Summary: An attorney may ethically charge interest on unpaid balances for legal services previously rendered whether or not the attorney and client agreed to such charging of interest prior to the rendering of services, provided that the client has notice and a reasonable opportunity to pay the balance due without interest. MBA Opinion No. 75-5 is superseded to the extent it is inconsistent with the foregoing.
Facts: A lawyer inquires if he may ethically charge interest on unpaid balances for legal services previously rendered, with notice and a reasonable opportunity for the client to pay the balance due without interest.
Discussion: In our Opinion No. 75-5, we stated that an attorney should be permitted to charge interest on a delinquent account only if the client so agrees before services are rendered or disbursements are incurred. This restriction was believed necessary in order "to preserve a proper relationship of trust and confidence between lawyer and client ... ." This advice, although apparently consistent with ABA Formal Opinion 338 (1974), no longer represents the view of the committee.
This change reflects the emerging realization that there are business aspects of the legal profession, as indicated by new advertising rules and the more permissive use of credit card arrangements. See MBA Opinion No. 77-15. Such a restriction places attorneys at a severe disadvantage in their efforts to collect bills in competition with other creditors. Moreover, there is no specific proscription in the Disciplinary Rules against charging interest.
This opinion is limited to the provisions of Supreme Judicial Court Rule 3:07, and does not address the provisions of federal and state statutes and regulations which apply to credit transactions or any substantive common law rule that might be developed.
Permission to publish granted by the Board of Delegates on January 19, 1983. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.