Many clients hire attorneys expecting clearly defined fees and billing practices. Indeed, an attorney-client relationship is fundamentally a contractual one. At a minimum, a retainer agreement or engagement letter should lay out the terms of the legal representation and services as a contract between the attorney and the client. A key aspect of the contractual attorney-client relationship includes, among others, the payment terms, hourly rates, retainer amounts, billing frequency, and payment expectations. Other key provisions that should be spelled out in the contract include what the attorney is expected to do for the client and what the client’s responsibilities are in the working relationship.
Some lawyers include provisions in their retainer agreements allowing them to charge a client’s credit card if a bill goes unpaid after a set period of time. The Maryland Attorney’s Rules of Professional Conduct and Maryland Ethics Opinions do not specifically address this issue, but also do not prohibit the practice. The Maryland Committee on Ethics (“Ethics Committee”) has a long history of issuing opinions associated with the ethical and fiduciary duties imposed by the Maryland Attorneys’ Rules of Professional Conduct (“Maryland Rules”) when accepting credit card payments for legal services. The Ethics Committee has clearly taken the position that the “use of credit cards for the payment of legal expenses and services is permitted under the Code, provided that all of its provisions are fully and completely observed.” In Ethics Docket No. 2001-15, the Ethics Committee demonstrated its continued support of credit card payments for legal fees, stating, “It should be initially noted that the Committee finds nothing unethical, per se, in accepting a credit card payment for either a fee or retainer. This arrangement is simply a matter of contract between the attorney and the client.” Id.
Interestingly, only a handful of states have addressed whether a lawyer may automatically charge a client’s credit card in the event an invoice is not paid. In 2017, the New York State Bar Association’s (NYSBA) Committee on Professional Ethics (“NYSBA Committee”) considered whether an attorney may automatically charge a client’s credit card for the total amount of an unpaid earned bill if the retainer agreement gives the lawyer authority to charge the card when the bill has not been paid within 20 days. Their decision examined the typical retainer agreement’s fine print regarding billing and collection terms. The specific contract provision under consideration provided:
“In the event of your failure to pay any bill for legal fees, costs and/or disbursements in excess of 20-days from the date of the bill, you hereby authorize the undersigned attorney to bill your credit card for the full amount of the unpaid balance of the bill, without further notice to you. . .”
The NYSBA Committee concluded that a lawyers’ retainer agreement may provide authority to the lawyer to bill the client’s credit card for earned legal fees, costs or disbursement that the client has failed to pay on or before a specified deadline as long as the client is informed of the right to dispute any invoice prior to the lawyer charging the client’s credit card. See NYSBA Committee Ethics Opinion 1112 (Jan. 7, 2017).
Of course, the NYSBA opinion does not govern Maryland lawyers, but the opinion is reasonable and does not conflict with the Maryland Rules. The opinion also aligns with the Ethics Committee’s established stance that credit card payments represent a valid form of legal fee remittance and that the payment of such fees fundamentally falls under standard contract law provisions.
Maryland attorneys are reminded that the onus of ensuring that all credit card payments for legal fees earned and unearned is solely on the attorney. Consideration should be given to proactively communicating payment terms to clients well in advance of any charge to a client’s credit card with additional notifications prior to additional charges. Comprehension of the nuances associated with these payments should be carefully reviewed when deciding if and how credit card processing will work in your firm. See Ethics Docket Nos. 78-19, 79-31, 89-52, 91-5, 97-14, 01-15, 02-23, 03-06. All of these ethics opinions may be found on the Maryland State Bar Association’s website.
For a more detailed explanation of accepting credit card payments for legal fees and guidance to mitigate the risks see “Accepting Credit Card Payments for Legal Fees.” For a comprehensive discussion of accepting non-traditional payment for attorneys fees see “Accepting Legal Fee Payment Through a Payment App,” “Third-Party Financing of Legal Fees Through Attorney,” and “Summary of Ethical Issues Involved in Payment of Legal Fees By Non-Traditional Means.”
Finally, consideration should be given to using a vendor versed in the ethical and fiduciary responsibilities of an attorney before accepting credit card payments. Two popular vendors, Clio and LawPay, are well aware of an attorney’s trust accounting requirements and familiar with attorney-client credit card payment transactions.
It is well-established that, under certain conditions, Maryland lawyers may allow their clients to pay their attorneys’ fees by credit card. Essentially, the attorney-client relationship is a legally binding service contract. Attorneys have fiduciary duties to clients, within the bounds of the Maryland Rules and engagement agreement. Clients must uphold their contractual obligations as well, including paying the attorney’s invoice in a timely manner. The retainer agreement governs the deal struck between an attorney and client and should incorporate the payment terms, including if and when an attorney may charge a client’s credit card for attorney services. Additional notice should also be provided to the client prior to additional charges to the client’s credit card.