[Modified by Opinion No. 97-06]

Summary: Credit cards may be used to finance attorney's fees under certain circumstances.

Facts: The Board of Commissioners of the Utah State Bar has been asked to consider Formal Opinion 338 of the Committee on Ethics and Professional Responsibility of the American Bar Association, and to determine its applicability to members of the Utah State Bar.

Opinion: That opinion concludes that the Code of Professional Responsibility of the American Bar Association (adopted by the Board of Commissioners of the Utah State Bar and approved by the Supreme Court of the State of Utah) has overruled American Bar Association Informal Opinion 1176, and that under the Code, the use of credit cards for payment of legal expenses and services is permitted if all provisions of that Code are observed completely.

The opinion sets forth requirements which in the opinion of the American Bar Association Committee on Ethics and Professional Responsibility, if observed by attorney and credit card issuer, would comply with the requirements of the Code of Professional Responsibility.

Those requirements are set forth herein as follows:

A. 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.

B. No directory of any kind shall be printed or published of the names of individual attorney members who subscribe to the credit card plan.

C. 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.

D. A lawyer shall not encourage participation in the plan, but his position must be that he accepts the plan as a convenience for clients who desire it; and the lawyer may not, because of his participation, increase his fee for legal services rendered the client.

E. Charges made by lawyers to clients pursuant to a credit card plan shall be only for services actually rendered or cash actually paid on behalf of a client.

F. In participating in a credit card program the attorney shall scrupulously observe his obligation to preserve the confidences and secrets of his client.

A necessary corollary to the use of credit cards is the charging of interest on delinquent accounts. It is the Committees opinion that it is proper to use a credit card system which involves the charging of interest on delinquent accounts. It is also the Committee's opinion that a lawyer can charge his client interest, providing the client is advised that the lawyer intends to charge interest and agrees to the payment of interest on accounts that are delinquent for more than a stated period of time.

We concur with Formal Opinion 338, and accordingly hold that if those requirements are met fully, the use of credit cards for the payment of attorney's services and charges is proper for members of the Utah State Bar.

In this connection, there is appended hereto as a part of this opinion a suggested form of Bank Charge Card-Attorney Agreement, which the Bar Commission holds meets the requirements of the Code of Professional Responsibility. An agreement substantially in this form is approved.

The proper use of credit cards involves charging of interest on delinquent accounts necessarily therefore, approval of use of credit cards for attorney services and charges carries with it the approval of charging interest on delinquent accounts, if the client is advised that the lawyer or card issuer will charge interest on delinquent accounts.

BANK CHARGE CARD - ATTORNEY AGREEMENT

Agreement between Bank and (Attorney) which sets forth the terms and conditions upon which Bank will, from time to time acquire from Attorney Charge Card drafts representing charges for services rendered on behalf of a client by the Attorney, the obligors on which are holders of a Credit Card issued by Bank or others. Attorney fees in connection with services rendered for the handling of bankruptcy cases, criminal cases, or issues between spouses will not be subject to credit card financing unless the Bank Credit Charge is handled by way of a Third Party not involved and/or not adverse in any of these types of action. Bank and Attorney hereby agree as follows:

1. Attorney will honor all valid unexpired Bank Cards when presented except those which he has been instructed by Bank or its authorized agent not to honor.

2. There may be no advertising under this plan with reference to attorney directly or indirectly by Bank.

3. Attorney will maintain a demand account with Bank, or otherwise arrange in manner satisfactory to Bank for transfer to and settlement by Bank for Drafts.

4. Attorney may rent from Bank on mutually satisfactory terms one or more imprinters to be used in making charges to Cardholders or otherwise obtain from Bank appropriate plate(s) for use in his existing imprinter. Such imprinters or plate(s) shall remain the property of Bank and shall be returned to Bank at the termination of this Agreement.

5. The term "charge" as used herein shall mean one or more transactions by Attorney on the same day, in connection with the rendering of services or advancement of cash on behalf of the Cardholder. Each charge shall be subject to the floor limit established by Bank from time to time unless prior authorization for charge is in excess of the floor limit is obtained by use of the telephonic authorization service established by Bank.

6. Bank shall furnish Attorney, without charge, all necessary supplies of Drafts and credit slips. Attorney agrees to use such Drafts and credit slips exclusively in connection with all charge transactions to be assigned to Bank.

7. In making a charge to a Cardholder, Attorney will:

a. Obtain all necessary telephonic authorizations and will note the code number of each such authorization on the Draft;

b. Refuse to complete the charge if the Card being presented has been reported to Attorney as being lost or stolen, has expired or he has been otherwise instructed by Bank not to honor such Card;

c. Fully and legibly imprint with Card and complete the Draft which he shall require the Cardholder to sign, and will complete the transaction if the signature of the Cardholder on the Draft appears to be the same as his signature on the Card;

d. Deliver to the Cardholder a copy of the Draft at the time of completing the transaction.

8. If Attorney's client is not a Cardholder, Attorney may provide client with Bank's application for a Card.

9. Within five (5) business days after making a charge, Attorney will deliver the Draft to Bank and will simultaneously assign, transfer and convey the indebtedness evidenced thereby to Bank and, subject to the applicable provisions of this Agreement, Bank agrees to purchase said Draft at a rate of discount which is agreed upon by Attorney and Bank from time to time. The rate of discount shall not be excessive so as to amount to the equivalent of or the appearance of, a division of fees. Drafts delivered to Bank more than five (5) business days after their date may be refused for processing by Bank. The amount of the charges noted on each Draft shall be credited by Bank to the account of Attorney or settled for by Bank check or other credit to Attorney. Each transfer to Bank of a Draft and of the indebtedness thereby evidenced shall be in writing in form satisfactory to Bank.

10. All refunds granted by Attorney shall be on the form furnished by Bank. A copy of each form granting funds issued by Attorney shall be delivered to Bank within five (5) business days after issuance. Upon receipt thereof Bank shall credit the applicable Cardholder with the amount of such refund shall charge to the Account of Attorney an amount equal to such refund. If attorney has no Account with Bank, Attorney shall deliver funds to Bank with, and in the amount shown on, the copy of such credit.

11. As to each draft sold to and purchased by Bank, Attorney warrants that at that time of assignment thereof:

a. Draft will be enforceable according to its terms;

b. No person other than Attorney will have or claim to have any interest in or lien on the indebtedness evidenced by the Draft.

c. If the charge transaction has been consented to by a Cardholder without presentation of his Card or by telephone or mail;

1. the client has granted such consent;

2. the client is the one whose name and number appear on the Draft; and

3. such client is the holder of a genuine, unexpired Card.

12. All Attorney's copies of Drafts relating to each charge presented to Bank shall be preserved by Attorney for a period of twelve (12) months and Bank shall have access to such copies at all reasonable times for examination and audit and in the event of an inaccuracy or discrepancy, Bank may correct same by debit or credit to the account of Attorney. Bank may also charge to the Account of Attorney all or any part of the amount previously credited thereto by Bank for any Draft which does not comply with the warranties set forth in Paragraph 11 hereof or which fails to conform to any other requirement set forth in the Agreement, or Bank may refuse to purchase any such Draft. If Attorney has no Account with Bank, adjustments set forth in this paragraph shall be promptly made between Bank and Attorney.

13. Attorney shall not collect or receive any payment on account on any Draft which has been assigned, transferred or conveyed to Bank.

14. This Agreement may be amended at any time by the parties by a writing signed by both of them, provided however, that Attorney shall not be bound by such amendment if he or Bank consults with the Board of Commissioners of the Utah State Bar with reference to any ethical considerations raised by such amendment and the Bar deems such amendment to improper.

15. Not withstanding Paragraph 14 hereof, Bank also reserves the right to advise Attorney from time to time, by written notice sent by first class mail, of amendments which Bank proposes to put into effect and effective date thereof. Attorney shall be bound by all such amendments proposed it, after such effective date, Attorney honors Cards and assigns, transfers or conveys Drafts generated thereby to Bank; provided, however, that Attorney shall not be bound by such amendment if he consults with the Board of Commissioners of the Utah State Bar with reference to the ethical considerations raised by the amendment and Attorney and the Bar deems such amendment to be improper.

16. This Agreement shall remain in effect until terminated by written notice sent by first class mail by either party to the other at any time, but no such termination shall affect the obligations of Attorney or Bank existing hereunder as of the date of such termination.

17. American Bar Association Formal Opinion Number 338, of the Committee on Ethics and Professional Responsibility has been formally adopted and approved by the Board of Commissioners of the Utah State Bar and has governing effect in relation to the use of credit cards for payment of attorney fees, costs and charges. The following terms of said opinion are incorporated in and become a part of this agreement.

A. 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.

B. No directory of any kind shall be printed or published of the names of individual attorney members who subscribe to the credit card plan.

C. No promotional materials of any kind will be supplied by 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.

D. A lawyer shall not encourage participation in the plan, but his position must be that he accepts the plan as a convenience for clients who desire it; and the lawyer may not because of his participation increase his fee for legal services rendered the client.

E. Charges made by lawyers to clients pursuant to a credit card plan shall be only for services actually rendered or cash actually paid on behalf of a client.

F. In participating in a credit card program the attorney shall scrupulously observe his obligation to preserve the confidences and secrets of his client.

The parties of hereto have executed this Agreement as of this day of 19 .

(Bank)

By

(Title) (Attorney)

By

(Address)