Attorneys Cannot Charge a Client’s Credit Card for Disputed Fees

Posted on February 4th, 2015 by Legal Fee Advisors

In an August 2014 opinion, while recognizing that it is well established that an attorney may receive fee payments for legal fees via credit card, The New York City Bar Association’s Committee on Professional Ethics (“Committee”) stated that attorneys may not charge that credit card for disputed fees.

The New York Rules of Professional Conduct (“Rules”) clearly allows attorneys to accept payments for legal services via credit card so long as they continue to adhere to their confidentiality obligations and avoid excessive charges to the Client pursuant to Rules 1.6 and 1.5. In the Committee’s opinion, an attorney who has been granted advance authorization to charge a Client’s credit card is an entrusted fiduciary of the available equity in that account because the Rules are designed, in part, to protect “Client Funds.” See Rule 1.5. The Committee further clarified their determination by stating that “as a general matter, charging the client’s credit card account after the client has disputed the fees violates this trust. Such a practice is analogous to a lawyer taking possession of disputed funds being held in escrow for the client’s benefit, a practice that is explicitly prohibited under Rule 1.15(b)(4).”[1] It is a logical extension of this Rule to apply to situations where attorneys have been given advance authorization to charge a Client’s credit card for fees and expenses.

In this era of advanced technology it makes logical sense that the Committee would extend the current Rules to apply to situations not within the consideration of the original drafters.  Furthermore, it is evident that the Committee will continue to place strong emphasis on the fiduciary responsibilities and trust that attorneys are charged with just by the very nature of their position as counsel to those in need.   This includes billing in accordance with established retainer agreements and complying with ethical and legal billing standards for all tasks and activities.

Dawn Guglielmo, Esq.
Legal Fee Advisors © 2015

[1] The Association of the Bar of the City of New York Committee on Professional Ethics Formal Opinion 2014-03. (August 2014)

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