OPINION NO. 16
INTEREST AND LATE CHARGES ON ATTORNEYS FEES
Repealed: October 25, 2002
A lawyer's fee shall be
reasonable. See Rule 1.5(a), Minnesota Rules of Professional Conduct. An illegal fee is unreasonable. In Minnesota, the assessment of interest or
late charges on attorney's fees is unreasonable, and a violation of Rule
1.5(a), if: (1) the rate of interest is
usurious; or (2) Minnesota law requires that the client agree in writing
to the imposition of the interest charges, and there is no such written
agreement; or (3) federal truth-in-lending disclosures for consumer credit
sales are required and have not been made.
The Lawyers Professional
Responsibility Board hereby issues this opinion which incorporates its
interpretation and prosecutorial position concerning interest or late charges
on attorney's fees. This opinion is not
intended to bind or influence any trial court or other adjudicatory body in
determining civil liability under truth-in-lending or usury laws.
1. An attorney who charges a client interest at an annual rate of 6 percent or less on outstanding attorney's fees, without obtaining advance written agreement from the client, will not be subject to lawyer discipline for failure to comply with the truth-in-lending requirements or disclosures.
2. An attorney who charges a
client interest at an annual rate of 8 percent or less, pursuant to a
written agreement with the client, will not be subject to lawyer discipline for
failure to comply with truth-in-lending requirements or disclosures.
3. An attorney who charges a
client interest at an annual rate of more than 8 percent will be subject to
lawyer discipline for failure to comply with any truth-in-lending requirements
or disclosures.
Adopted: March 26, 1993.
Repealed: October 25, 2002.
Related authorities and other resources: Minnesota Bench & Bar, October 1989 at p. 18; Yilek, "Interest and Late Charges: How to Charge Clients," Minnesota Bench & Bar, March 1991 at p. 18. Repeal of Opinion explained in Minnesota Lawyer, Dec. 2, 2002, p. 2.