Proposed Opinions

Rules, Procedure, Comments

All opinions of the Ethics Committee are predicated upon the North Carolina Rules of Professional Conduct. Any interested person or group may submit a written comment – including comments in support of or against the proposed opinion – or request to be heard concerning a proposed opinion. The Ethics Committee welcomes and encourages the submission of comments, and all comments are considered by the committee at the next quarterly meeting. Any comment or request should be directed to the Ethics Committee at ethicscomments@ncbar.gov no later than June 20, 2025.

Council Actions

At its meeting on April 25, 2025, the State Bar Council adopted the ethics opinion summarized below:

2025 Formal Ethics Opinion 1
Obligations Related to Notice When Lawyer Leaves a Firm

Opinion sets out the requirements of the notice that must be sent to affected clients when a lawyer leaves a law firm.

Ethics Committee Actions

At its meeting on April 24, 2025, the Ethics Committee considered a total of five inquiries, including the adopted opinion referenced above. Two inquiries were sent or returned to subcommittee for further study, including an inquiry exploring conflicts of interest for public defender offices and an inquiry addressing whether the Rules of Professional Conduct permit a real property lawyer to refer a client to a law partner’s title insurance business. The committee also approved the publication of two new proposed formal ethics opinions for comment, which appear below.

Proposed opinion affirms prohibition on lawyers participating in a settlement agreement that includes a limitation on a party’s or counsel’s ability to report misconduct to the North Carolina State Bar and rules a lawyer serving as a mediator may not assist with or participate in a mediated settlement agreement that includes such a term.

Inquiry #1:

Lawyer A and Lawyer B represent Client A and Client B, respectively. Throughout the dispute and representation, the interaction between the parties and their respective counsel has been tense and difficult, including accusations from both parties of alleged misconduct by counsel. The parties, however, have agreed to pursue resolution of their dispute prior to trial and have instructed counsel to negotiate a settlement agreement. While discussing settlement terms, Lawyer A informs Lawyer B that Client A is exploring whether to file a grievance complaint against Lawyer B with the North Carolina State Bar, but that Client A would be willing to disregard a potential grievance complaint if Lawyer B and Client B agree to pay a larger monetary amount to Client A in the settlement. Lawyer B responds by suggesting that the settlement terms include a provision prohibiting both Clients A and B as well as Lawyers A and B from filing a grievance complaint with the North Carolina State Bar against either lawyer. All involved agree with this term.

May Lawyer A and Lawyer B suggest and agree to the settlement term prohibiting the lawyers and their represented parties from filing a grievance complaint with the North Carolina State Bar against the lawyers involved?

Opinion #1:

No.

The Ethics Committee has previously stated that, “an attorney may not condition settlement of a civil dispute on an agreement not to report lawyer misconduct.” RPC 84. The opinion provides,

In order for the North Carolina State Bar to fulfill its responsibility to regulate the legal profession, it is imperative that persons who are aggrieved by apparent lawyer misconduct or who have otherwise become aware of such misconduct feel free to transmit relevant information to the Grievance Committee for investigation. A lawyer who attempts to dissuade a person from reporting his or her alleged misconduct in the course of settlement negotiations or in any other context would be engaging in conduct prejudicial to the administration of justice in violation of Rule 1.2(d) [currently codified as Rule 8.4(d)] of the Rules of Professional Conduct.

Id.

Permitting lawyers to participate in a settlement agreement whereby the lawyers involved negotiate and agree to a term that prohibits an individual from reporting misconduct to the State Bar undermines and threatens the legal profession’s ability to carry out the critically important responsibility and privilege of self-regulation. Accordingly, Lawyers A and B cannot suggest, demand, or agree to a settlement term prohibiting the lawyers and parties involved in a dispute from filing a grievance with the North Carolina State Bar.

Inquiry #2:

Attorney mediator (Mediator) was designated to mediate a court-ordered mediation. The parties and their respective lawyers were present at the mediation. While Mediator caucuses with each party and their lawyers, Mediator took private notes on paper of the settlement terms being discussed. One of the terms to be included in the mediated settlement agreement (agreement) was proposed by one of the lawyers and provides that no party shall file a grievance complaint against any lawyer involved in the case, based on a claim arising out of the current cause of action, with the lawyer’s regulatory agency, i.e., the North Carolina State Bar. The lawyers asked Mediator to act as a scribe for the agreement and commit to writing the agreed upon terms.

Is Mediator in violation of the Rules of Professional Conduct by acting as a scribe and committing to writing the term prohibiting the filing of a grievance complaint with the State Bar?

Opinion #2:

Yes. The Preamble to the Rules of Professional Conduct emphasizes that a lawyer is subject to the Rules of Professional Conduct when a lawyer serves “as a third-party neutral, a nonrepresentational role helping the parties to resolve a dispute or other matter. Some of these Rules apply directly to lawyers who are or have served as third-party neutrals. See, e.g., Rules 1.12 and 2.4.” Preamble [3]. In essence, the Preamble indicates that, unless otherwise noted, a licensed lawyer is always subject to the requirements of the Rules of Professional Conduct regardless of the capacity in which the lawyer is acting. To maintain the privilege and ability to self-govern, all lawyers have a professional obligation to adhere to the Rules of Professional Conduct. Lawyers who serve as a third-party neutral, including mediators, are not excused from such obligations. Additionally, Rule 8.4(a) states that it is misconduct for a lawyer to “violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another.”

A settlement term that prohibits a party from filing a grievance complaint against any lawyer involved in the case interferes with the profession’s ability to regulate itself and is therefore conduct prejudicial to the administration of justice. See Rule 8.4(d); Opinion #1. Although Mediator was not the one to propose the language, it is professional misconduct for the mediator to knowingly assist the lawyers involved in the mediation to violate the Rules of Professional Conduct. Rule 8.4(a). Because lawyers cannot negotiate away the filing of a grievance complaint with the State Bar, Mediator is professionally obligated to avoid assisting the lawyers with negotiating a settlement term that prohibits a party from reporting one or more of the lawyers to the State Bar.

Inquiry #3:

Same scenario as #2 above, except one of the lawyers involved in the mediation drafted the agreement. The drafting lawyer provided Mediator with a copy of the agreement to review with all the parties.

Is Mediator in violation of the Rules of Professional Conduct by taking the term prohibiting the filing of a grievance complaint with the State Bar, in writing, back and forth between the parties while working toward a resolution?

Opinion #3:

Yes. See Opinions #1 & #2.

Inquiry #4:

Same scenario as #2 above, except Mediator did not take notes, but only verbally transmitted the settlement terms, including the agreement not to report any lawyer to the State Bar, between the parties.

Is Mediator in violation of the Rules of Professional Conduct by verbally transmitting the term prohibiting the filing of a grievance complaint with the State Bar between the parties while working toward a resolution?

Opinion #4:

Yes. See Opinions #1 & #2. Whether Mediator shares the settlement terms in writing or verbally is immaterial. Mediator may not violate the Rules of Professional Conduct through the acts of another and may not knowingly assist another in violating the Rules of Professional Conduct. Participating in or facilitating the inclusion of a term that is prohibited by the rules as described in this scenario constitutes a violation of Rule 8.4(a) and is prejudicial to the administration of justice. Rule 8.4(d).

Inquiry #5:

Same scenarios as Opinions #2, #3, and #4. Mediator is unaware of the rules and ethics opinions and does not know the term prohibiting the filing of a grievance complaint with the State Bar is a violation of the Rules of Professional Conduct. Under these circumstances, will Mediator be in violation of the Rules of Professional Conduct if the term is included in the agreement?

Opinion #5:

Yes. Although the Standards of Professional Conduct for Mediators do not require mediators to know the law relative to the issue in dispute, it is well settled that “[e]very lawyer is responsible for observance of the Rules of Professional Conduct[;]” therefore, lawyers are expected to have at least a general knowledge of the rules. Preamble [16]. Lawyers acting as mediators are not exempt from this expectation and are required to have a basic understanding of the Rules of Professional Conduct. Ignorance of the rules is no excuse.

Inquiry #6:

Same scenario as Opinions #2, #3, and #4; except the parties do not reach a resolution at the mediation but did discuss with Mediator the inclusion of a term in the agreement to not report any lawyer to the State Bar. The parties and their lawyers subsequently signed the agreement—including the aforementioned term regarding reporting any lawyer to the State Bar—two days later outside the presence of Mediator. Mediator subsequently learned of the agreement and the inclusion of the problematic term regarding reporting any lawyer to the State Bar.

Does Mediator have a duty to report the lawyers’ professional misconduct to the State Bar regarding their inclusion of a term in the agreement to not report any lawyer to the State Bar?

Opinion #6:

No, unless the Standards of Professional Conduct for Mediators permit disclosure of the lawyers’ misconduct.

Rule 8.3 requires a lawyer “who knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects [to]...inform the North Carolina State Bar or the court having jurisdiction over the matter.” Rule 8.3(a). However, Rule 8.3 recognizes that a lawyer who is serving as a mediator is also subject to the Standards of Professional Conduct for Mediators (the Standards), including the requirement to keep information learned during a mediation confidential. Std. 3, N.C. Stds. of Prof’l Conduct for Mediators (2023); see also Rule 8.3, cmt. [7] (a lawyer-mediator is required by the Standards “to keep confidential the statements and conduct of the parties and other participants in the mediation, with limited exceptions, to encourage the candor that is critical to the successful resolution of legal disputes.”). As of the date of this opinion, the Standards do not permit a mediator to disclose information concerning a lawyer’s professional responsibility that is learned during mediation. Consequently, Rule 8.3(e) sets out a different requirement concerning a lawyer-mediator’s duty to report the professional misconduct of lawyers that is learned of during mediation:

A lawyer who is serving as a mediator and who is subject to the North Carolina Supreme Court Standards of Professional Conduct for Mediators (the Standards) is not required to disclose information learned during a mediation if the Standards do not allow disclosure. If disclosure is allowed by the Standards, the lawyer is required to report professional misconduct consistent with the duty to report set forth in [Rule 8.3(a)].

Rule 8.3(e). As noted in the comment, “if the Standards allow disclosure, a lawyer serving as a mediator who learns of or observes conduct by a lawyer that is a violation of the Rules of Professional Conduct is required to report consistent with the duty set forth in paragraph (a) of this Rule.” Rule 8.3, cmt. [7].

Accordingly, if the Standards do not permit Mediator to disclose the professional misconduct of lawyers learned of during mediation, Mediator is not required to disclose the professional misconduct pursuant to Rule 8.3(a). If the Standards are amended to permit Mediator to report professional misconduct by lawyers that is learned of during mediation, Mediator would have a duty to report the lawyers’ professional misconduct pursuant to Rule 8.3(a).

Inquiry #7:

Although Mediator may not have a duty to report the lawyers to the State Bar pursuant to Rule 8.3(e) for their inclusion in the agreement of a term to not report any lawyer to the State Bar, what additional action, if any, should Mediator take in response to the parties’ and lawyers’ suggestion to include or inclusion of the problematic term in the agreement?

Opinion #7:

Presuming the Standards do not permit disclosure of the lawyers’ misconduct and Mediator does not have a duty to report the lawyers to the State Bar (see Opinion #6 above), Mediator retains the duty to not violate the Rules of Professional Conduct through the acts of another and to not knowingly assist another in violating the Rules of Professional Conduct. Rules 8.4(a), 8.4(d); see Opinions #2-4. To meet this professional responsibility, Mediator “should consider withdrawing from the mediation or taking such other action as may be required by the Standards” if the lawyers insist on conduct during the mediation that violates the Rules of Professional Conduct. Rule 8.3, cmt. [7]. Such other action may include informing the lawyers directly that the proposed term violates the Rules of Professional Conduct,1 suggesting the lawyers contact the State Bar for ethics advice providing the lawyers with a copy of this opinion, or explaining that Mediator’s own obligations under the Rules of Professional Conduct prohibit further participation in the mediation and shall require withdrawal if the lawyers or parties insist on including the term in future negotiations or draft agreements. If the lawyers or parties do not discontinue discussion or inclusion of the term in their settlement agreement, Mediator must withdraw from the mediation. Id.

Endnote

1. The Ethics Committee recognizes that Standard #6 of the Standards of Professional Conduct for Mediators (2023) prohibits a mediator from providing “legal advice or other professional advice during the mediation.” Whether this prohibition in the Standards permits a lawyer-mediator to opine on another lawyer-participant’s professional responsibility in a mediation is outside of the scope of the Rules of Professional Conduct. However, the Ethics Committee also recognizes that a lawyer—serving as a mediator or any third-party neutral—has a duty to advance and uphold the integrity of the legal profession and the administration of justice, which includes a lawyer’s obligation to not undermine the self-regulating nature of the legal profession. Warning or educating other lawyers regarding their professional misconduct during mediation serves the public interest, the legal profession, and the administration of justice.

The Ethics Committee welcomes feedback on the proposed opinion; feedback should be sent to ethicscomments@ncbar.gov.

Proposed opinion clarifies when and how a lawyer may increase the billing rate for services during the representation.

Inquiry #1:

Client seeks to retain Lawyer for representation in a domestic case. Lawyer presents Client with a fee agreement outlining, among other things, the scope of the representation and the hourly billing rate Lawyer’s firm will charge Client for legal services during the representation that are provided by Lawyer, other lawyers at the firm, and support staff. Lawyer’s fee agreement also contains a clause that states the following:

The billing rate may change during the course of the representation. At least once each calendar year, the billing rates of all firm employees are reviewed and may be increased. Client will be notified on the client’s billing statement when these billing rate changes occur.

Client and Lawyer signed the fee agreement, and Lawyer’s representation of Client began.

Over the next year, Client received billing statements from the law firm charging Client the hourly rates stated in the fee agreement. Client timely paid each bill. One year into the representation, Client received a bill for the law firm’s services. The bill contained a 20% increase in the billing rate for the various firm employees that worked on Client’s case. Client received no advance notice of the increase before it was imposed. Client contacted Lawyer and objected to the imposed increase. Lawyer informed Client that Client had the right to terminate the representation if the rate was unacceptable to Client. Lawyer also explained that Client agreed to the potential increase in billing rates in the fee agreement, and that Client would still be responsible for the bill if Client terminated the representation because the services had already been provided. Desiring to not start over with a new lawyer, Client accepted the rate increase and paid the bill.

One year later, law firm increased the hourly billing rates again and imposed the increase on Client’s latest billing statement without notice to Client. Client again objected to the increase; Lawyer again noted that Client agreed to the potential increase in the original fee agreement and suggested Client terminate the representation if the rate was unacceptable.

May Lawyer increase the hourly rate billed to Client per the fee agreement?

Opinion #1:

No.

Rule 1.5 requires a lawyer to communicate to a client “the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible...preferably in writing, before or within a reasonable time after commencing the representation.” Rule 1.5(b); see Rule 1.5, cmt. [2]. After the representation begins, a lawyer may attempt to renegotiate a fee agreement with a client during the course of the representation, but a lawyer may not abandon or threaten to abandon a client to “cut the attorney’s losses or to coerce an additional or higher fee.” Rule 1.5, cmt. [5]. As noted in the comment to Rule 1.5:

Once a fee agreement has been reached between attorney and client, the attorney has an ethical obligation to fulfill the contract and represent the client's best interests regardless of whether the lawyer has struck an unfavorable bargain. An attorney may seek to renegotiate the fee agreement in light of changed circumstances or for other good cause, but the attorney may not abandon or threaten to abandon the client to cut the attorney's losses or to coerce an additional or higher fee. Any fee contract made or remade during the existence of the attorney-client relationship must be reasonable and freely and fairly made by the client having full knowledge of all material circumstances incident to the agreement. If a dispute later arises concerning the fee, the burden of proving reasonableness and fairness will be upon the lawyer.

Id.; see also RPC 166; cf. ABA Formal Ethics Op. 11-458 (2011) (Model Rule 1.5 does not have language in its comment that is similar to North Carolina’s Rule 1.5, cmt. [5]).

Here, Lawyer executed a fee agreement with Client setting forth the hourly rate to be billed for legal services provided. If Lawyer desires to increase the billing rate, Lawyer may attempt to renegotiate the fee agreement with Client, but Lawyer may not unilaterally increase the billing rate without reasonable notice to Client regarding the intended increase. In this scenario, regardless of Client’s purported consent, Lawyer’s inclusion of a provision in the fee agreement that grants Lawyer the authority to unilaterally increase the billing rate without notice to the client and without limitation on the increase does not comply with Lawyer’s obligation to communicate to Client the basis or rate of the fee “before or within a reasonable time after commencing the representation.” Rule 1.5(b). Accordingly, Lawyer may not increase the billing rate under the fee agreement as described.

Importantly, whether Lawyer’s 20% increase to Client’s billing rate is permissible depends on whether the increase results in a fee that is clearly excessive. Pursuant to Rule 1.5(a), “[a] lawyer shall not make an agreement for, charge, or collect an illegal or clearly excessive fee or charge or collect a clearly excessive amount for expenses.” A number of factors must be considered in determining whether a fee is clearly excessive, including the time and labor required, the novelty and difficulty of the representation, the fee customarily charged in the locality for similar services, and the experience, reputation, and ability of the lawyer(s) providing legal services. Rules 1.5(a)(1)-(8). Prior to charging Client any fee—be it an initial fee or a proposed increase to the original fee or billing rate—Lawyer must determine that the fee to be charged is not clearly excessive.

Inquiry #2:

Same facts as Inquiry #1. Client refused to pay the increased hourly billing rate, and instead paid law firm the rate that was originally set out in the fee agreement. Lawyer informed Client that if Client did not pay the outstanding bill in full at the increased hourly rate, Lawyer would move to withdraw from the representation.

May Lawyer withdraw from representing Client based on Client’s refusal to pay the increased hourly rate?

Opinion #2:

Not immediately. Lawyer “may not abandon or threaten to abandon the client to cut the attorney's losses or to coerce an additional or higher fee.” Rule 1.5, cmt. [5]; see Opinion #1. Although Lawyer may withdraw from the representation based on Client’s refusal to pay the increased hourly rate if Client receives adequate notice and the increased fee is not clearly excessive, see Opinion #3 below, Lawyer may not immediately withdraw under these circumstances due to the coercive effect withdrawal may have on Client. See also Virginia Ethics Op. 1705 (1997) (“[Changes to existing fee agreements] are permitted so long as they reflect a fairly negotiated agreement by the client and lawyer to modify or supplant their original understanding on fees, and are not the result of any undue influence or coercion by the lawyer.”).

Notably, Lawyer retains the ability to withdraw for reasons other than the disagreement over fees as provided in Rule 1.16(b).

Inquiry #3:

Same facts as Inquiry #1, except Client was notified of the specific intended increase to the hourly rate 30 days prior to the imposition of the increased hourly rate. If Client does not object to the proposed increase, may law firm increase the hourly rate?

Opinion #3:

Yes, as long as the resulting fee is not clearly excessive per Rule 1.5(a). As noted above, Lawyer may have an existing contract that provides for a fee increase (see Opinion #4 below) or seek to renegotiate the fee with Client “in light of changed circumstances or for other good cause”, and “[a]ny fee contract made or remade during the existence of the attorney-client relationship must be reasonable and freely and fairly made by the client having full knowledge of all material circumstances incident to the agreement.” Rule 1.5, cmt. [5]. Changed circumstances that may warrant revisiting an existing fee agreement include changes related to the factors used to determine whether a fee is clearly excessive, such as the time and labor required for the representation, market forces reflecting the fee customarily charged in the locality for similar legal services, and the experience and reputation of the lawyer performing the services. Rule 1.5(a)(1)-(8); see ABA Formal Ethics Op. 11-458 (“Changes in circumstances, including changes in the factors listed in Rule 1.5(a), occurring after the client-lawyer relationship was formed may cause the client, the lawyer, or both, to seek to revisit the fee arrangement.”). Furthermore, the reasonableness of an amended fee agreement with a client will depend on the context and circumstances of the representation and the attorney-client relationship, as well as a variety of considerations including but not limited to the sophistication of the client, the practice area and its related customs, the length of the representation and the complexity of the issue(s), and the history of interaction between the client and the lawyer. See ABA Formal Ethics Op. 11-458 (“The reasonableness of a modified fee agreement should therefore be assessed in relation to the circumstances at the time of the modification.”).

Here, Lawyer notified Client of the potential for an intended increase in the original fee agreement, then provided Client with reasonable notice of the specific intended increase prior to charging the increased rate. Client has “full knowledge of all material circumstances” regarding the fee agreement and the proposed increase, and Lawyer has provided sufficient reasonable notice to permit Client to make an informed decision about continuing or terminating the representation. Under these circumstances, if Client does not respond to Lawyer’s notice regarding the intended increase, Lawyer may infer Client’s acceptance of the modified fee agreement and impose the intended increase as described in the notice. ABA Formal Ethics Op. 11-458 (2011).

Inquiry #4:

Same facts as Inquiry #1, except the original fee agreement limits any increase in hourly rates to occur no more than annually and to be no greater than 3%. May Lawyer increase the hourly rate billed to Client based upon the fee agreement, regardless of any notice provided to Client?

Opinion #4:

Yes. Under these facts, Lawyer has informed Client of “the basis or rate of the fee and expenses for which the client will be responsible...before or within a reasonable time after commencing the representation[,]” including any increase to the billing rate, in the fee agreement to which Client consented. Rule 1.5(b). Provided the increase in rate is not clearly excessive, Lawyer may increase the billing rate as set forth in the fee agreement. Rule 1.5(a). Although not required under these circumstances, Lawyer is encouraged to provide Client with reasonable notice prior to the imposition of any increased billing rate.

Inquiry #5:

Same facts as Inquiry #4. Client refused to pay the 3% increased hourly billing rate, and instead paid law firm the rate that was originally set out in the fee agreement. May Lawyer withdraw from representing Client based on Client’s refusal to pay the increased hourly rate?

Opinion #5:

Yes. A lawyer may withdraw from representing a client for a variety of reasons, including if “the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer's services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled[.]” Rule 1.16(b)(6). Under these circumstances, the provision in the fee agreement describing the potential increase in fees was appropriate under the Rules of Professional Conduct, and therefore Client’s refusal to comply with the terms of the fee agreement constitutes Client’s “fail[ure] to substantially fulfill an obligation to the lawyer regarding the lawyer’s services[.]” Id. Provided Lawyer reasonably notifies Client about Lawyer’s withdrawal if Client refuses to comply with the fee agreement, Lawyer may withdraw from the representation based on Client’s refusal to pay the increased hourly rate. 

The Ethics Committee welcomes feedback on the proposed opinion; feedback should be sent to ethicscomments@ncbar.gov.