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 96-06
Law Firm has instituted a policy allowing its clients to use credit cards for payment of professional fees. Law Firm is also considering a policy that would allow its clients to pre-authorize charges on their credit cards. This procedure would consist of the client signing a pre-authorization form giving Law Firm authority to charge the client's card directly. The client would set the amount of charges authorized to be made on a monthly basis or to pay the balance of the client's professional fees. In no event would Law Firm be able to charge amounts in excess of the amount authorized by the client. It is anticipated that the pre-authorization form would be used in connection with fixed fee arrangements, retainer arrangements and installment payment plans. The pre-authorization would be valid for no more that one year and could be canceled by the client at any time through written notice to the firm.
Question:
Is the credit card pre-authorization policy considered by Law Firm prohibited by the Rules of Professional Conduct?
Summary:
Law Firm's credit card pre-authorization policy is not prohibited by the Rules of Professional Conduct.
Opinion:
This Committee has previously ruled that clients may use credit cards when paying fees to lawyers. Advisory Op. 81-1. Therefore, based upon the facts presented, it is not inappropriate for the client and lawyer to enter into an agreement whereby a pre-authorized amount may be charged to a client's credit card for services. Such a pre-authorized agreement is subject to the requirements of Rule 1.5(b): "When a lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation;" and of Rule 1.5(a): "A lawyer's fee shall be reasonable." Since clients will incur interest on amounts charged by the Law Firm, care should be taken to allow clients an opportunity to review Law Firm's bill for services before it is charged to the credit card.