Synopsis of of the State Bar July 2024 Council Meeting

APPOINTMENTS

At its meeting on July 19, 2024, the North Carolina State Bar Council made the following appointments:

Disciplinary Hearing Commission (Three-year term) – The council appointed Joshua W. Willey Jr., to complete Margaret Hunt’s term ending June 30, 2025.

Board of Legal Specialization (Three-year terms) – The council appointed Cynthia A. Aziz (immigration law specialist), Daniel C. Pope (workers’ compensation law specialist), and Damon Seils (public member) to three-year terms on the board. Matthew J. Ladenheim was appointed to a one-year term as board chair. Barbara R. Morgenstern was appointed to another three-year term on the board and a one-year term as vice-chair.

IOLTA Board (Three-year terms) – The council reappointed Theodore C. Edwards, Jacob Kyle Smith, and Sharika Richardson Shropshire to second three-year terms. Shelby D. Benton was appointed to a one-year term as chair.

North Carolina Dispute Resolution Commission (Three-year term) – State Bar President A. Todd Brown appointed Lauren T. Quinn to a three-year term.

General Statutes Commission (Three-year term) – State Bar President A. Todd Brown reappointed Joseph J. Kalo IV to another two-year term.

RECOMMENDATIONS FOR APPOINTMENTS SOUGHT

Anyone interested in being appointed to serve on any of the State Bar’s boards or commissions should complete a “Boards and Commissions Interest Form.” The deadline for completion of the interest form is October 14, 2024. Your information will be included in the agenda materials for the annual meeting of the council (October 29-November 1, 2024). The council will make the following appointments at its November 1, 2024, business meeting:

Board of Continuing Legal Education (Three-year terms) – There are three appointments to be made. Adrienne S. Blocker, current chair, and Leah A. Kane are not eligible for reappointment. Dayton T. Cole is eligible for reappointment. The rules governing the Board of Continuing Legal Education require the council to appoint the board’s chair and vice-chair annually.

The Board of Continuing Legal Education (CLE) is a nine-member board composed of North Carolina licensed attorneys. The board establishes policy related to the execution of the CLE program’s mission and is responsible for oversight of the operation of the program subject to the statutes governing the practice of law, the authority of the council, and the rules of the board. The board usually meets four times a year.

The North Carolina State Bar’s mandatory CLE program requires lawyers licensed to practice and practicing in North Carolina to take CLE to help them to achieve and maintain professional competence for the benefit of the public they serve.

Board of Law Examiners (Three-year terms) – There are three appointments to be made. Ronald G. Baker Sr., Ronald L. Gibson, and Judge Calvin E. Murphy are eligible for reappointment.

The 11 members of the North Carolina Board of Law Examiners are appointed by the council. The board examines applicants and establishes rules and regulations for admission to the North Carolina State Bar. The board’s objective is to ensure that all persons seeking admission to practice law in North Carolina possess the requisite competency and qualifications of character and fitness. Board members review bar examination questions; conduct character and fitness and comity hearings; supervise the bar examinations; and grade the examinations. Additionally, the board engages in periodic review of methods utilized in the examination and grading process. A board member donates an average of 35-45 days to service each year.

Client Security Fund Board of Trustees (Five-year term) – There is one appointment to be made. Amy E. Richardson is not eligible for reappointment. The rules governing the Client Security Fund require the council to appoint the board’s chair and vice-chair annually.

The Client Security Fund was established by the North Carolina Supreme Court in 1984 to reimburse clients who have suffered financial loss as the result of dishonest conduct of lawyers engaged in the private practice of law in North Carolina. The fund is administered by a board of trustees composed of four North Carolina lawyers and one public member. The board usually meets in conjunction with the quarterly meetings of the council.

Board Of Paralegal Certification (Three-year terms) – There are two appointments to be made. S.M. Kernodle-Hodges (paralegal member) is eligible for reappointment. Benita Angel Gwynn Powell (lawyer member), the current chair, is eligible to serve an additional year on the board in the capacity of chair. The rules governing the Board of Paralegal Certification require the council to appoint the board’s chair and vice-chair annually.

The Board of Paralegal Certification is a nine-member board composed of five North Carolina licensed attorneys (one of whom must be a paralegal educator) and four North Carolina certified paralegals. The board establishes policy related to the execution of the paralegal certification program and is responsible for the oversight of the operation of the program subject to the statutes governing the practice of law, the authority of the council, and the rules of the board. The paralegal certification program assists in the delivery of competent representation to the public by identifying individuals who are qualified by education and training and have demonstrated knowledge, skill, and proficiency to perform substantive legal work under the direction and supervision of a licensed lawyer. The board usually meets four times a year.

RANDOM AUDITS

Lawyers selected for random audit are based on a randomized list of all active members of the North Carolina State Bar who practice in the state. Audits for the third quarter will be conducted in Bladen, Buncombe, Chatham, Cumberland, Durham, Harnett, Johnston, Lee, Mecklenburg, New Hanover, Orange, Pender, and Wake Counties.

ETHICS COMMITTEE

Ethics Committee Actions

At its meeting on July 19, 2024, the State Bar Council adopted one ethics opinion: 2023 Formal Ethics Opinion 3, Installation of Third Party’s Self-Service Kiosk in Lawyer’s Office and Inclusion of Lawyer in Third Party’s Advertising Efforts (opinion provides that a lawyer may allow a third-party business to install a self-service kiosk in the lawyer’s office for the provision of ignition lock services but may not receive rent or referral fees, and further concludes that a lawyer may be included in the business’s advertising efforts upon compliance with Rule 7.4).

At its meeting on July 18, 2024, the Ethics Committee considered a total of eight inquiries. Four inquiries were sent or returned to subcommittee for further study, including an inquiry examining the ethical requirements relating to a lawyer’s departure from a law firm and an inquiry addressing a lawyer’s ability to obligate a client’s estate to pay the lawyer for any time spent defending the lawyer’s work in drafting and executing the client’s will. The committee also approved an advisory opinion concerning short-term limited legal service programs, and the committee approved the publication of two proposed formal ethics opinions for comment: Proposed 2024 Formal Ethics Opinion 1, Use of Artificial Intelligence in a Law Practice (proposed opinion discusses a lawyer’s professional responsibility when using artificial intelligence in a law practice); and Proposed 2024 Formal Ethics Opinion 2, Withholding Criminal Discovery in District Court (proposed opinion concludes that (i) it is ethically permissible for a prosecutor to condition a plea offer on withholding discovery in district court provided the prosecutor complies with Rule 3.8 and any other constitutional requirements, and (ii) a defense lawyer may participate in such a plea deal upon communication to and consent by the defendant). Comment on the proposed opinions may be sent to: ethicscomments@ncbar.gov. Please submit comments by October 14, 2024.

GRIEVANCE COMMITTEE 

During the quarter, the Grievance Committee considered 321 files. The committee dismissed 279 files. Six files involving five lawyers were referred for trial before the Disciplinary Hearing Commission. Eleven lawyers were referred to the Trust Accounting Compliance Program. One lawyer was referred to the Lawyer Assistance Program. Three files were dismissed with letters of caution and 11 files were dismissed with letters of warning. The committee authorized admonitions in three files, reprimands in six files, and a censure in one file.

RULE AMENDMENTS  

For the complete text of the proposed rules amendments and new rules, visit the State Bar website.

Senate Bill 790 (2023-2024 Session) - North Carolina General Assembly (ncleg.gov) was ratified on June 20, 2024. The legislation makes the following changes to the State Bar's grievance process:

• Requires the State Bar to provide a copy of the complaint and supporting materials when issuing a letter of notice to a respondent attorney and, when requested by the respondent attorney, to provide certain other materials and information when recommending disciplinary action against the respondent attorney. 
• Allows a respondent attorney to address the Grievance Committee and to hear the Office of Counsel's presentation to the Grievance Committee. 
• Allows the chair of the Grievance Committee to designate a person as a “vexatious complainant” if the complainant has initiated grievances to the State Bar that warrant dismissal in a manner and volume that amounts to an "abuse of the bar disciplinary process."
• Specifies who may file a grievance with the State Bar (standing).
• Directs the State Bar to adopt rules to implement an expungement process for certain disciplinary actions. 

Proposed Rule Amendments and Procedures to Implement Legislative Requirements

27 N.C.A.C. .01, Section .0100, Discipline and Disability Rules

• Rule .0111, Grievances; Form and Filing
• Rule .0112, Investigations; Initial Determination; Notice and Response; Committee Referrals
• Rule .0113, Proceedings Before the Grievance Committee
• Rule .0136, Expungement or Sealing of Discipline [NEW RULE]
• Rule .0137, Vexatious Complainants [NEW RULE]

To implement the legislative requirements, the council is publishing for comment proposed amendments to three existing discipline rules (Rules .0111, .0112, and .0113) and two new discipline rules (Rules .0136 and .0137). In addition to implementing the legislative requirements, proposed amendments to the existing rules improve clarity and modernize terminology. The proposed amendments to Rule .0112(k) will also create a voluntary, individualized grievance deferral program in which respondents collaborate with the Office of Counsel to create a deferral agreement that is tailored to address the respondent’s underlying misconduct.

Proposed Adoption of Temporary Rule to Implement Legislative Requirements on Expungement of Discipline

27 N.C.A.C. .01B, Discipline and Disability Rules

• Rule .0136, Expungement or Sealing of Discipline

The recent legislation instructs the State Bar to adopt temporary rules to implement an expungement process by October 31, 2024, and to adopt permanent rules by January 31, 2025. To comply with this schedule, the council adopted Rule .0136 as a temporary rule effective October 31, 2024 (while also publishing the rule for comment—see above—as a procedurally necessary precursor to adoption as a final rule by the council and transmission to the chief justice for final approval).

Authorization to Use Temporary Procedures to Implement Changes to the Grievance Process, Standing Requirements, and Designate a Vexatious Complainant

Pursuant to the legislation, certain procedural changes to the grievance process must apply to grievances filed on or after August 1, 2024. To comply with the legislation, the council authorized the Grievance Committee and the Office of Counsel to follow the provisions in the proposed amendments to Rules .0111, .0112, and .0113, and proposed new Rule .0137 (in its entirety), effective August 1, 2024, until permanent rules are adopted and approved through the rule-making process.

Proposed Amendments to Rules Governing the Specialization Program for Publication

27 N.C.A.C. .01D, Section .2600, Certification Standards for the Immigration Law Specialty

• Rule .2605, Standards for Certification as a Specialist in Immigration Law
• Rule .2606, Standards for Continued Certification as a Specialist

The rule amendments proposed by the Board of Legal Specialization reduce the CLE requirements for initial certification and for recertification as an immigration law specialist.

Amendments Pending Approval by the Supreme Court

At its meeting on July 19, 2024, the North Carolina State Bar Council voted to adopt the following rule amendments for transmission to the North Carolina Supreme Court for its approval. 

Proposed Amendments to the Rules Governing the Administrative Committee

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

• Rule .0901, Transfer to Inactive Status

The proposed amendments create a process for members to transfer directly from administrative suspension status to inactive status. They also update the requirements for transfer from active status to inactive status.

Proposed Amendments to the Disciplinary Rule on the Trust Account Compliance Program (TAC Program) and the Random Audit Program

27 N.C. Admin. Code 1B, Section .0100, Discipline and Disability Rules

• Rule .0132, Trust Accounts; Audit

The proposed amendments to Rule .0132 will facilitate the deferral of grievances to the TAC Program and the referral of lawyers who “fail” a random audit to the TAC Program.