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Ethics Advisory Opinions
UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 81-01Assuming a client is agreeable, a lawyer may (1) charge a monthly service charge on the unpaid balance of legal fees owed by a client, or (2) may take an interest-bearing note in payment of legal fees.

Questions:
The questions presented in these requests are very similar in nature.

In one, the question relates to the propriety of a lawyer charging a monthly service charge on the unpaid balance of legal fees owed by a client.

The other poses a question as to whether there are any ethical considerations which would prevent a lawyer from taking an interest bearing note in payment of legal fees.

Opinion:
The Committee has met and considered these issues and is of the opinion that both procedures would be permissible under the Code of Professional Responsibility. EC 2-17, EC 2-18, and EC 2-19 deal generally with the questions of establishing a proper and reasonable fee for services rendered and the need to reach an early agreement with a client as to the basis of a fee to be charged. Assuming that the client is agreeable to the payment of a service charge or interest on a note, these procedures would appear to be permissible.

The use of a note, to include interest, for the payment of legal fees would appear to be perfectly permissible under the Code of Professional Responsibility.

The use of credit cards for payment of fees has been approved by Formal Opinion 338 of the Committee on Ethic and Professional Responsibility of the American Bar Association and plans for financing fees through arrangements with banks have been approved by Formal Opinion 320, which includes approval for the use of an interest bearing note.

In formal (sic) Opinion 338 the following statement is made: A necessary corollary to the use of credit cards is the charging of interest on delinquent accounts. It is the Committee's opinion that it is proper to use a credit card system which involves the charging of interest on delinquent accounts. It is also the Committee's opinion that 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.