Proposed Rule Amendments

Amendments Approved by the Supreme Court

On March 20, 2024, the North Carolina Supreme Court approved the following rule amendments. (For the complete text of the amendments, see the Fall 2023 and Winter 2024 editions of the Journal or visit the State Bar website: ncbar.gov.)

Amendments to the Duties of the Secretary

27 N.C.A.C. 1A, Section .0400, Election, Succession, and Duties of Officers

The amendments permit the secretary of the State Bar to delegate ministerial tasks, such as the certification of copies of court records, to other State Bar employees.

Amendments to the Rules Governing the Authorized Practice Committee

27 N.C.A.C. 1D, Section .0200, Procedures for the Authorized Practice Committee

The amendments to the rules governing the Authorized Practice Committee improve clarity and ensure that the rules reflect the current procedures of the committee.

Amendments to the Procedures for Fee Dispute Resolution

27 N.C.A.C. 1D, Section .0700, Procedures for Fee Dispute Resolution

The amendments permit multiple methods for service of process of a letter of notice on a fee dispute respondent.

Amendments to the Rules Governing the Specialization Program

27 N.C.A.C. 1D, Section .3500, Certification Standards for the Employment Law Specialty

The amendments create a specialty in employment law. The rules, which are all new, establish the standards for the new specialty.

Proposed Amendments

At its meeting on April 19, 2024, the council voted to publish for comment the following proposed rule amendments:

Proposed Amendments to the Rules Governing the Administrative Committee

27 N.C.A.C. 1D, Section .0900, Procedures for the Administrative Committee

The proposed amendments create a clear process for lawyers to transfer directly from administrative suspension status to inactive status and update the requirements for transfer from active status to inactive status.

Rule .0901, Transfer to Inactive Status

(a) Petition for Transfer from Active to Inactive Status

Any active member who desires to be transferred to inactive status shall file a petition with the secretary addressed to the council setting forth fully

(1) the member’s name and current address;

(2) the date of the member’s admission to the North Carolina State Bar;

(3) the reasons why the member desires transfer to inactive status;

(43) that at the time of filing the petition the member is in good standing having paid all membership fees, Client Security Fund assessments, late fees and costs assessed by the North Carolina State Bar, as well as all past due fees, fines and penalties owed to the Board of Continuing Legal Education and without any grievances or disciplinary complaints pending against him or her;

(54) any other matters pertinent to the petition.

 (b) Petition for Transfer from Administrative Suspension Status to Inactive Status

Any member suspended pursuant to Rule .0903 who desires to be reinstated and immediately transferred to inactive status shall file a petition with the secretary addressed to the council setting forth fully

(1) the member’s name and current address;

(2) the date of the member’s admission to the North Carolina State Bar;

(3) the date of the member’s administrative suspension;

(4) that at the time of filing the petition the member has paid all membership fees, Client Security Fund assessments, late fees and costs assessed by the North Carolina State Bar, as well as all past due fees, fines, and penalties owed to the Board of Continuing Legal Education;

(5) that the member acknowledges that any subsequent petition to transfer from inactive status to active status will require satisfying the requirements for reinstatement from suspension pursuant to Rule .904, using the effective date of the member’s suspension to calculate the requirements of Rule .0904(d)(3) or (4).

 (b) (c) Conditions Upon Transfer

No member may be voluntarily transferred to disability-inactive status, retired/ nonpracticing status, or emeritus pro bono status until:

(1) the member has paid all membership fees, Client Security Fund assessments, late fees, and costs assessed by the North Carolina State Bar or the Disciplinary Hearing Commission, as well as all past due fees, fines and penalties owed to the Board of Continuing Legal Education;

(2) the member acknowledges that the member continues to be subject to the Rules of Professional Conduct and to the disciplinary jurisdiction of the State Bar including jurisdiction in any pending matter before the Grievance Committee or the Disciplinary Hearing Commission; and,

(3) in the case of a member seeking emeritus pro bono status, it is determined by the Administrative Committee that the member is in good standing, is not the subject of any matter pending before the Grievance Committee or the Disciplinary Hearing Commission, and will be supervised by an active member employed by a nonprofit corporation qualified to render legal services pursuant to G.S. 84-5.1.

(c) (d) Order Transferring Member to Inactive Status

Upon receipt of a petition which satisfies the provisions of Rule .0901(a) or (b) above, the council may, in its discretion, enter an order transferring the member to inactive status and, where appropriate for petitions filed pursuant to Rule .0901(a), granting emeritus pro bono status. The order shall become effective immediately upon entry by the council. A copy of the order shall be mailed to the member.

 (d) (e) Transfer to Inactive Status by Secretary of the State Bar

Notwithstanding paragraph (c) (d) of this rule, an active member may petition for transfer to inactive status pursuant to paragraph (a) or (b) of this rule and may be transferred to inactive status by the secretary of the State Bar upon a finding that the active member has complied with or fulfilled the conditions for transfer to inactive status set forth in paragraph (b) (c) of this rule. Transfer to inactive status by the secretary is discretionary. If the secretary declines to transfer a member to inactive status, the member’s petition shall be submitted to the Administrative Committee at its next meeting and the procedure for review of the petition shall be as set forth in paragraph (c) (d)of this rule.

Proposed Amendments to the North Carolina State Bar Discipline and Disability Rules

27 N.C.A.C. 1B, Section .0100, Discipline and Disability of Attorneys

The proposed amendments will (1) recognize the creation within the Office of Counsel of a Trust Account Compliance Department that consists of the Trust Account Compliance Program (TAC Program) and the random audit program; (2) facilitate a voluntary deferral to the TAC Program by the Grievance Committee upon a finding that a respondent has failed to employ sound trust accounting procedures; (3) permit the specific criteria and procedures for eligibility to participate in the trust account compliance program be established by policy and guidelines of the council (rather than rule); and (4) facilitate referrals by the staff (the counsel, the director of the Trust Account Compliance Department, and the auditor) to the TAC Program of lawyers whose random audits have disclosed one or more violations of Rule 1.15 of the Rules of Professional Conduct.

Rule .0112, Investigation; Initial Determination; Notice and Response; Committee Referrals

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(k) Referral to Trust Accounting Compliance Program

(1) Voluntary Deferral to Trust Account Compliance Program. If, at any time before a finding of probable cause, the Grievance Committee determines that the alleged misconduct is primarily attributable to the respondent’s failure to employ sound trust accounting techniques, the committee may offer the respondent an opportunity to voluntarily participate voluntarily in the Trust Account Compliance Program of theState Bar’s Trust Account Compliance Department (the program) Program for up to two years before the committee considers discipline.

Policies governing the criteria and procedures for eligibility to participate in the program, participation in, and completion of the program shall be established by the Council.

If the respondent accepts the committee’s offer to participate in the compliance program, the respondent must fully cooperate with the staff of the Trust Account Compliance Counsel Department and must provide produce to the staff Office of Counsel all documentation and proof of compliance requested by the staff. quarterly proof of compliance with all provisions of Rule 1.15 of the Rules of Professional Conduct. Such proof shall be in a form satisfactory to the Office of Counsel. If the respondent does not accept the committee’s offer, the grievance will be returned to the committee’s agenda for consideration of imposition of discipline.

(2) Completion of Trust Account Compliance Program. If the respondent successfully completes the program, the committee may consider successful completion of the program as a mitigating circumstance and may, but is not required to, dismiss the grievance for good cause shown. If the respondent does not fully cooperate with the Trust Account Compliance Counsel staff of the Trust Account Compliance Department and/or does not successfully complete the program, the grievance will be returned to the committee’s agenda for consideration of imposition of discipline.

(3) Ineligible for Referral. The committee will not refer to the program: any case involving possible misappropriation of entrusted funds, criminal conduct, dishonesty, fraud, misrepresentation, or deceit, or any other case the committee deems inappropriate for referral. The committee will not refer to the program any respondent who has not cooperated fully and timely with the committee’s investigation.

(a) any respondent whose grievance file involves possible misappropriation of entrusted funds, criminal conduct, dishonesty, fraud, misrepresentation, or deceit, or any other alleged misconduct the committee determines to be inappropriate for referral;

(b) any respondent who has not cooperated fully and timely with the committee’s investigation;

(c) any respondent who has already participated in the program as the result of the conduct in issue; or

(d) any respondent who declined an offer to participate in the program before the conduct at issue was referred to the Grievance Committee.

(4) Termination of Deferral Upon Discovery of Evidence of Serious Misconduct. If the Office of Counsel or the committee discovers learns of evidence that a respondent who is participating in the program may have misappropriated entrusted funds, engaged in criminal conduct, or engaged in conduct involving dishonesty, fraud, misrepresentation, or deceit, the chair will terminate the respondent’s participation in the program and the disciplinary process will proceed.

(5) Referral No Defense to Allegations of Professional Misconduct. Referral to the Trust Accounting Compliance Program is not a defense to allegations of professional misconduct that a lawyer misappropriated entrusted funds, engaged in criminal conduct, or engaged in conduct involving dishonesty, fraud, misrepresentation, or deceit, and it does not immunize a lawyer from the disciplinary consequences of such conduct.

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Rule .0132, Trust Accounts; Audit

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(b) Random Audit Investigative Subpoenas and Investigations – The chairperson of the Grievance Committee may randomly issue investigative subpoenas to members compelling the production of any records required by the Rules of Professional Conduct to be kept relative to the handling of client funds or property by the Rules of Professional Conduct for inspection by the counsel or by any auditor appointed by the counsel to determine compliance with the Rules of Professional Conduct. Any such subpoena will disclose upon its face its random character and contain a verification of the secretary that it was randomly issued. No member will be subject to random selection under this section more than once in three years. Any member whose random audit discloses one or more violations of the Rules of Professional Conduct may be referred by the counsel, by the director of the Trust Account Compliance Department (the department), or by the auditor to the department’s Trust Account Compliance Program. Determination of a member’s qualification for referral to the Trust Account Compliance Program after random audit shall be made by the counsel, by the director, or by the auditor pursuant to guidelines established by the council. The counsel, the director, or the auditor may also report any violation of the Rules of Professional Conduct discovered during the random audit to the Grievance Committee for investigation. The auditor may allow the attorney a reasonable amount of time to correct any procedural violation in lieu of reporting the matter to the Grievance Committee. The director of the department and the auditor shall each have authority under the original subpoena for random audit to compel the production of any documents necessary to determine whether the attorney member has corrected any violation identified during the audit.

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