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OBA Ethics Counsel

Ethics Opinion No. 286

Adopted May 16, 1975

INQUIRY

Is it ethical and proper for an attorney to charge interest on fees for professional services rendered and expenses advanced which are past due?

OPINION

The answer to the inquiry is yes for the reasons set out below.

There are no specific provisions in the code of Professional Responsibility which speak to the issue. The Legal Ethics Committee of the Oklahoma Bar Association has never directly ruled on the issue and the American Bar Association has never published a formal opinion concerning the issue.

The American Bar Association published Informal Decision C-741 (March 31, 1964) holding that it would be improper to charge an interest rate on a fee for professional services rendered which was not paid by the client within a specific period of time. In 1974, the American Bar Association published Formal Opinion 338 (November 16, 1974) creating the guidelines for the use of credit cards in paying fees for professional services rendered. At the conclusion of the opinion, the Committee stated:

"... a lawyer can charge his client interest providing the client is advised that the lawyer intends to charge interest and agrees to the payment of interest on accounts that are delinquent for more than a stated period of time."

This language obviously overrules Informal Decision C-741 and sanctions the charging of interest on fees for professional services rendered which are past due.

The Legal Ethics Committee of the Oklahoma Bar Association published Opinion 268 (December 14, 1972) dealing with the use of credit cards to pay fees for professional services rendered and the Committee stated:

"... so long as the amount of the attorney's fee is clearly stated and the amount of finance or interest charge is clearly and separately stated with the right of the client to prepay the obligation without payment of any finance or interest charge, there is no prohibited division of fees."

Although the Committee's statement is dealing with the issue of division of fees it is clear that the language approves the charging of interest on fees for professional services rendered when such fees have not been paid within a stated period of time.

There are no opinions dealing with the charging of interest on expenses advanced by the attorney which are past due, however in as much as it would be proper under the opinions to charge interest on fees for professional services rendered, it would be proper to charge interest on expenses advanced which are past due.

Therefore, the Legal Ethics Committee of the Oklahoma Bar Association finds that it is ethical and proper for an attorney to charge interest on overdue accounts for professional services rendered or expenses advanced as long as there has been an agreement made with the client concerning these charges.

In light of the Committee's opinion it merits mention that there are specific requirements under the Oklahoma Uniform Consumer Credit Code providing for the disclosure of interest under various situations. It is suggested that the attorney review the statutes before proceeding with the charging of interest so that he fully complies with the requirements applicable to his situation.