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Advisory Opinion 45

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State Disciplinary Board
Advisory Opinion No. 45
March 15, 1985,
as amended November 15, 1985

Charging Interest on Clients' Overdue Bills

Pursuant to the provisions of Rule 4-223 of the Rules and Regulations for the Organization and Government of the State Bar of Georgia (219 Ga. 873, as amended), the State Disciplinary Board of the State Bar of Georgia, after a proper request for such, renders its opinion concerning the proper interpretation of the Code of Professional Responsibility of the State Bar of Georgia.

Questions Presented:

1. A client is billed for service rendered and fails to pay after thirty (30) days have elapsed. Is it permissible to notify the client, by letter, that unless his account is paid in full, interest will be charged on the next bill on the unpaid balance?

2. A client signs a fee contract with an attorney providing for the charging of interest on any unpaid balance. Is it permissible for the attorney to charge interest?

3. An attorney notifies his or her client by letter that interest will be charged unless their accounts are paid in full. If the conduct described in question 1 is impermissible, can the attorney rectify the situation by rebilling the clients with any interest charged deducted, or if interest was paid returned?

Opinion: The State Disciplinary Board is of the opinion that an attorney may ethically unilaterally charge interest on client's overdue bills. A lawyer may ethically do so provided that he or she complies with all applicable law, specifically O.C.G.A. § 7-4-16, the Federal Truth in Lending and Fair Credit Billing Acts contained in Title I of the Consumer Credit Protection Act as amended (15 USC 1601 et seq.) and EC 2-19, which states: As soon as feasible after a lawyer has been employed, it is desirable that he reach a clear agreement with his client as to the basis of the fee charges to be made. Such a course will not only prevent later misunderstanding but will also work for good relations between the lawyer and the client. It is usually beneficial to reduce to writing the understanding of the parties regarding the fee, particularly when it is contingent. A lawyer should be mindful that many persons who desire to employ him may have had little or no experience with fee charges of lawyers, and for this reason he should explain fully to such persons the reasons for the particular fee arrangement he proposes. The Board is of the opinion that an attorney can comply with EC 2-19 and unilaterally charge interest without a prior specific agreement with a client if notice is given to the client in advance that interest will be charged on fee bills which become delinquent after a stated period of time, but not less than 30 days. The Board recommends that notice be provided on the bill at the time it is sent and that the notice be conspicuous and printed in type size no smaller than the largest type size used in the body of the bill. The notice must specify the amount of interest to be charged and the period of time after which it will be imposed.

Attorneys should be aware that additional notice and disclosure requirements may be imposed by law, including the specific requirements of O.C.G.A. § 7-4-16 and the Federal Truth in Lending and Fair Credit Billing Acts, supra. This opinion relates only to those instances where a charge of interest is imposed on a client's overdue bill and has no applicability to the extension of credit or the obtaining of security by an attorney.

Therefore, the questions presented are answered as follows:

1. Yes. An attorney may charge his clients interest provided the attorney complies with EC 2-19 and all applicable law, specifically O.C.G.A. § 7-4-16 and the Federal Truth in Lending and Fair Credit Billing Acts, supra.

2. See the answer to question 1.

3. Due to the Board's answer to question 1, this question need not be addressed.

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