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I am an attorney and...
I am an attorney and I have a client who is failing to pay its invoices. What is the maximum interest rate I can charge for late payments and can I charge it each month they are late (my retainer provides the right to charge interest in the event of late payment)?
Submitted: 3 years ago.Category: Consumer Protection Law
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Answered in 24 minutes by:
6/16/2015
Consumer Protection Lawyer: Law Educator, Esq., Lawyer replied 3 years ago
Law Educator, Esq.
Category: Consumer Protection Law
Satisfied Customers: 126,940
Experience: Attorney experienced in commercial litigation.
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Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
The NY legal maximum interest rate is 16% APR and if your fee agreement does not specify an interest rate that would be the maximum interest you can charge. This breaks down to 1.33% per month (which comes out to the 16% per year). You can charge interest on the entire amount that is not paid each month.
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Customer reply replied 3 years ago
So if a bill was overdue in April (failure to pay within 30 days in March), can I charge all 16% on the full amount on the next invoice? Or can i only charge 1.33% each month the payment is late? Are there any rules against lawyers charging interest? Finally, who would I reach out to if they still refuse to pay in order to take it to the next level (what kind of lawyer would help me sue them)?
Consumer Protection Lawyer: Law Educator, Esq., Lawyer replied 3 years ago
Thank you for your reply.
It is a 16% ANNUAL rate, so you cannot charge 16% a month, just 1.33% per month, which would add up to the 16% annual rate. You can charge the 1.33% on the total bill due, which is the principle and any interest that was not paid that month.
If they still do not pay, then you can sue in court for the amount of the bill, either in small claims or supreme court. A general litigation attorney can do this, or even a collection agency can be hired to pursue the bill.
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Customer reply replied 3 years ago
So I can charge 1.33% every month on every matter they are late for. If they have 4 invoices outstanding and over due I can charge interest in each one. It's 16% annual per matter not per client. Correct?
Customer reply replied 3 years ago
Also if the invoice is 4 months due can I charge interest in the next invoice for past due interest, or since I failed to charge interest for the first 3 months payment was overdue?
Consumer Protection Lawyer: Law Educator, Esq., Lawyer replied 3 years ago
Thank you for your reply.
You can charge 1.33% per month for each invoice that is due. So if they have invoices for 4 separate matters, then you can charge 1.33% on each invoice per month. It is per matter, not per client. You make the adjustment on the invoices you did not charge interest on and go back to each invoice and charge 1.33% per month
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