Ethics Opinions
Iowa Supreme Court Board of Professional Ethics and Conduct




Date of Opinion: 06/22/1977

Opinion Number: 77-09

Title: NOT IMPROPER FOR IOWA LAWYERS TO PARTICIPATE IN CREDIT CARD PLANS, WITHIN CERTAIN LIMITS

Opinion: Inquiry has been made of this Committee concerning the propriety of the use of so-called credit cards by lawyers.

Heretofore this Committee has considered this question and has been of the opinion that there is no ethical prohibition within certain limitations.

On November 16, 1974, the American Bar Association Committee on Ethics and Professional Responsibility issued Formal Opinion 338 which approves the use of such credit cards within limitations.

The following is a statement of Formal Opinion 338 by the American Bar Association Committee and the restriction (contained in the last paragraph) which The Iowa State Bar Association Committee on Professional Ethics and Conduct proposes be added thereto:
      "The use of credit cards for the payment of legal services and expenses is permitted under the Code of Professional Responsibility if specified guidelines are followed. Interest may be charged on delinquent accounts with the client's agreement.

      "The Committee on Ethics and Professional Responsibility is advised that the payment of legal fees through credit cards has been approved, subject to certain limitations and conditions, in the states of Georgia, Michigan, Oklahoma and Oregon, and in the cities of Buffalo, New York, Cleveland, Ohio, and Los Angeles, California. This Committee has previously rendered Formal Opinion 320, in February of 1968, relating to a legal fee finance plan, and Informal Opinions 1120 in October, 1969, and 1176 in February of 1971, relating to the use of bank credit cards for the payment of legal fees. The Code of Professional Responsibility has now been adopted by the American Bar Association and, with some modifications, by virtually all of the fifty states. The question is presented whether under the Code the use of credit cards in payment of legal fees and expenses should be broadly sanctioned.

      "It is the Committee's opinion that the Code has overruled Informal Opinion 1176 and that the use of credit cards for the payment of legal expenses and services is permitted under the Code, providing all of its provisions are fully and completely observed. Generally speaking, a credit card plan conforms to these Code provisions and the considerations flowing therefrom when the plan requires that:
        "1. All publicity and advertising relating to a credit card plan shall be subject to the prior approval in writing of the state or local bar committee having jurisdiction of the professional ethics of the attorneys involved.

        "2. No directory of any kind shall be printed or published of the names of individual attorney members who subscribe to the credit card plan.

        "3. No promotional materials of any kind will be supplied by the credit card company to a participating attorney except possibly a small insignia to be tactfully displayed in the attorney's office indicating his participation in the use of the credit card.

        "4. A lawyer shall not encourage participation in the plan, but his position must be that he accepts the plan as a convenience for clients who desire it; and the lawyer may not because of his participation increase his fee for legal services rendered the client.

        "5. Charges made by lawyers to clients pursuant to a credit card plan shall be only for services actually rendered or cash actually paid on behalf of a client.

        "6. In participating in a credit card program the attorney shall scrupulously observe his obligation to preserve the confidences and secrets of his client.
      "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."

      "Therefore, in Iowa, such plans of financing legal fees as 'Bank Americard' and 'Master Charge' may be participated in by lawyers, if they are a function or activity of the local bar association and are open to all lawyers within the territory covered by the local bar association involved and if the plan adopted is so modified as to be 'without recourse' and to comply with the guidelines provided in ABA Formal Opinion 338 and, in every case, in accordance with specific requirements and provisions directed by the Committee on Bar Economics of The Iowa State Bar Association."




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