relied on older ABA and other-jurisdiction opinions that rejected applying business practices to the legal profession as too impersonal and commercial. With the establishment of the new Rules of Professional Conduct, the Committee observed that lawyers were permitted a number of practices that once would have seemed commercial, and that at least eleven other jurisdictions then permitted some form of finance charge under their current ethical rules. The Committee therefore reconsidered its position.

The Committee concluded that Rule 1.5 does not prohibit an attorney from charging interest on unpaid balances, provided the client agrees to such terms in writing at the outset of the representation, and stated in a footnote that the finance-charge language must be clear and highlighted. Although Rule 1.5 does not require all fee agreements to be in writing, the Committee noted it frequently received complaints from clients without written fee agreements who did not understand the fee terms when they retained the lawyer. Because imposing a finance charge is a new concept with the potential to confuse clients further, the Committee concluded that fairness to the public mandates voluntary, written client consent at the outset of representation. Requesting consent in the middle of a representation would carry the implied threat that the attorney might withdraw, so consent under those circumstances has the potential to be coerced.

The Committee also stated that lawyers must comply with any applicable federal or state laws regarding the amount and method of imposing finance charges. It rescinded L.E.I. 78-7.

Currency note

This opinion was issued in 1993, before the West Virginia Supreme Court of Appeals' comprehensive 2015 revision of the West Virginia Rules of Professional Conduct (effective January 1, 2015). 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 Treat this page as historical context, not current guidance.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 add a finance charge to an overdue fee bill?

A: The opinion concluded Rule 1.5 does not prohibit charging interest on unpaid balances if the client agreed in writing at the outset, with finance-charge language that is clear and highlighted.

Q: Could a lawyer ask for consent to a finance charge after the case is underway?

A: The opinion concluded fairness to the public mandates voluntary written consent at the outset; requesting it mid-representation carries the implied threat of withdrawal, so consent then has the potential to be coerced.

Q: Did this opinion change earlier West Virginia guidance?

A: Yes. The opinion expressly rescinded L.E.I. 78-7, which had prohibited finance charges on delinquent fee accounts.

Q: Are there limits beyond the ethics rules?

A: Yes. The opinion stated lawyers must comply with any applicable federal or state laws regarding the amount and method of imposing finance charges.

Background and rules framework

The opinion interpreted West Virginia's Rule 1.5 (Model Rule 1.5), governing the reasonableness and communication of fees, as it stood in 1993. The Committee read Rule 1.5 not to bar interest on unpaid balances where the client consents in writing at the outset, departing from the contrary position of L.E.I. 78-7. The opinion also pointed to applicable federal and state finance-charge laws as a separate constraint.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5 / WV Rule 1.5 (fees; reasonableness and communication of fee terms)

Other opinions cited:

• L.E.I. 78-7 (rescinded): the bar's 1978 opinion prohibiting finance charges on delinquent fee accounts

See also

• WV Ethics Op. 94-01: Collection of Overdue Accounts
• WV Ethics Op. 99-03: Non-Refundable Retainers

Source

• Landing page: https://wvodc.org/Legal-Ethics-Opinion
• Original PDF: https://storage.googleapis.com/msgsndr/Rgd68xOkcVdteTsBkf6O/media/66a7ea7d40a6291c76c91e84.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

L.E.I. 93-02

FINANCE CHARGES ON DELINQUENT FEE ACCOUNTS

In 1978, the Committee on Legal Ethics issued a formal opinion prohibiting an attorney from imposing finance charges on delinquent fee accounts. See L.E.I. 78-7. The Committee relied on several older opinions from the American Bar Association and other jurisdictions which rejected the application of business practices to the legal profession as too impersonal and commercial in nature. With the establishment of the new Rules of Professional Conduct, the Committee has seen a number of practices permitted by lawyers which once would have seemed commercial in nature.

Therefore, the Committee deems it appropriate to reconsider its position. At least eleven other jurisdictions permit, under their current ethical rules, the imposition of a finance charge in some manner.

The Committee is of the opinion that Rule 1.5 of the Rules of Professional Conduct does not prohibit an attorney from charging interest on unpaid balances provided that the client agrees to such terms in writing at the outset of the representation.[1]

Although Rule 1.5 does not require all fee agreements to be in writing, the Committee frequently receives complaints from clients without written fee agreements that they did not understand the terms of the fee when they retained the lawyer.

Because the imposition of a finance charge is a new concept which has the potential to confuse the client even further, fairness to the public mandates voluntary, written client consent at the outset of representation. Requesting a client in the middle of representation to consent to such charges would carry with it the implied threat that the attorney might withdraw. Client consent under such circumstances has the potential to be coerced.

The Committee also warns lawyers that they must comply with any applicable federal or state laws regarding the amount and method of imposing finance charges.

L.E.I. 78-7 is rescinded.

Entered: July 16, 1993.

Charles M. Love, III, Chairman
Committee on Legal Ethics

[1] The language concerning the finance charge must be clear and highlighted.