Opinion No. 2013-5

(Inquiry No. 2013-5 )

Ethical issues for attorneys accepting payment by credit card.

An attorney is permitted to accept client payments by credit card under the New York Rules of Professional Responsibility provided the attorney observes certain caveats and restrictions, which are the same as those required under the previous New York Code of Professional Responsibility.

Rule Provisions:
Rule 1.5
Rule 1.6
Rule 1.8
Rule 1.16(e)
Rule 5.4(a)
Rule 7.1
Rule 7.3

Facts Presented:
Inquiring counsel’s firm does not presently accept payments by credit card, but is interested in doing so.

Inquiring counsel asks whether his firm may accept payments by credit card, and if so, whether there are ethical requirements that must be observed.

Inquiring counsel asks whether his firm may accept payments by credit card, and if so, whether there are ethical requirements that must be observed.

The acceptance of credit cards as a form of payment of legal fees is permissible so long as various safeguards are built into the credit card arrangement between the lawyer and the card issuer. Such safeguards include, without limitation, the following:
1. Arbitration before a Bar Committee must be permitted in order to protect the client against an improper fee. N.Y. State 117 (1969); see EC 2-23 (“a lawyer should ‘attempt to resolve amicably’ any differences over fees”).

2. The client must retain the right to take his or her case to court if the client chooses not to arbitrate. N.Y. State 117.

3. The lawyer must agree to be bound to make good the award if a client is successful in court. Id.

4. The card issuer and the lawyer must agree that the client may raise against the card issuer or a subsequent holder in an action to collect an obligation all defenses which the client might have had against the lawyer. Id.

5. The lawyer must reserve the right to recapture the credit card obligation in the event that the client fails to pay the obligation before the card issuer brings suit thereon, thereby entitling the lawyer to determine whether or not to proceed to sue. Id.; N.Y. County 602 (1972); see EC 2-23 (“a lawyer should be zealous in efforts to avoid controversies over fees with clients”).

6. Neither the lawyer nor the client may be compelled to divulge the nature of the legal services rendered. ABA 338 (1974); N.Y. County 602; N.Y. State 117; see DR 4-101; EC 4-1, 4-2 and 4-3.

7. If interest on unpaid balances will be charged, the client must be expressly advised prior to the execution of any credit arrangement the rate of interest that will be charged and after what period of time it will be charged if the account remains unpaid. N.Y. State 399 (1975).

See also N.Y. State 362 (1974).

In Formal Opinion No. 1995-1 (1995), the Association of the Bar of the City of New York Committee on Professional and Judicial Ethics, NYC Eth. Op. 1995-1, 1995 WL 157730, opined that “[a] lawyer may enter into a relationship with, and use the services of, a company that finances the payment of legal fees and provides certain record-keeping services for attorneys, provided the attorney observes and complies with the caveats and restrictions set forth in the opinion.” 3

City Bar Op. 1995-1, in particular, raised concerns regarding (1) the preservation of confidences and secrets, (2) the division of fees with a non-lawyer credit card company, (3) publicity and advertising, (4) control over suits which might be brought against clients, (5) conflicts of interest arising from the attorney’s relationship with the credit card company, (6) the charging of interest on legal fees, (7) the reasonableness of the fees charged, and (8) the consequences of the assignment by the credit card company of its interest and duties to third parties. In most, but not all cases, City Bar Op. 1995-1 agreed with the resolution of those issues which had previously been arrived at in NYCLA Eth. Op. 690, and NYSBA Op. 362.

In Opinion No. 763 (2003), NY Eth. Op. 763, 2003 WL 21312652, the New York State Bar Association Committee on Professional Ethics returned to this issue. The NYSBA Op. 763 opined:

In N.Y. State 362 (1974) and N.Y. State 117 (1969), as well as N.Y. State 399 (1975), this Committee answered in the affirmative the question of whether a lawyer could participate in a bank charge card system where the agreement with the bank permits the lawyer’s clients to pay for legal services by credit card. Certain minimal safeguards, however, were to be incorporated into any such plan. Accord, Utah State Bar Op. 97-06; So. Carolina Bar Ethics Advisory Opinion 98-08; Colo. Bar Ass’n Opinion 97/98-01.

Preliminarily, the Committee observes that when N.Y. State 117 and N.Y. State 362 were written, the use of credit cards was not as common as it is today and the payment of legal fees by credit card was a novelty. With over thirty years of credit card history to look back upon and little abuse of the arrangement by lawyers or banks, the Committee has reconsidered the safeguards listed in its earlier opinions. In so doing, the Committee concludes that it is no longer necessary to require that the agreement between the lawyer and the bank provide that, in any possible suit against the client, the bank waive all defenses which a holder in due course might have. The Committee also observes that the prohibition against any display of a decal in the lawyer’s office has been superseded by substantive law. This Committee does not pass upon issues of law, but restricts its opinions solely to ethical issues arising under the Code. Therefore, to the extent herein provided, the requirements of N.Y. State 117 and N.Y. State 362 are modified.

Ten additional years have passed since the issuance of NYSBA Op. 763. In that time, the New York Code of Professional Responsibility, which was in effect when all of the preceding opinions were issued, has been replaced by the New York Rules of Professional Conduct.

Despite this change in the regulatory regime governing attorneys, the concerns raised by those prior opinions continue to be embodied in the new Rules. Compare, e.g., former DR 4-101 (Confidences and Secrets) with current Rule 1.6 (Confidentiality); former DR 3-102 (Dividing Legal Fees with a Non-Lawyer) with current Rule 5.4(a) (Professional Independence of a Lawyer); former DR 2-110(A)(3) (Withdrawal from Employment) with current Rule 1.16(e) (Declining or Terminating Representation); former DR 2-101 (Advertising) with current Rule 7.1 (Advertising); former DR 2-103 (Solicitation and Recommendation of Professional Employment) with current Rule 7.3 (Solicitation and Recommendation of Professional Employment); former DR 5-107 (Avoiding Influence by Others and the Client) with current Rule 1.8(f) (Current Client: Specific Conflict of Interest Rules); and former DR 2-106 (Fee for Legal Services) with current Rule 1.5 (Fees and Division of Fees).

At the same time, there are now over 40 years of credit card history to look back upon. To this Committee’s knowledge, there continues to be little reported abuse of the arrangement by lawyers or banks.

In the opinion of this Committee the reconsideration of the safeguards listed in the earlier opinions undertaken by the State Bar in Opinion No. 763 was appropriate, and remains effective under the new Rules, as do the considerations and safeguards mandated.


An attorney may accept client payments by credit card provided the attorney observes and complies with the caveats and restrictions set forth herein.

[Approved by the Full Committee on December 11, 2013]