Proposed Rule Amendments

The Process and Your Comments

Proposed amendments to the Rules of the North Carolina State Bar are published for comment during the quarter after the council of the North Carolina State Bar approves their publication. The proposed amendments are published in the North Carolina State Bar's Journal and on this website. After publication for comment, the proposed rule amendments are considered for adoption by the council at its next quarterly meeting. If adopted, the rule amendments are submitted to the North Carolina Supreme Court for approval. Amendments become effective upon approval by the court. Unless otherwise noted, proposed additions to rules appear in in bold and underlined print, deletions are interlined. Proposed amendments to the Rules of Professional Conduct appear at the end of the page.

The State Bar welcomes your comments regarding proposed amendments to the rules. Please send a written response to L. Thomas Lunsford II, The North Carolina State Bar, PO Box 25908, Raleigh, NC 27611, or comments@ncbar.gov, by June 30, 2015.

 

Amendments Approved by the Supreme Court

On March 5, 2015, the North Carolina Supreme Court approved the following amendments to the rules of the North Carolina State Bar (for the complete text, see the Fall 2014 and Winter 2014 editions of the Journal or visit the State Bar website):

Amendments to the Discipline and Disability Rules

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

The amendments change the name of the Trust Accounting Supervisory Program to the Trust Account Compliance Program.

Amendments to the Rules Governing the Board of Law Examiners

27 N.C.A.C. 1C, Section .0100, Board of Law Examiners

The amendments will allow graduates of law schools that are not accredited by the American Bar Association to qualify for admission to the North Carolina State Bar under certain circumstances.

Amendments to the Rules Governing the Administration of the CLE Program

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

The amendments change the name of the mandatory CLE program for new lawyers from “Professionalism for New Admittees” to “Professionalism for New Attorneys” (PNA Program) and permit the Board of Continuing Education to approve alternative timeframes for the PNA Program, thereby giving CLE providers more flexibility to be creative in their presentations of the program.

Amendments to The Plan of Legal Specialization

27 N.C.A.C. 1D, Section .1700, The Plan of Legal Specialization

The amendments eliminate the possibility that one person can serve as board chair for an excessive period of time and enable a logical succession of the chairmanship among the members of the board.

Amendments to the Standards for Certification as a Specialist

27 N.C.A.C. 1D, Section .2500, Certification Standards for the Criminal Law Specialty, and Section .2700, Certification Standards for Workers’ Compensation Law Specialty

The amendments to the criminal law standards reduce the number of practice hours required to meet the substantial involvement standard for the juvenile delinquency subspecialty and allow for additional forms of practice equivalents for the subspecialty. In the standards for the workers’ compensation specialty, the amendments add insurance as a related field in which a lawyer may earn CLE credits for certification and recertification.

Amendments to the Standards for Certification of Paralegals

27 N.C.A.C. 1G, Section .0100, The Plan for Certification of Paralegals

The amendments permit a degree from a foreign educational institution to satisfy part of the educational requirements for certification if the foreign degree is evaluated by a qualified credential evaluation service and found to be equivalent to an associate or bachelor’s degree from an accredited US institution.

Amendments to the Rules of Professional Conduct to Address Bullying and Intimidation

27 N.C.A.C. 2, Rules of Professional Conduct

The amendment to Rule 1.0, Terminology, clarifies that the term “tribunal” encompasses any proceeding of a court including a deposition. The amendments to the comments to Rule 3.5, Impartiality and Decorum of the Tribunal, Rule 4.4 Respect for Rights of Third Persons, and Rule 8.4, Misconduct, confirm that conduct that constitutes bullying and attempts to intimidate are prohibited by existing provisions of these Rules of Professional Conduct.

Amendments to the Rules of the Board of Law Examiners

Rules Governing Admission to the Practice of Law in the State of North Carolina, Section .0100, Organization
The amendments change the street and mailing address listed for the offices of the Board of Law Examiners to reflect the board’s move to a new location.

Amendments Pending Approval by the Supreme Court

At its meeting on April 17, 2015, the council of the North Carolina State Bar voted to adopt the following rule amendments for transmission to the North Carolina Supreme Court for approval (for the complete text of all proposed rule amendments see the Spring 2015 edition of the Journal unless otherwise indicated):

Proposed Amendments to the Rule on Pro Bono Practice by Out-of-State Lawyers

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

The proposed amendments allow an out-of-state lawyer employed by a nonprofit corporation rendering legal services to indigent persons to obtain pro bono practice status during the pendency of the lawyer’s application for admission to the North Carolina State Bar. In addition, the proposed amendments clarify that an out-of-state lawyer employed as in-house counsel for a business organization with offices in North Carolina may petition and qualify for pro bono practice status.

Proposed Amendments to the Hearing and Appeal Rules of the Board of Legal Specialization

27 N.C.A.C. 1D, Section .1800, Hearing and Appeal Rules of the Board of Legal Specialization

The proposed amendments explain that an “incomplete application” does not include an application with respect to which fewer than five completed peer review forms have been timely filed with the Board of Legal Specialization

Proposed Amendments to the Rules of Professional Conduct

27 N.C.A.C. 2, The Rules of Professional Conduct

In the Spring 2014 edition of the Journal, proposed amendments to several Rules of Professional Conduct were published for comment. The amendments were proposed after study of the ABA Ethics 20/20 Commission’s recommended amendments to the ABA Model Rules of Professional Conduct in response to changes in technology and globalization. The proposed amendments to the North Carolina Rules included amendments to the titles of three rules. Unfortunately, the title amendments were not forwarded to the Supreme Court when the proposed rule amendments were sent to the Court for approval. The amendments to the text of the rules were approved by the Court on October 2, 2014. The following amendments to rule titles are now pending approval of the Court:

Rule 5.3, Responsibilities Regarding Nonlawyer Assistants Assistance

Rule 5.5, Unauthorized Practice of Law; Multijurisdictional Practice of Law

Rule 7.3, Direct Contact with Potential Solicitation of Clients

For the complete text of the amendments to the Rules of Professional Conduct, see the Spring 2014 edition of the Journal or visit the State Bar website.

Proposed Amendments
Below are the rule amendments from the most recent meeting of the State Bar Council in April 2015.


Proposed Amendments to Create a Procedure for Permanent Relinquishment of Membership in the State Bar

27 N.C.A.C. 1A, Section .0300, Election and Succession of Officers, and Section .0400, Duties of Officers

 

Presently, there are only two classes of membership in the State Bar, active and inactive, and there is no procedure for resigning from—i.e., relinquishing membership in—the State Bar. The proposed amendments create such a procedure. To permit the inclusion of the relinquishment rules in an appropriate location within Subchapter 1A of the State Bar rules, it is proposed that the rules currently in Section .0300, Election and Succession of Officers, be moved to the beginning of Section .0400, Duties of Officers, and that Section .0400 be renamed “Election, Succession, and Duties of Officers.” Section .0300 will be renamed and devoted to proposed rules on permanent relinquishment of membership in the State Bar.

 

All proposed rules under Section .0300 are new. Therefore, bold, underlined print is not used below to indicate proposed additions other than to the titles to Section .0300 and Section .0400. Rules .0401 to .0407 will contain the rules (currently Rule .0301 through Rule .0307) being relocated, unchanged, from Section .0300 and are not printed below.

 

Section .0300 Election and Succession of Officers Permanent Relinquishment of Membership in the State Bar

 

[All rules currently in this section withdrawn and relocated, in their entirety, to the beginning of Section .0400.]

 

.0301 Effect of Relinquishment.

 

(a) Order of Relinquishment. Pursuant to the authority of the council to resolve questions pertaining to membership status as specified in N.C. Gen. Stat. 84-23, the council may allow a member of the State Bar to relinquish his or her membership in the State Bar subject to the conditions set forth in this section. Upon the satisfaction of those conditions, the council may enter an order declaring that the individual is no longer a member of the State Bar and no longer has the privileges of membership set forth in N.C. Gen. Stat. 84-16 and in the rules of the State Bar.

 

(b) Requirements to Return to Practice of Law. If an individual who has been granted relinquishment of membership desires to return to the practice of law in the state of North Carolina, he or she must apply to the North Carolina Board of Law Examiners and satisfy all of the requirements to obtain a license to practice law in the state of North Carolina as if for the first time.

 

(c) Prohibition on Representations. Effective upon the date of the order of relinquishment, the former licensee is prohibited from representing that he or she is

 

(1) a lawyer in North Carolina,

 

(2) licensed to practice law in North Carolina,

 

(3) able to provide legal services in North Carolina, or

 

(4) a member of the North Carolina State Bar.

 

.0302 Conditions for Relinquishment

 

A member of the State Bar may petition the council to enter an order of relinquishment. An order of relinquishment shall be granted if the petition demonstrates that the following conditions have been satisfied:

 

(a) Unresolved Complaints. No open, unresolved allegations of professional misconduct are pending against the petitioner in any jurisdiction.

 

(b) No Financial Obligation to State Bar. The petitioner 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, and all fees, fines, and penalties owed to the Board of Continuing Legal Education.

 

(c) Wind Down of Law Practice. The petitioner has completed the wind down of his or her law practice in compliance with the procedure for winding down the law practice of a suspended or disbarred lawyer set forth in paragraphs (a), (b), and (e) of Rule .0124 of Subchapter 1B and with any other condition on the wind down of a law practice imposed by state, federal, and administrative law. The petition must describe the wind down of the law practice with specificity.

 

(d) Acknowledgment. The petitioner acknowledges the following: the State Bar’s authority to take the actions described in Rule .0303 of this section; that the sole mechanism for regaining active membership status with the State Bar is to apply to the North Carolina Board of Law Examiners for admission and to satisfy all of the requirements to obtain a license to practice law in the state of North Carolina as if for the first time; and that he or she is not entitled to confidentiality under Rule .0129 of Subchapter 1B of any information relating to professional misconduct received by the State Bar after the date of the entry of the order of relinquishment.

 

(e) Address. The petition includes a physical address at which the State Bar can communicate with the petitioner.

 

(f) Notarized Petition. The petition is signed in the presence of a notary and notarized.

 

.0303 Allegations of Misconduct Received by the State Bar On or After the Date of Relinquishment

 

(a) Post Relinquishment Action by State Bar. Relinquishment is not a bar to the initiation or investigation of allegations of professional misconduct and shall not prevent the State Bar from prosecuting a disciplinary action against the former licensee for any violation of the Rules of Professional Conduct that occurred prior to the date of the order of relinquishment.

 

(b) Procedure for Investigation. Allegations of misconduct shall be investigated pursuant to the procedures set forth in Section .0100 of Subchapter 1B.

 

(c) Release of Information from Investigation. Information from the investigation of allegations of misconduct shall be retained in the State Bar’s records and may be released by the State Bar as required by law or as necessary to protect the interests of the public. Release may be made to, but is not limited to, the North Carolina Board of Law Examiners, any professional licensing authority, or any law enforcement or regulatory body investigating the former licensee.

 

Section .0400 Election, Succession, and Duties of Officers

 

.0401 Officers

[Relocated Rule .0301 from Subchapter 1A, Section .0300]

 

.0402 Eligibility for Office

[Relocated Rule .0302 from Subchapter 1A, Section .0300]

 

.0403 Term of Office

[Relocated Rule .0303 from Subchapter 1A, Section .0300]

 

.0404 Elections

[Relocated Rule .0304 from Subchapter 1A, Section .0300]

 

.0405 Nominating Committee

[Relocated Rule .0305 from Subchapter 1A, Section .0300]

 

.0406 Vacancies and Succession

[Relocated Rule .0306 from Subchapter 1A, Section .0300]

 

.0407 Removal from Office

[Relocated Rule .0307 from Subchapter 1A, Section .0300]

.0401 .0408 Compensation of Officers

 

[Re-numbering remaining rules.]

 

 


Proposed Amendments to the Rules Governing the Training of Law Students

27 N.C.A.C. 1C, Section .0200, Rules Governing Practical Training of Law Students

 

The proposed rule amendments eliminate the requirement that supervising lawyers in a law school clinic must be full-time faculty members. This will allow law schools to employ, on a part-time basis, adjunct faculty to supervise students in a clinic. The rule amendments will give law schools more flexibility in designing and implementing new clinical programs.

 

.0205 Supervision

 

(a) A supervising attorney shall

 

(1) be an active member of the North Carolina State Bar who has practiced law as a full-time occupation for at least two years;

 

(2) supervise no more than two legal interns concurrently, provided, however, there is no limit on the number of legal interns who may be supervised concurrently by an attorney who is a full or part-time member of a law school’s faculty or staff whose primary responsibility as a faculty member is supervising legal interns in a legal aid clinic and, further provided, that an attorney who supervises legal interns through an externship or outplacement program of a law school legal aid clinic may supervise up to five legal interns;

 

(3) assume personal professional responsibility for any work undertaken by a legal intern while under his or her supervision;

 

(4) ...

 


Proposed Amendments to the Specialization Hearing and Appeal Rules

27 N.C.A.C. 1D, Section .1800, Hearing and Appeal Rules of the Board of Legal Specialization

 

The proposed amendments increase the time an applicant has to review a failed examination after receiving notice of failure and shorten the time an applicant has to file a petition for grade review.

 

.1803 Reconsideration of Failed Examination

 

(a) Review of Examination. Within 30 45 days of the date of the notice from the board’s executive director that the applicant has failed the written examination, the applicant may review his or her examination at the office of the board at a time designated by the executive director...

 

(b) Petition for Grade Review. If, after reviewing the examination, the applicant feels an error or errors were made in the grading, the applicant may file with the executive director a petition for grade review. The petition must be filed within 45 30 days of the date of the notice of failure after the last day of the exam review period and should set out in detail the examination questions and answers which, in the opinion of the applicant, have been incorrectly graded...

 

(c) ...

 


Proposed Amendments to the Specialization Rules on CLE

27 N.C.A.C. 1D, Section .1900, Rules Concerning the Accreditation of Continuing Legal Education for the Purposes of the Board of Legal Specialization

 

The proposed rule amendments make the specialization rules on CLE consistent with the general CLE accreditation rules by allowing an applicant for specialty certification or recertification to satisfy the CLE requirements by attending prerecorded, simultaneously broadcast, and online programs.

 

.1903 Accreditation Standards for Lecture-Type CLE Activities

 

(a) ...

 

(b) ...

 

(c) The CLE activity may be live; prerecorded in audio or video format; simultaneously broadcast by telephone, satellite, live web streaming (webcasting), or video conferencing; or online. presented by either live instruction or mechanical or electronically recorded or reproduced material. If electronic transmission is used, an instructor should be present for comment or to answer questions. The board may reduce the hours of credit for electronic transmission when no instructor is present. A prerecorded audio or video CLE activity must comply with the minimum registration and verification of attendance requirements in Rule .1604(d) of this chapter.

 

(d) ...


Proposed Amendments to the Rules on Trust Accounting in the Rules of Professional Conduct

27 N.C.A.C. 2, Rules of Professional Conduct

 

In the Spring 2015 edition of the Journal, proposed amendments to Rule 1.15, Safekeeping Property (and its subparts, Rule 1.15-1, Rule 1.15-2, and Rule 1.15-3), and to Rule 8.5, Misconduct, were published. The amendments were proposed primarily to add requirements that will facilitate the early detection of internal theft and errors. A new subpart, Rule 1.15-4, Trust Account Management in Multiple-Lawyer Firm, was proposed to create a procedure whereby a firm with two or more lawyers may designate a firm principal to serve as the “trust account oversight officer” to oversee the administration of the firm’s general trust accounts in conformity with the requirements of Rule 1.15.

 

In response to comments received after publication, additional amendments are proposed. These additional amendments better distinguish fiduciary accounts and general trust accounts and the duties relative to these accounts; explain what is intended by a “representative transaction” in Rule 1.15-3(i); and distinguish professional fiduciary services from legal services.

 

The additional amendments are shown below in red text. Rule 1.15-4 is an entirely new rule and, therefore, Only the revisions since last published appear in bold, underlined print. No comments were received on the proposed amendments to the official comments to Rule 1.15 and Rule 8.3, Reporting Professional Misconduct. Therefore, the proposed amendments to the comments are not republished.

 

Rule 1.15 Safekeeping Property

 

This rule has three four subparts: Rule 1.15-1, Definitions; Rule 1.15-2, General Rules; and Rule 1.15-3, Records and Accountings; and Rule 1.15-4, Trust Account Management in Multiple-Lawyer Firm. The subparts set forth the requirements for preserving client property, including the requirements for preserving client property in a lawyer’s trust account. The comment for all three four subparts as well as the annotations appear after the text for Rule 1.15-3 1.15-4.

 

Rule 1.15-1 Definitions

 

For purposes of this Rule 1.15, the following definitions apply:

 

(a) “Bank” denotes a bank, or savings and loan association, or credit union chartered under North Carolina or federal law.

 

(b) ...

 

(k) “Legal services” denotes services (other than professional fiduciary services) rendered by a lawyer in a client-lawyer relationship.

 

Rule 1.15-2 General Rules

 

(a) Entrusted Property.

...

 

(f) Segregation of Lawyer’s Funds. Funds in Trust Accounts. A trust or fiduciary account may only hold trust funds entrusted property. Third party funds that are not received by or placed under the control of the lawyer in connection with the performance of legal services or professional fiduciary services may not be deposited or maintained in a trust or fiduciary account. Additionally, No no funds belonging to a lawyer shall be deposited or maintained in a trust account or fiduciary account of the lawyer except:

 

(1) funds sufficient to open or maintain an account, pay any bank service charges, or pay any tax levied on the account; or

 

(2) funds belonging in part to a client or other third party and in part currently or conditionally to the lawyer.

 

(g) Mixed Funds Deposited Intact. When funds belonging to the lawyer are received in combination with funds belonging to the client or other persons, all of the funds shall be deposited intact. The amounts currently or conditionally belonging to the lawyer shall be identified on the deposit slip or other record. After the deposit has been finally credited to the account, the lawyer may shall withdraw the amounts to which the lawyer is or becomes entitled. If the lawyer’s entitlement is disputed, the disputed amounts shall remain in the trust account or fiduciary account until the dispute is resolved.

 

(h) Items Payable to Lawyer. Any item drawn on a trust account or fiduciary account for the payment of the lawyer’s fees or expenses shall be made payable to the lawyer and shall indicate on the item by client name, file number, or other identifying information the client from whose balance on which the item is drawn. Any item that does not include capture this information may not be used to withdraw funds from a trust account or a fiduciary account for payment of the lawyer’s fees or expenses.

 

(i) No Bearer Items. No item shall be drawn on a trust account or fiduciary account made payable to cash or bearer and no cash shall be withdrawn from a trust account or fiduciary account by any means of a debit card.

 

(j) Debit Cards Prohibited. Use of a debit card to withdraw funds from a general or dedicated trust account or a fiduciary account is prohibited.


(j)
(k) No Personal Benefit to Lawyer or Third Party. A lawyer shall not use or pledge any entrusted property to obtain credit or other personal benefit for the lawyer or any person other than the legal or beneficial owner of that property.


(k)
(l) Bank Directive.

...

 

[Re-lettering intervening paragraphs.]


(o)
(p) Duty to Report Misappropriation. A lawyer who discovers or reasonably believes that entrusted property has been misappropriated or misapplied shall promptly inform the trust account compliance counsel (TACC) in the North Carolina State Bar Office of Counsel. Discovery of intentional theft or fraud must be reported to the TACC immediately. When an accounting or bank error results in an unintentional and inadvertent use of one client’s trust funds to pay the obligations of another client, the event must be reported unless the misapplication is discovered and rectified on or before the next quarterly reconciliation required by Rule 1.15-3(d)(1). This rule requires disclosure of information otherwise protected by Rule 1.6 if necessary to report the misappropriation or misapplication.


(p)
(q) Interest on Deposited Funds.

...

(q) (r) Abandoned Property.

...

(s) Signature on Trust Checks.

 

(1) Checks drawn on a trust account must be signed by a lawyer, or by an employee who is not responsible for performing monthly or quarterly reconciliations and who is supervised by a lawyer. Prior to exercising signature authority, a lawyer or supervised employee shall take a one-hour trust account management continuing legal education (CLE) course approved by the State Bar for this purpose. The CLE course must be taken at least once for every law firm at which the lawyer or the supervised employee is given signature authority.

 

(2) Trust account checks may not be signed using signature stamps, preprinted signature lines on checks, or electronic signatures.

 

Rule 1.15-3 Records and Accountings

 

(a) Check Format...

 

(b) Minimum Records for Accounts at Banks. The minimum records required for general trust accounts, dedicated trust accounts, and fiduciary accounts maintained at a bank shall consist of the following:

 

(1) ...;

 

(2) all canceled checks or other items drawn on the account, or printed digital images thereof furnished by the bank, showing the amount, date, and recipient of the disbursement, and, in the case of a general trust account, the client name, file number, or other identifying information of the client from whose client balance against which each item is drawn, provided, that:...

...

 

(d) Reconciliations of General Trust Accounts.

 

(1) Quarterly Reconciliations. At least quarterly, the individual client balances shown on the ledger of a general trust account must be totaled and reconciled with the current bank statement balance for the trust account as a whole. For each general trust account, a printed reconciliation report shall be prepared at least quarterly. Each reconciliation report shall show all of the following balances and verify that they are identical:

 

(A) The balance that appears in the general ledger as of the reporting date;

 

(B) The total of all subsidiary ledger balances in the general trust account, determined by listing and totaling the positive balances in the individual client ledgers and the administrative ledger maintained for servicing the account, as of the reporting date; and

 

(C) The adjusted bank balance, determined by adding outstanding deposits and other credits to the ending balance in the monthly bank statement and subtracting outstanding checks and other deductions from the balance in the monthly statement.

 

(2) Monthly Reconciliations. Each month, the balance of the trust account as shown on the lawyer’s records shall be reconciled with the current bank statement balance for the trust account.

 

(3) The lawyer shall review, sign, date, and retain a printed copy of the reconciliations of the general trust account for a period of six years in accordance with Rule 1.15-3(g).

 

(e) Accountings for Trust Funds.

...

(i) Reviews.

 

(1) Each month, for each general trust account, dedicated trust account, and fiduciary account, the lawyer shall review the bank statement and cancelled checks for the month covered by the bank statement.

 

(2) Each quarter, for each general trust account, dedicated trust account, and fiduciary account, the lawyer shall review the statement of costs and receipts, client ledger, and cancelled checks of a random sample of representative transactions completed during the quarter to verify that the disbursements were properly made. The transactions reviewed must involve multiple disbursements unless no such transactions are processed through the account, in which case a single disbursement is considered a transaction for the purpose of this paragraph. A sample of three representative transactions shall satisfy this requirement, but a larger sample may be advisable.

 

(3) The lawyer shall take the necessary steps to investigate, identify, and resolve within ten days any discrepancies discovered during the monthly and quarterly reviews.

 

(4) A report of each monthly and quarterly review, including a description of the review, the transactions sampled, and any remedial action taken, shall be prepared. The lawyer shall sign, date, and retain a printed copy of the report and associated documentation for a period of six years in accordance with Rule 1.15-3(g).

 

(j) Retention of Records in Electronic Format. Any printed or paper report required by this rule may be saved, for the required period, in an electronic format provided the original paper report was signed and dated at the time of preparation and the electronic copy is retained in a format that cannot be electronically manipulated, such as PDF.

 

Rule 1.15-4, Trust Account Management in Multiple-Lawyer Firm

 

(a) Trust Account Oversight Officer (TAOO).

 

Lawyers in a law firm of two or more lawyers may designate a partner in the firm to serve as the trust account oversight officer (TAOO) for any general trust account into which more than one firm lawyer deposits fiduciary trust funds. The TAOO and the partners of the firm, or those with comparable managerial authority (managing lawyers), shall agree in writing that the TAOO will oversee the administration of any such trust account in conformity with the requirements of Rule 1.15, including, specifically, the requirements of this Rule 1.15-4. More than one partner may be designated as a TAOO for a law firm.

 

(b) Limitations on Delegation.

 

Designation of a TAOO does not relieve any lawyer in the law firm of responsibility for the following:

 

(1) oversight of the administration of any dedicated trust account or fiduciary account that is associated with a legal matter for which the lawyer is primary legal counsel or with the lawyer’s performance of professional fiduciary services; and

 

(2) review of the disbursement sheets or statements of costs and receipts, client ledgers, and trust account balances for those legal matters for which the lawyer is primary legal counsel.

 

(c) Training of the TAOO.

 

(1) Within the six months prior to beginning service as a TAOO, a lawyer shall,

 

(A) read all subparts and comments to Rule 1.15, all formal ethics opinions of the North Carolina State Bar interpreting Rule 1.15, and the North Carolina State Bar Trust Account Handbook;

 

(B) complete one hour of accredited continuing legal education (CLE) on trust account management approved by the State Bar for the purpose of training a lawyer to serve as a TAOO;

 

(C) complete two hours of training (live, online, or self-guided) presented by a qualified educational provider on one or more of the following topics: (i) financial fraud, (ii) safeguarding funds from embezzlement, (iii) risk assessment and management for bank accounts, (iv) information security and online banking, or (v) accounting basics; and

 

(D) become familiar with the law firm’s accounting system for trust accounts.

 

(2) During each year of service as a TAOO, the designated lawyer shall attend one hour of accredited continuing legal education (CLE) on trust account management approved by the State Bar for the purpose of training a TAOO or one hour of training, presented by a qualified educational provider, on one or more of the subjects listed in paragraph (c)(1)(C).

 

(d) Designation and Annual Certification.

 

The written agreement designating a lawyer as the TAOO described in paragraph (a) shall contain the following:

 

(1) A statement by the TAOO that the TAOO agrees to oversee the operation of the firm’s general trust accounts in compliance with the requirements of all subparts of Rule 1.15, specifically including the mandatory oversight measures in paragraph (e) of this rule;

 

(2) Identification of the trust accounts that the TAOO will oversee;

 

(3) An acknowledgement that the TAOO has completed the training described in paragraph (c)(1) and a description of that training;

 

(4) A statement certifying that the TAOO understands the law firm’s accounting system for trust accounts; and

 

(5) An acknowledgement that the lawyers in the firm remain professionally responsible for the operation of the firm’s trust accounts in compliance with Rule 1.15.

 

Each year on the anniversary of the execution of the agreement, the TAOO and the managing lawyers shall execute a statement confirming the continuing designation of the lawyer as the TAOO, certifying compliance with the requirements of this rule, describing the training undertaken by the TAOO as required by paragraph (c)(2), and reciting the statements required by subparagraphs (d)(1), (2), (4), and (5). During the lawyer’s tenure as TAOO and for six years thereafter, the agreement and all subsequent annual statements shall be maintained with the trust account records (see Rule 1.15-3(g)).

 

(e) Mandatory Oversight Measures.

 

In addition to any other record keeping or accounting requirement set forth in Rule 1.15-2 and Rule 1.15-3, the firm shall adopt a written policy detailing the firm’s trust account management procedures which shall annually be reviewed, updated, and signed by the TAOO and the managing lawyers. Each version of the policy shall be retained for the minimum record keeping period set forth in Rule 1.15-3(g).


Proposed Amendment to Rule 5.6 of The Rules of Professional Conduct

27 N.C.A.C. 2, Rules of Professional Conduct

 

The proposed amendments to Rule 5.6, Restrictions on Right to Practice, clarify that the prohibition on participation in a settlement agreement that restricts a lawyer’s right to practice applies to settlement agreements between private parties and the government, not just agreements between private parties. The proposed amendment to the official comment explains that the prohibition does not apply to a plea agreement or other settlement of a criminal matter or to a disciplinary case in which the accused is a lawyer.

 

Rule 5.6 Restrictions on Right to Practice

 

A lawyer shall not participate in offering or making:

 

(a) …; or

 

(b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy between private parties.

 

Comment

 

[1] ….

 

[3] This Rule does not prohibit restrictions that may be included in the terms of the sale of a law practice pursuant to Rule 1.17. The Rule also does not prohibit restrictions on a lawyer’s right to practice that are included in a plea agreement or other settlement of a criminal matter or the resolution of a disciplinary proceeding where the accused is a lawyer.

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