Proposed Rule Amendments

Amendments Pending Supreme Court Approval

At its meeting on January 24, 2025, the council voted to adopt the following rule amendments for transmission to the North Carolina Supreme Court for its approval. (For the complete text of the rule amendments, see the Winter 2024 edition of the Journal or visit the State Bar website: ncbar.gov.)

Amendments to the Rules Governing Discipline

27 N.C.A.C. 1B, Section .0100, Rule .0113, Proceedings Before the Grievance Committee; Rule .0136, Expungement or Sealing of Discipline [New Rule]; Rule .0108, Chairperson of the Hearing Commission: Powers and Duties

The amendments to Rule .0113 and new Rule .0136 implement the provisions of Session Law 2024-25 (Senate Bill 790) that require the State Bar to produce certain records to a respondent; to provide an opportunity for a respondent to address the Grievance Committee; and to adopt a rule on expungement. The amendments to Rule .0108 empower the chair of the Disciplinary Hearing Commission to review vexatious complainant designations and to rule on requests to expunge or seal discipline.

Amendments to the Rules Governing the Continuing Legal Education Program

27 N.C.A.C. 01D, Section .1500, Rule .1523, Credit for Non-Traditional Programs and Activities

The amendment adds technology training and professional well-being programs to the types of programs that can be presented “in-house” by a person or organization not affiliated with the lawyers attending the program or their law firm.

Proposed Amendments

At its meeting on January 24, 2025, the council voted to publish for comment the following proposed rule amendments:

Proposed Amendments to the Rules Governing the Election, Succession, and Duties of Officers

27 N.C.A.C. 01A, Section .0400, Election, Succession, and Duties of Officers

The proposed rule amendment eliminates the requirement that elections for State Bar Council officers be held by secret ballot in conformance with G.S. 143-318.13(b), which states that “a public body may not vote by secret or written ballot.”

Rule .0404, Elections

(a) A president-elect, vice-president and secretary shall be elected annually by the council at an election to take place at the council meeting held during the annual meeting of the North Carolina State Bar. All elections will be conducted by secret ballot.

(b) If there are more than two candidates for an office, then any candidate receiving a majority of the votes shall be elected. If no candidate receives a majority, then a run-off shall be held between the two candidates receiving the highest number of votes.

Proposed Amendments to the Rules Governing the Procedures for Fee Dispute Resolution

27 N.C.A.C. 01D, Section .0700, Procedures for Fee Dispute Resolution

The proposed rule amendments clarify procedural aspects of the fee dispute resolution process, allow staff to determine that a matter is not appropriate for the program due to characteristics that would require expenditure of disproportionate program resources, and reallocate certain decision-making authority—including allowing staff to determine that a matter has reached impasse without input from the councilor overseeing the fee dispute program.

Rule .0706, Powers and Duties of the Vice-Chairperson

The vice-chairperson of the Grievance Subcommittee overseeing ACAP, or his or her designee, who must be a councilor, will:

(a) approve or disapprove a respondent’s request to withhold the respondent’s response from the petitioner; approve or disapprove any recommendation that an impasse be declared in any fee dispute; and

(b) refer to the Grievance Committee all cases in which it appears that

(i) a lawyer might have demanded, charged, contracted to receive, or received an illegal or clearly excessive fee or a clearly excessive amount for expenses in violation of Rule 1.5 of the Rules of Professional Conduct; or

(ii) a lawyer might have failed to refund an unearned portion of a fee in violation of Rule 1.5 the Rules of Professional Conduct, or

(iii) a lawyer might have violated one any other provision of the or more Rules of Professional Conduct other than or in addition to Rule 1.5.

Rule .0707, Processing Requests for Fee Dispute Resolution

(a) A request for resolution of a disputed fee must be submitted in writing to the coordinator of the Fee Dispute Resolution Program addressed to the North Carolina State Bar, PO Box 25908, Raleigh, NC 27611. A lawyer is required by Rule of Professional Conduct 1.5 to notify in writing a client with whom the lawyer has a dispute over a fee (i) of the existence of the Fee Dispute Resolution Program and (ii) that if the client does not file a petition for fee dispute resolution within 30 days after the client receives such notification, the lawyer will be permitted by Rule of Professional Conduct 1.5 to file a lawsuit to collect the disputed fee. A lawyer may file a lawsuit prior to expiration of the required 30-day notice period or after the petition is filed by the client only if such filing is necessary to preserve a claim. If a lawyer does file a lawsuit pursuant to the preceding sentence, the lawyer must not take steps to pursue the litigation until the fee dispute resolution process is completed. A client may request fee dispute resolution at any time before either party files a lawsuit. The petition for resolution of a disputed fee must contain:

(1) the names and addresses of the parties to the dispute;

(2) a clear and brief statement of the facts giving rise to the dispute;

(3) a statement that, prior to requesting fee dispute resolution, a reasonable attempt was made to resolve the dispute by agreement;

(4) a statement that the subject matter of the dispute has not been adjudicated and is not presently the subject of litigation.

(b) A petition for resolution of a disputed fee must be filed (i) before the expiration of the statute of limitation applicable in the General Court of Justice for collection of the funds in issue or (ii) within three years of the termination of the client-lawyer relationship, whichever is later.

(c) The State Bar will process fee disputes and grievances in the following order:

(1) If a client submits to the State Bar simultaneously a grievance and a request for resolution of disputed fee involving the same attorney-client relationship, the request for resolution of disputed fee will be processed first and the grievance will not be processed until the fee dispute resolution process is concluded.

(2) If a client submits a grievance to the State Bar and the State Bar determines it would be appropriate for the Fee Dispute Resolution Program to attempt to assist the client and the lawyer in settling a dispute over a legal fee, the attempt to resolve the fee dispute will occur first. If a grievance file has been opened, it will be stayed until the Fee Dispute Resolution Program has concluded its attempt to facilitate resolution of the disputed fee.

(3) If a client submits a request for resolution of a disputed fee to the State Bar while a grievance submitted by the same client and relating to the same attorney-client relationship is pending, the grievance will be stayed while the Fee Dispute Resolution Program attempts to facilitate resolution of the disputed fee.

(4) Notwithstanding the provisions of subsections (c)(1),(2), and (3) of this section, the State Bar will process a grievance before it processes a fee dispute or at the same time it processes a fee dispute only when the State Bar whenever it determines that doing so is in the public interest.

(d) The coordinator of the Fee Dispute Resolution Program or a facilitator will review the petition to determine its suitability for fee dispute resolution. If it is determined that the dispute is not suitable for fee dispute resolution, the coordinator and/or the facilitator will prepare a letter setting forth the reasons the petition is not suitable for fee dispute resolution and recommending that the petition be discontinued and that the file be closed the parties will be notified in writing that the dispute is not suitable for fee dispute resolution and that a file will not be opened or, if a file has already been opened, that the file has been closed. The coordinator and/or the facilitator will forward the letter to the vice-chairperson. If the vice chairperson agrees with the recommendation, the petition will be discontinued and the file will be closed. The coordinator and/or facilitator will notify the parties in writing that the file was closed. Grounds for concluding that a petition is not suitable for fee dispute resolution or for closing a file include, but are not limited to, the following:

(1) the petition is frivolous or moot; or

(2) the committee lacks jurisdiction over one or more of the parties or over the subject matter of the dispute; or.

(3) due to complexity of the dispute, the amount of fees or expenses at issue, lack of cooperation by one or more of the parties, or other factors, facilitating resolution of the dispute will consume a disproportionally large amount of the fee dispute program’s resources.

(e) If the vice-chairperson disagrees with the recommendation to close the file, the coordinator will schedule a settlement conference.

Rule .0708, Settlement Conference Procedure

(a) The coordinator will assign the case to a facilitator.

(b) The State Bar will serve a letter of notice upon the respondent lawyer.

(1) The letter of notice shall be served by one of the following methods:

(A) mailing a copy thereof by registered or certified mail, return receipt requested, to the last known address of the member contained in the records of the North Carolina State Bar or such later address as may be known to the person attempting service;

(B) mailing a copy thereof by designated delivery service (such as Federal Express or UPS), return receipt requested, to the last known address of the member contained in the records of the North Carolina State Bar or such later address as may be known to the person attempting service;

(C) personal service by the State Bar counsel or deputy counsel or by a State Bar investigator;

(D) personal service by any person authorized by Rule 4 of the North Carolina Rules of Civil Procedure to serve process; or

(E) email sent to the email address of the member contained in the records of the North Carolina State Bar if the member sends an email from that same email address to the State Bar agreeing to accept service of the letter of notice by email. Service of the letter of notice will be deemed complete on the date that the letter of notice is sent by email.

A member who cannot, with reasonable diligence, be served by one of the methods identified in subparagraphs (A)–(E) above shall be deemed served upon publication of the notice in the State Bar Journal.

(2) The letter of notice shall enclose copies of the petition and of any relevant materials provided by the petitioner.

(3) The letter of notice shall notify the respondent (i) that the petition was filed and (ii) of the respondent’s obligation to provide to the State Bar a written response to the letter of notice, signed by the respondent, within 15 days of service of the letter of notice.

(c) Within 15 days after the letter of notice is served upon the respondent, the respondent must provide a written response to the petition which must be signed by the respondent. The facilitator may grant requests for extensions of time to respond. The response must be a full and fair disclosure of all the facts and circumstances pertaining to the dispute. The response shall include all documents necessary to a full and fair understanding of the dispute and. The response shall not include documents that are not necessary to a full and fair understanding of the dispute. The facilitator will provide a copy of the response to the petitioner unless the vice-chair or the vice-chair’s designee determines that good cause exists to approve a respondent’s request not to provide the response to the petitioner. unless the respondent objects in writing. The determination of the vice-chair or of the vice-chair’s designee whether good cause exists is final and is not subject to review.

(d) The facilitator may conduct will conduct an any investigation the facilitator determines to be necessary to understand the facts relevant to the dispute.

(e) The facilitator shall determine, in the facilitator’s sole discretion, whether the settlement conference will be held via email or telephone communications, with both parties simultaneously, or with one party at a time. may conduct a telephone settlement conference. The facilitator may conduct the settlement conference by conference call or by telephone calls between the facilitator and one party at a time, depending upon which method the facilitator believes has the greater likelihood of success.

(f) The facilitator will explain the following to the parties:

(1) the procedure that will be followed;

(2) the differences between a facilitated settlement conference and other forms of conflict resolution;

(3) that the settlement conference is not a trial;

(4) that the facilitator is not a judge;

(5) that participation in the settlement conference does not deprive the parties of any right they would otherwise have to pursue resolution of the dispute through the court system if they do not reach a settlement;

(6) the circumstances under which the facilitator may communicate privately with any party or with any other person;

(7) whether and under what conditions private communications with the facilitator will be shared with the other party or held in confidence during the conference; and

(8) that any agreement reached will be reached by mutual consent of the parties.

(g) It is the duty of the facilitator to be impartial and to advise the parties of any circumstance that might cause either party to conclude that the facilitator has a possible bias, prejudice, or partiality.

(h) It is the duty of the facilitator to timely determine when the dispute cannot be resolved by settlement and to declare that an impasse exists and that the settlement conference willshould end.

(i) Upon completion of the settlement conference, the facilitator will prepare a disposition letter to be sent to the parties explaining:

(1) that the settlement conference resulted in a settlement and the terms of settlement; or

(2) that the settlement conference resulted in an impasse.