Ethics Opinions

Opinion No. 74-1

January 1974

Summary: It is proper for a lawyer to participate in a credit card arrangement with a bank, under which his clients pay for legal services and disbursements by charging them with a credit card, but only upon the following conditions:
(1) assignments of indebtedness to the bank must be without recourse; (2) there can be no advertising or publicity with respect to the arrangement, either by the bank or by the lawyer; (3) charges may be made only with respect to services previously rendered, as to which the lawyer and the client have agreed upon the amount of the fee, and disbursements already incurred; and (4) the same arrangement must be made available by the bank to all other lawyers practicing in the geographical area served by the bank. [Editor's note: But see MBA Opinion 77-15, which reconsidered Opinion 74-1 in light of more recent cases construing the First Amendment as applied to professional advertising: "We now hold that the truthful use of credit card signs or insignia in the office of a lawyer is proper."]

Facts: Attorney A proposes to enter into an agreement with a local bank, pursuant to which the bank "will, from time to time, accept for deposit in attorney's account credit obligations representing charges for services rendered on behalf of a client or cash advanced on behalf of a client by the Attorney, the obligors on which are holders of a Master Charge issued by Bank or others."
The proposed written agreement between the bank and the lawyer includes the following provisions: the lawyer will honor all valid unexpired cards; no advertising by the bank will identify individual lawyers by name; the lawyer will maintain an account in the bank; the bank will purchase charge drafts from the lawyer at an agreed rate of discount; the lawyer may issue credits; the lawyer warrants that each charge draft sold to the bank is enforceable according to its terms, and the bank may charge back to the account of the lawyer any amount which fails to comply with the warranty.
Attorney A states that he will not advertise his acceptance of Master Charge cards in any way, and that he will ask the bank not to advertise his being a member.

Discussion: The subject matter has engendered considerable discussion in other states in recent years. Some lawyers have opposed the use of credit cards in the belief that such a practice is inconsistent with the practice of law as a "learned profession" (EC 9-6) rather than a commercial business. Others have favored the use of credit card arrangements for the payment of legal fees under appropriate restrictions and conditions, believing that in the contemporary world the acceptance of credit cards is not unprofessional in character.
ABA Formal Opinion 320, published in 1968, stated in summary that:
It is not per se unethical for a local or state bar association to approve and for lawyers to participate in a plan for financing legal fees, provided that adequate precautions are taken to see that the plan is formulated and administered within the framework of the canons of ethics.
That opinion, which in full text includes a thorough analysis of conflicting views and potential ethical problems, was directed primarily to bar association plans under which clients could obtain loans from banks to pay for legal services.
Subsequently the ABA Standing Committee on Ethics and Professional Responsibility has published two informal opinions critical of specific proposals for use of credit cards to enable clients to pay legal fees, but without condemning the general principle. Informal Opinion No. 1120 (10/3/69) and Informal Opinion No. 1176 (2/4/71). Several state and local bar associations have granted approval for specific credit card plans.
We are fast approaching the predicted phenomenon of a "cashless society." The use of Master Charge and other credit card systems is increasingly widespread. Other professions have sanctioned the use of credit cards to pay for professional services.
The Code of Professional Responsibility recognizes that the legal profession has an obligation to make its services available to all persons, but that lawyers are entitled to reasonable compensation. See, for example, EC 1-1, 2-16, and 2-24. In many instances the use of credit card plans may enable persons to obtain legal services which they need but otherwise would be unable or reluctant to seek, while at the same time providing to lawyers some assurance of prompt and reasonable compensation.
We are aware from experience that often the lawyer is given the minimum priority in allocation of payments to creditors; yet there is no logical reason why he should be treated less favorably than the doctor, the dentist, or even the department store.
However, we recognize that any credit card system used to pay for legal services must be subject to carefully drawn conditions to avoid actual or apparent violations of the canons of ethics.
We believe that it would be unprofessional for a lawyer to publicize the fact that he accepts credit card payments for his services, even by displaying a small credit card sign or insignia in his offices. See Disciplinary Rule DR 2-102.
There should be no advertising or promotion of any credit card plan, either by the lawyer directly or indirectly through the participating bank. Compare Disciplinary Rule DR 2-101. (A lawyer participating in such a plan may inform the client directly that if the client is a holder of the particular credit card, the lawyer is willing to accept a credit card draft in payment for his legal services as a matter of convenience for the client. No suggestion of this nature should appear upon the lawyer's letterhead, however, nor should participation in the plan be announced by general mailings to clients.)
Every effort should be made to avoid any tripartite dispute among the lawyer, the client and the bank with respect to the validity of particular charges. Therefore credit card charges should be acceptable only with respect to legal services previously rendered (including disbursements as appropriate) with respect to which the lawyer and the client have agreed upon the amount of the fee before the draft is executed by the client; and the bank should agree to accept all drafts without recourse against the lawyer (so that the lawyer does not retain a financial stake in the matter of payment to the bank, thus becoming in practical effect a collection agent for the bank).
We are of the opinion that any such credit card plan should be authorized only if all lawyers in the area served by the bank are free to participate in the plan. Without such a restriction, there are substantial risks that it will appear to the public that the bank is promoting the use of services of particular lawyers, in violation of the principles of Disciplinary Rule DR 2-103.
With the benefit of further experience by the legal profession in the use of credit card arrangements, it may appear that other and further restrictions or conditions are desirable; this opinion must not be regarded as final or permanent in nature.
We suggest that it would be appropriate for the Massachusetts Bar Association to develop and publish to the profession an approved form of lawyer-bank agreement acceptable for use in connection with credit card payments for legal services.

Permission to publish granted by the Board of Delegates, 1974. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.