1975-04.

CourtIndiana
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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