Proposed Rule Amendments

Highlights

• The CLE rule amendments that change fundamental aspects of the way mandatory CLE is enforced will be sent to the Supreme Court this quarter for approval. The changes, if approved, will be effective in 2024. Note that additional amendments are proposed for four CLE rules that are published for comment below.

Amendments Approved by the Supreme Court

On March 1, 2023, the North Carolina Supreme Court approved the following rule amendments. (For the complete text of the amendments, see the Fall and Winter 2022 editions of the Journal or visit the State Bar website: ncbar.gov.)

Amendments to the Rule on Standing Committees of the Council

27 N.C.A.C. 1A, Section .0700, Rule .0701, Standing Committees and Boards

The amendment designates the Access to Justice Committee as a standing committee of the State Bar Council.

Amendments to the Discipline and Disability Rules

27 N.C.A.C. 1B, Section .0100, Rule .0119, Effect of a Finding of Guilt in Any Criminal Case

The amendments set forth what the State Bar must do when a criminal conviction relevant to a disciplinary matter has been expunged, overturned, or otherwise eliminated.

Amendments to the Rules for Administrative Reinstatement

27 N.C.A.C. 1D, Section .0900, Rule .0902, Reinstatement from Inactive Status

The amendments permit a member of the federal judiciary who is an inactive member of the State Bar to use each year (or portion thereof) of service as a federal judicial official to offset each year of inactive status for the purpose of determining whether the judge (inactive member) must sit for and pass the bar exam to be reinstated to active status.

Amendments to the IOLTA Rules

27 N.C.A.C. 1D, Section .1300, Rules Governing the Administration of the Plan for Interest on Lawyers’ Trust Accounts (IOLTA)

The amendments to Rules .1306, .1313, .1314, .1316, and .1319 are largely technical and seek to improve clarity and revise designated dates and timeframes to comport with practice.

Amendments to the Rules on Prepaid Legal Services Plans

27 N.C.A.C. 1E, Section .0300, Rules Concerning Prepaid Legal Services Plans

The amendment to Rule .0301 changes the definition of a prepaid legal services plan to prohibit a plan from operating simultaneously as an intermediary organization (formerly known as a lawyer referral service).

Amendments to the Rules of Professional Conduct

27 N.C.A.C. 2, Rule 1.15, Safekeeping Property

The amendments add definitions for four different types of ledgers to Rule 1.15-1, and reorder subparagraphs in Rules 1.15-2 and 1.15-3 to make the progression of requirements more logical.

27 N.C.A.C. 2, Rule 4.1, Truthfulness in Statements to Others

The technical correction to Rule 4.1, comment [2], replaces a reference to “tortuous misrepresentation” with “tortious misrepresentation.”

Amendments Pending Supreme Court Approval

At its meeting on April 21, 2023, the  North Carolina State Bar 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 Spring 2023 edition of the Journal or visit the State Bar website.)

Proposed Amendments to the CLE Rules and Regulations

27 N.C.A.C. 1D, Section .1500, Rules Governing the Administration of the Continuing Legal Education Program; 27 N.C.A.C. 1D, Section .1600, Regulations Governing the Administration of the Continuing Legal Education Program

The proposed amendments reimagine the procedures and processes for regulating compliance with mandatory CLE. The changes include the adoption of a two-year reporting and compliance cycle, the elimination of the annual report requirement, and the elimination of the credit hour attendee fee in favor of program application fees and an annual attendance fee assessment of active State Bar members. Rollover credit of up to 12 CLE hours has been retained. Section .1600 of the CLE rules is deleted.

Proposed Amendments

At its meeting on April 21, 2023, the council voted to publish for comment the following proposed rule amendments:

Proposed Amendments to the Discipline and Disability Rules

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

The proposed amendment is a technical correction that clarifies that the procedure for refusing a letter of warning is distinct from the requirements for service of process of a letter of warning.

Rule .0113, Proceedings Before the Grievance Committee

(a) Probable Cause...

...

(j) Letters of Warning

(1) ...

...

(3) Service of Process:

(A) ...

(B) If valid service upon the respondent has not previously been accomplished by certified mail, personal service, publication, or acceptance of service by the respondent or the respondent’s counsel, a copy of the letter of warning shall be served upon the respondent by certified mail or personal service. If diligent efforts to serve the respondent by certified mail and by personal service are unsuccessful, the letter of warning shall be served by mailing a copy of the letter of warning to the respondent’s last known address on file with the State Bar. Service shall be deemed complete upon deposit of the letter of warning in a postpaid, properly addressed wrapper in a post office or official depository under the exclusive care and custody of the United States Postal Service. Within 15 days after service, the respondent may refuse the letter of warning and request a hearing before the commission to determine whether the respondent violated the Rules of Professional Conduct. Such refusal and request will be in writing, addressed to the Grievance Committee, and served on the secretary by certified mail, return receipt requested. The refusal will state that the letter of warning is refused. If the respondent does not serve a refusal and request within 15 days after service upon the respondent of the letter of warning, the letter of warning will be deemed accepted by the respondent. An extension of time may be granted by the chairperson of the Grievance Committee for good cause shown.

(4) Within 15 days after service, the respondent may refuse the letter of warning and request a hearing before the commission to determine whether the respondent violated the Rules of Professional Conduct. Such refusal and request will be in writing, addressed to the Grievance Committee, and served on the secretary by certified mail, return receipt requested. The refusal will state that the letter of warning is refused. If the respondent does not serve a refusal and request within 15 days after service upon the respondent of the letter of warning, the letter of warning will be deemed accepted by the respondent. An extension of time may be granted by the chairperson of the Grievance Committee for good cause shown.

(45) In cases in which the respondent refuses the letter of warning, the counsel will prepare and file a complaint against the respondent at the commission.

(k) Admonitions, Reprimands, and Censures . . . .

Proposed Amendments to the Rules Governing the Continuing Legal Education Program

27 N.C.A.C. 1D, Section .1500, Rules Governing the Administration of the Continuing Legal Education Program

Rules .1517, .1520, .1522, and .1525 were previously amended and published for comment in the Spring 2023 edition of the Journal as part of the overhaul of the CLE rules. 

The proposed amendments to Rules .1517, .1520, .1522, and .1525 extend the existing exemption from CLE for members of the judiciary and judicial law clerks and add an exemption from CLE for lawyers who are full-time employees of the General Assembly; add an annual renewal fee for on-demand programs; create a Registered Sponsor status that can be granted by the CLE Board to sponsors that meet certain requirements; and limit the presentation of PNA programs to registered sponsors and judicial district bars approved by the board to offer such programs.

Rule .1517, Exemptions

(a) Notification of Board. To qualify for an exemption, for a particular calendar year, a member shall notify the bBoard of the exemption in during the annual membership renewal process or in another manner as directed by the Board. report for that calendar year sent to the member pursuant to Rule .1522 of this subchapter. All active members who are exempt are encouraged to attend and participate in legal education programs.

...

(c) Judiciary and Clerks. Members of the state judiciary who are required by virtue of their judicial offices to take an average of (twelve) 12 or more hours of continuing judicial or other legal education annually and all members of the federal judiciary are exempt from the requirements of these rules for any calendar year in which they serve some portion thereof in such judicial capacities. Additionally, Aa full-time law clerk for a member of the federal or state judiciary is exempt from the requirements of these rules for any calendar year in which the clerk serves some portion thereof in such capacity., provided, however, that

(1) the exemption shall not exceed two consecutive calendar years; and, further provided, that

(2) the clerkship begins within one year after the clerk graduates from law school or passes the bar examination for admission to the North Carolina State Bar whichever occurs later.

(d) Nonresidents. The Board may exempt an active member from the continuing legal education requirements if, for at least six consecutive months immediately prior to requesting an exemption, (i) the member resides outside of North Carolina, (ii) the member does not practice law in North Carolina, and (iii) the member does not represent North Carolina clients on matters governed by North Carolina law. Any active member residing outside of North Carolina who does not practice in North Carolina for at least six (6) consecutive months and does not represent North Carolina clients on matters governed by North Carolina law shall be exempt from the requirements of these rules.

(e) Law Teachers and General Assembly Employees. An exemption from the requirements of these rules shall be given to any active member who does not practice in North Carolina or represent North Carolina clients on matters governed by North Carolina law and who is:

(1) A full-time teacher at the School of Government (formerly the Institute of Government) of the University of North Carolina;

(2) A full-time teacher at a law school in North Carolina that is accredited by the American Bar Association; or

(3) A full-time teacher of law-related courses at a graduate level professional school accredited by its respective professional accrediting agency.;or

(4) A full-time employee of the North Carolina General Assembly.

(f) Special Circumstances Exemptions. The bBoard may exempt an active member from the continuing legal education requirements for a period of not more than one year at a time upon a finding by the bBoard of special circumstances unique to that member constituting undue hardship or other reasonable basis for exemption., or for a longer period upon a finding of a permanent disability.

(g) Pro Hac Vice Admission. Nonresident attorneys lawyers from other jurisdictions who are temporarily admitted to practice in a particular case or proceeding pursuant to the provisions of G.S. 84-4.1 shall not be subject to the requirements of these rules.

(h) Senior Status Exemption. The bBoard may exempt an active member from the continuing legal education requirements if

(1) the member is sixty-five years of age or older; and

(2) the member does not render legal advice to or represent a client unless the member associates withunder the supervision of another active member who assumes responsibility for the advice or representation.

(i) Bar Examiners. Members of the North Carolina Board of Law Examiners are exempt from the requirements of these rules for any calendar year in which they serve some portion thereof in such capacity. CLE Record During Exemption Period. During a calendar year in which the records of the board indicate that an active member is exempt from the requirements of these rules, the board shall not maintain a record of such member’s attendance at accredited continuing legal education programs. Upon the termination of the member’s exemption, the member may request carry over credit up to a maximum of twelve (12) credits for any accredited continuing legal education program attended during the calendar year immediately preceding the year of the termination of the exemption. Appropriate documentation of attendance at such programs will be required by the board.

(j) Permanent Disability. Attorneys who have a permanent disability that makes attendance at CLE programs inordinately difficult may file a request for a permanent substitute program in lieu of attendance and shall therein set out continuing legal education plans tailored to their specific interests and physical ability. The board shall review and approve or disapprove such plans on an individual basis and without delay.

(kj) Application for Substitute Compliance and Exemptions. Other requests for substitute compliance, partial waivers, and/or other exemptions for hardship or extenuating circumstances may be granted by the bBoard on an annual yearly basis upon written application of the attorney member.

(l) Bar Examiners. Credit is earned through service as a bar examiner of the North Carolina Board of Law Examiners. The board will award 12 hours of CLE credit for the preparation and grading of a bar examination by a member of the North Carolina Board of Law Examiners.

(k) Effect of Annual Exemption on CLE Requirements. Exemptions are granted on an annual basis and must be claimed each year. An exempt member’s new reporting period will begin on March 1 of the year for which an exemption is not granted. No credit from prior years may be carried forward following an exemption.

(l) Exemptions from Professionalism Requirement for New Members.

(1) Licensed in Another Jurisdiction. A newly admitted member who is licensed by a United States jurisdiction other than North Carolina for five or more years prior to admission to practice in North Carolina is exempt from the PNA program requirement and must notify the Board of the exemption during the annual membership renewal process or in another manner as directed by the Board.

(2) Inactive Status. A newly admitted member who is transferred to inactive status in the year of admission to the North Carolina State Bar is exempt from the PNA program requirement but, upon the entry of an order transferring the member back to active status, must complete the PNA program in the reporting period that the member is subject to the requirements set forth in Rule .1518(b) unless the member qualifies for another exemption in this rule.

(3) Other Rule .1517 Exemptions. A newly admitted active member who qualifies for an exemption under Rules .1517(a) through (i) of this subchapter shall be exempt from the PNA program requirement during the period of the Rule .1517 exemption. The member shall notify the Board of the exemption during the annual membership renewal process or in another manner as directed by the Board. The member must complete the PNA program in the reporting period the member no longer qualifies for the Rule .1517 exemption.

Rule .1520, Requirements for Program Approval (Replaced in its entirety)

(a) Approval. CLE programs may be approved upon the application of a sponsor or an active member on an individual program basis. An application for such CLE program approval shall meet the following requirements:

(1) The application shall be submitted in the manner directed by the Board.

(2) The application shall contain all information requested by the Board and include payment of any required application fees.

(3) The application shall be accompanied by a program outline or agenda that describes the content in detail, identifies the teachers, lists the time devoted to each topic, and shows each date and location at which the program will be offered.

(4) The application shall disclose the cost to attend the program, including any tiered costs.

(5) The application shall include a detailed calculation of the total CLE hours requested, including whether any hours satisfy one of the requirements listed in Rules .1518(b) and .1518(d) of this subchapter, and Rule 1.15-2(s)(3) of the Rules of Professional Conduct.

(b) Program Application Deadlines and Fee Schedule.

(1) Program Application and Processing Fees. Program applications submitted by sponsors shall comply with the deadlines and Fee Schedule set by the Board and approved by the Council, including any additional processing fees for late or expedited applications.

(2) Free Programs. Sponsors offering programs without charge to all attendees, including non-members of any membership organization, shall pay a reduced application fee.

(3) Member Applications. Members may submit a program application for a previously unapproved out of state, in-person program after the program is completed, accompanied by a reduced application fee. On-demand program applications must be submitted by the program sponsor.

(4) On-Demand CLE Programs. Approved on-demand programs are valid for three years. During this initial three-year term, sponsors shall pay an annual renewal fee each year in the amount set by the Board. After the initial three-year term, programs may be approved annually in a manner approved by the Board that includes a certification that the program content continues to meet the accreditation standards in Rule .1519 and the payment of a program recertification fee.

(5) Repeat Programs. Sponsors seeking approval for a program, or portion of a program, that was previously approved by the Board within the same CLE year (March 1 through the end of February) shall pay a reduced application fee.

(c) Program Quality and Materials. The application and materials provided shall reflect that the program to be offered meets the requirements of Rule .1519 of this subchapter. Sponsors and active members seeking credit for an approved program shall furnish, upon request of the Board, a copy of all materials presented and distributed at a CLE program. Any sponsor that expects to conduct a CLE program for which suitable materials will not be made available to all attendees may be required to show why materials are not suitable or readily available for such a program.

(d) Online and On-Demand CLE. The sponsor of an online or on-demand program must have an approved method for reliably and actively verifying attendance and reporting the number of credit hours earned by each participant. Applications for any online or on-demand program must include a description of the sponsor’s attendance verification procedure.

(e) Notice of Application Decision. Sponsors shall not make any misrepresentations concerning the approval of a program for CLE credit by the Board. The Board will provide notice of its decision on CLE program approval requests pursuant to the schedule set by the Board and approved by the Council. A program will be deemed approved if the notice is not timely provided by the Board pursuant to the schedule. This automatic approval will not operate if the sponsor contributes to the delay by failing to provide the complete information requested by the Board or if the Board timely notifies the sponsor that the matter has been delayed.

(f) Denial of Applications. Failure to provide the information required in the program application will result in denial of the program application. Applicants denied approval of a program may request reconsideration of such a decision by submitting a letter of appeal to the Board within 15 days of receipt of the notice of denial. The decision by the Board on an appeal is final.

(g) Attendance Records. Sponsors shall timely furnish to the Board a list of the names of all North Carolina attendees together with their North Carolina State Bar membership numbers in the manner and timeframe prescribed by the Board.

(h) Late Attendance Reporting. Absent good cause shown, a sponsor’s failure to timely furnish attendance reports pursuant to this rule will result in (i) a late reporting fee in an amount set by the Board and approved by the Council, and (ii) the denial of that sponsor’s subsequent program applications until the attendance is reported and the late fee is paid.

Rule .1522, Registered Sponsors [NEW RULE - The previous proposed amendment to Rule .1522 deleted the rule in its entirety and reserved the rule for future use. New proposed Rule .1522 addresses Registered Sponsors.]

(a) Registered Sponsor Status. Notwithstanding the requirements of Rule .1520(b), the following rules apply to registered sponsors:

(1) Presumptive Approval of Programs. Once an organization is approved as a registered sponsor, the continuing legal education programs sponsored by that organization are presumptively approved for credit; however, application must still be made to the Board for approval of each program pursuant to Rule .1520(a). The Board will provide notice of its decision on CLE program approval requests pursuant to the schedule set by the Board and approved by the Council. A program will be deemed approved if the notice is not timely provided by the Board pursuant to the schedule. The registered sponsor may request reconsideration of an unfavorable accreditation decision by submitting a letter of appeal to the Board within 15 days of receipt of the notice of disapproval. The decision by the Board on an appeal is final.

(2) Professionalism for New Admittees (PNA) Programs. Registered sponsors shall be permitted to provide PNA programs approved pursuant to Rule .1525 of this subchapter.

(3) Other services provided by the Board. The CLE Board may, in its discretion, provide additional services and adjustments to registered sponsors, including but not limited to reduced program application fees, different application deadlines, and optional payment structures. However, all registered sponsors shall be treated uniformly.

(b) Eligibility Standards. The Board may, in its sole discretion, register a sponsor if it meets the following requirements:

(1) The sponsor shall submit an application in the manner directed by the Board;

(2) The application shall contain all information requested by the Board and include payment of an application fee in an amount set by the Board;

(3) The sponsor must have had at least 20 programs approved for credit in the year prior to applying for Registered Sponsor status; and

(4) The sponsor shall suitably demonstrate a history of consistent compliance with the rules of this subchapter.

(c) Annual Renewal. Registered Sponsors must renew their status annually in the time and manner directed by the Board, including the payment of an annual renewal fee in an amount set by the Board.

(d) Revocation of Registered Sponsor Status. The Board may, at any time and in its sole discretion, revoke the registration of a registered sponsor for failure to satisfy the requirements of this subchapter. A sponsor who has its status revoked may re-apply for Registered Sponsor Status pursuant to Paragraph (b) of this rule.

(e) Previously Registered Sponsors. A sponsor that was previously designated by the Board as a registered sponsor prior to the effective date of this revised rule shall maintain its registered sponsor status for the duration of the CLE year in which this rule becomes effective but shall be required to renew its status annually subject to the revised eligibility requirements in Paragraph (b) of this rule.

Rule .1525, Professionalism Requirement for New Members (PNA) [NEW RULE]

(a) Content and Accreditation. The State Bar PNA program shall consist of 12 hours of training in subjects designated by the State Bar including, but not limited to, professional responsibility, professionalism, and law office management. The chairs of the Ethics and Grievance Committees, in consultation with the chief counsel to those committees, shall annually establish the content of the program and shall publish any changes to the required content on or before January 1 of each year. PNA programs may only be provided by sponsors registered under Rule .1522 of this subchapter or judicial district bars specifically approved by the Board to offer PNA programs. To be approved as a PNA program, the program must satisfy the annual content requirements, and a sponsor must submit a detailed description of the program to the Board for approval. A sponsor may not advertise a PNA program until approved by the Board. PNA programs shall be specially designated by the Board and no program that is not so designated shall satisfy the PNA program requirement for new members.

(b) Timetable and Partial Credit. The PNA program shall be presented in two 6-hour blocks (with appropriate breaks) over two days. The 6-hour blocks do not have to be attended on consecutive days or taken from the same provider; however, no partial credit shall be awarded for attending less than an entire 6-hour block unless a special circumstances exemption is granted by the Board. The Board may approve an alternative timetable for a PNA program upon demonstration by the provider that the alternative timetable will provide an enhanced learning experience or for other good cause; however, no partial credit shall be awarded for attending less than the entire 12-hour program unless a special circumstances exemption is granted by the Board.

(c) Online programs. The PNA program may be distributed over the internet by live streaming, but no part of the program may be taken on-demand unless specifically authorized by the Board.

(d) PNA Requirement. Except as provided in Rule .1517(1), each newly admitted active member of the North Carolina State Bar must complete the PNA program during the member’s first reporting period. It is strongly recommended that newly admitted members complete the PNA program within their first year of admission.

Proposed Amendments to the Rules Governing the Specialization Program

27 N.C.A.C. 1D, Section .1700, The Plan of Legal Specialization; Section .3400, Certification Standards for the Child Welfare Specialty

The proposed amendments clarify a specialist’s duty to report professional misconduct to the board, and make technical corrections to rules relating to the new specialty in child welfare law.

Rule .1723, Revocation or Suspension of Certification of a Specialist

(a) ...

(b)Discretionary Revocation or Suspension. The board may revoke its certification of a lawyer as a specialist if the specialty is terminated or may suspend or revoke such certification if it is determined, upon the board’s own initiative or upon recommendation of the appropriate specialty committee and after hearing before the board as provided in Rule .1802 and Rule .1803, that

(1) ...;

...

(6) the lawyer certified as a specialist received public professional discipline from the North Carolina State Bar on or after the effective date of this provision, other than suspension or disbarment from practice and the board finds that the conduct for which the professional discipline was received reflects adversely on the specialization program and the lawyer’s qualification as a specialist; or

(7) the lawyer certified as a specialist was sanctioned or received public professional discipline on or after the effective date of this provision from any state or federal court or tribunal or, if the lawyer is licensed in another jurisdiction, from the regulatory authority of that jurisdiction in the United States, or the lawyer certified as a specialist was found to have engaged in misconduct by any state or federal court or tribunal, and the board finds that the conduct for which the sanctions or professional discipline was received reflects adversely on the specialization program and the lawyer’s qualification as a specialist.; or

(8) the lawyer certified as a specialist was criminally convicted by any state or federal court and the board finds that the conduct underlying the conviction reflects adversely on the specialization program and the lawyer’s qualification as a specialist.

(c) Report to Board. A lawyer certified as a specialist has a duty to inform the board promptly of any professional discipline received by the lawyer, any judicial finding of misconduct, any criminal conviction, or any fact or circumstance described in Rules .1723(a) and (b) above. The board may consider a lawyer’s failure to promptly report in determining whether to suspend or revoke certification.

(d) ...

Rule .1725, Areas of Specialty

There are hereby recognized the following specialties:

(1) ...

...

(5) criminal law

(a) federal and state criminal law

...

(14) child welfare law

Rule .3407, Applicability of Other Requirements [NEW RULE]

The specific standards set forth herein for certification of specialists in child welfare law are subject to any general requirement, standard, or procedure adopted by the board applicable to all applicants for certification or continued certification.

Proposed Amendments to the Rules of Professional Conduct

27 N.C.A.C. 2, Section .0100, Client-Lawyer Relationship

The proposed amendment allows a lawyer to provide modest gifts to the client for basic living expenses if the lawyer is representing an indigent client pro bono, a court-appointed client, an indigent client pro bono through a non-profit legal services or public interest organization, or an indigent client pro bono through a law school clinic or pro bono program, subject to certain conditions.

Rule 1.8, Conflict of Interest: Current Clients: Specific Rules

(a) ..

...

(e) A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:

(1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and

(2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client. client; and

(3) a lawyer representing an indigent client pro bono, a lawyer representing a court appointed client, a lawyer representing an indigent client pro bono through a nonprofit legal services or public interest organization, and a lawyer representing an indigent client pro bono through a law school clinical or pro bono program may provide modest gifts to the client for food, rent, transportation, medicine, and other basic living expenses. The lawyer:

(A) may not promise, assure, or imply the availability of such gifts prior to retention or as an inducement to continue the client-lawyer relationship after retention;

(B) may not seek or accept reimbursement from the client, a relative of the client, or anyone affiliated with the client; and

(C) may not publicize or advertise a willingness to provide such gifts to prospective clients.

Financial assistance under this Rule may be provided even if the representation is eligible for fees under a fee-shifting statute.

(f) ...

Comment

...

Financial Assistance

[10] ...

[11] Paragraph (e)(3) provides another exception. A lawyer representing an indigent client pro bono, a lawyer representing a court appointed client, a lawyer representing an indigent client pro bono through a nonprofit legal services or public interest organization, and a lawyer representing an indigent client pro bono through a law school clinical or pro bono program may give the client modest gifts. Gifts permitted under paragraph (e)(3) include modest contributions for food, rent, transportation, medicine, and similar basic necessities of life. If the gift may have consequences for the client, including, e.g., for receipt of government benefits, social services, or tax liability, the lawyer should consult with the client about these considerations prior to making the gift. See Rule 1.4.

[12] The paragraph (e)(3) exception is narrow. Modest gifts are allowed in specific circumstances where it is unlikely to create conflicts of interest or invite abuse. What constitutes a modest gift is dependent on a variety of factors, including the client’s circumstances, the client’s needs for basic living expenses, the type or purpose of the gift, or whether the assistance is needed to enable the client to withstand delay in litigation that would otherwise put substantial pressure on the client to settle a case because of financial hardship rather than on the merits. Paragraph (e)(3) prohibits the lawyer from (i) promising, assuring, or implying the availability of financial assistance prior to retention or as an inducement to continue the client-lawyer relationship after retention; (ii) seeking or accepting reimbursement from the client, a relative of the client, or anyone affiliated with the client; and (iii) publicizing or advertising a willingness to provide gifts to prospective to clients beyond court costs and expenses of litigation in connection with contemplated or pending litigation or administrative proceedings.

[13] Financial assistance, including modest gifts pursuant to paragraph (e)(3), may be provided even if the representation is eligible for fees under a fee-shifting statute. However, paragraph (e)(3) does not permit lawyers to provide assistance in other contemplated or pending litigation in which the lawyer may eventually recover a fee, such as contingent-fee personal injury cases or cases in which fees may be available under a contractual fee-shifting provision, even if the lawyer does not eventually receive a fee.

Person Paying for a Lawyer’s Services

[1114] ...

[Subsequent comments re-numbered.]