1975-04.
Court | Indiana |
Indiana Ethics Opinion
1975.
1975-04.
Opinion No. 04 of 1975Opinion No. 4 of 1975On November 16, 1974, the Committee on Ethics and Professional
Responsibility of the American Bar Association handed clown Formal Opinion No.
338 which, under certain conditions, authorized the use of credit cards for the
payment of legal fees. The opinion received wide publicity. Subsequently,
several individual attorneys and two local bar associations requested an
opinion from this committee as to the ethical propriety the use of such credit
cards in Indiana.
Qualified Approval Stated
Provided that the conditions and limitations discussed below are
observed, the find that the use of a credit card in payment of a fee for legal
services does not violate the Indiana Code of Professional Responsibility. We
feel, however, that the use of such cards has the potential for encouraging
unethical behavior on the part of attorneys and stress the importance of the
conditions and limitations imposed herein. Unless they are strictly followed,
individual attorneys and the bar as a whole would be open to the charge that
the use of such cards serve merely the commercial interests of the bar and not
that of our clients.
The Ethics Committee of the American Bar Association, under the
old Canons of Ethics, took a dim view of any credit arrangement in the payment
of fees, see e.g., Formal Opinion No. 151 (prohibiting
discounts if a fee is paid within a certain time); Informal Opinion No. C 741
(prohibiting the charging of interest on ac counts not paid within 90 days).
However, in Formal Opinion No. 320, in 1968, the Ethics Committee approved a
number of plans involving the financing of legal fees through a loan by the
bank to the client. The possible ethical objections to these plans and
concluded that under the safeguards spelled out in the plans presented to them
(unlike earlier plans rejected by local bar associations, see e.g., the Ethics
Committee of the Los Angeles County Bar Association, Opinion No. 288; Allegheny
County Bar Association, Opinion No. 9), these plans met the restrictions of the
Canons.
Young Lawyers Plan Recalled
The Young Lawyers Section of the Indiana State Bar Association
then proposed the adoption of one of the approved plans by attorneys in
Indiana. Such a plan was approved by the House of Delegates of the Indiana
State Bar Association at its October 1969 meeting. (For an excellent discussion
of the plan and the events leading up to its approval, see Holcomb, 'A Look at
the Bank Method of Financing Legal Fees;' 14 Res Gestae No. I,
P. 6 (1970)j.
Subsequently in October, 1969, the Ethics Committee of the
American Bar association issued Informal Opinion No. 1120 in which it
disapproved of the use of a bank credit card arrangement pointing out that such
cards were for the sale of merchandise or the sale of non-professional
services. The Committee noted that legal fees were not precise. The plan
allowed for recourse against the attorney which would create a
conflict of interest between the attorney and client. They distinguished Formal
Opinion No. 320, pointing out that it dealt with a plan "intended to operate on
a highly individualized basis and not on a volume basis."
In February 1971, the Committee, in Informal
Opinion No. 1176, reaffirmed its prior position stating that merely prohibiting
publicity and adding "without recourse" did not remove their objections.
Pointing to Ethical Considerations 2-9 and 2-10 of the new Code (which discuss
the problem of advertising), the Committee noted that it still banned
advertising and the distinction "between the legal profession and that of other
professions and businesses" was still a valid distinction.
ABA Opinion 338 Critique
As stated above, the American Bar Association's Ethics Committee
overruled these opinions in November 197=1. Formal Opinion No. 338 is, however,
most unsatisfactory. It is short and contains no reasoning for its conclusion
that these opinions should be overruled and that credit cards are ethical.
After an introductory paragraph it reads, in its entirety:
(Continued on page 202)
CREDIT CARD LAWYER'S FEE PAYMENT APPROVED
Continued from page 291)
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...
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