Can a lawyer charge interest or service charges on a client's overdue legal bills?

Plain-English summary

A lawyer whose clients had been late in paying bills for services and expenses asked whether he could ethically charge interest or service charges to a delinquent client. The committee noted that the inquiry largely involved questions of law, including the application of the Federal Consumer Protection Act, which it described as purely a matter of law. On the ethical question, the committee found no objection to charging interest at an agreed legal rate for fees not paid when due.

The committee added two limits. The rate had to be a legal one, because usury cannot be justified by an agreement made in advance, and "carrying" or "service" charges that alone or combined with interest exceeded legal interest rates would be not only unethical but illegal, citing DR 2-106. The committee also pointed to EC 2-19, instructing a lawyer to reach a clear agreement with the client about charges as soon as possible after being employed, preferably in writing, observing that reducing the agreement to writing helps satisfy the concern expressed in EC 2-23.

Currency note

This opinion was issued in 1971, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. It applied the former Code of Professional Responsibility (EC 2-19, 2-23, and DR 2-106), the subject matter of which is now addressed by Rule 4-1.5. Treat this page as historical context, not current guidance. Verify against current Rule 4-1.5 before relying on any specific requirement mentioned here.

Common questions

Q: May a lawyer charge interest on a client's overdue fees?

A: Under this opinion, yes. The committee found no ethical objection to charging interest at an agreed legal rate on fees not paid when due.

Q: Is there a limit on the rate?

A: Yes. The opinion required the rate to be a legal one, because usury cannot be justified by a prior agreement, and stated that interest or service charges exceeding legal interest rates would be both unethical and illegal under DR 2-106.

Q: Did the committee recommend documenting the arrangement?

A: The opinion pointed to EC 2-19, under which a lawyer should reach a clear agreement with the client about charges as soon as possible after employment, preferably in writing, noting that doing so addresses the concern in EC 2-23.

Background and rules framework

The opinion applied EC 2-19, EC 2-23, and DR 2-106 of the former Code, which addressed fee agreements and the limits on charges. That subject is now in Rule 4-1.5, governing fees and costs. The Model Rule analogue is Rule 1.5.

Citations and references

Rules of Professional Conduct:

• EC 2-19, 2-23; DR 2-106 [Code of Professional Responsibility; subject matter now in Rule 4-1.5]

Statutes:

• Federal Consumer Protection Act (referenced as a question of law the committee did not resolve)

See also

• FL Bar Ethics Op. 18-2: Interest on Advanced Costs
• FL Bar Ethics Op. 16-1: Forgiving Advanced Costs
• FL Bar Ethics Op. 71-57: Keeping a File Until Costs Are Paid

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-71-26/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-71-26-1.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 71-26
September 13, 1971
Advisory ethics opinions are not binding.
It is not unethical for an attorney to charge interest (or service charges) at an agreed legal rate on fees that are delinquent.
CPR: EC 2-19, 2-23; DR 2-106
Chairman Massey stated the opinion of the committee:
A problem has arisen in that an attorney's clients have been late in paying bills for service and expense rendered. He inquires whether he may ethically charge interest or service charges to the delinquent client. The Committee does not desire to beg the question here but would point out that essentially the inquiry involves questions of law. The application of the Federal Consumer Protection Act is purely one of law. On the other hand, there is no ethical objection to the charging of interest at an agreed legal rate for fees not paid when due.
Usury cannot be justified by an agreement in advance and therefore the rate must be a legal one. Beyond this, "carrying" or "service" charges which either alone or coupled with interest are in excess of legal interest rates would be not only unethical but illegal. See DR 2-106.
An attorney ethically is instructed as soon as possible after being employed to enter into a clear agreement with the client as to charges to be made, and this is most beneficial when reduced to writing. EC 2-19. Nothing in the Code of Professional Responsibility prohibits interest or service charges; however, the attorney should, by reducing the agreement to writing, be able to take care of the remonstration contained in EC 2-23.