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.

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, 2009.

Below are the rule amendments from the most recent meeting of the State Bar Council

Proposed Amendments to Codify the Rulemaking Procedures of the State Bar

27 N.C.A.C. 1A, Section .1400, Rulemaking Procedures

Amendment Pending Approval of the Supreme Court

Although the State Bar Council consistently follows a specific procedure for adopting and amending the rules of the State Bar, the procedure itself has never been codified in the official rules of the State Bar. The following proposed new section of the State Bar rules sets forth the procedure.

27 N.C.A.C. 1A Section .1400 Rulemaking Procedures

[Entire section is new and, therefore, does not appear in bold print.]

.1401 Publication for Comment

(a) As a condition precedent to adoption, a proposed rule or amendment to a rule must be published for comment as provided in subsection (c).

(b) A proposed rule or amendment to a rule must be presented to the Executive Committee and the council prior to publication for comment, and specifically approved for publication by both.

(c) A proposed rule or amendment to a rule must be published for comment in an official printed publication of the North Carolina State Bar that is mailed to the membership at least 30 days in advance of its final consideration by the council. The publication of any such proposal must be accompanied by a prominent statement inviting all interested parties to submit comment to the North Carolina State Bar at a specified postal or e-mail address prior to the next meeting of the Executive Committee, the date of which shall be set forth.

.1402 Review by the Executive Committee

At its next meeting following the publication or republication of any proposed rule or amendment to a rule, the Executive Committee shall review the proposal and any comment that has been received concerning the proposal. The Executive Committee shall then:

(a) recommend the proposal's adoption by the council;

(b) recommend the proposal's adoption by the council with nonsubstantive modification;

(d) defer consideration of the matter to its next regular business meeting;

(e) table the matter; or

(f) reject the proposal.

.1403 Action by the Council and Review by the North Carolina Supreme Court

(a) Whenever the Executive Committee recommends adoption of any proposed rule or amendment to a rule in accordance with the procedure set forth in Rule .1402 above, the council at its next regular business meeting shall consider the proposal, the Executive Committee's recommendation, and any comment received from interested parties, and:

(1) decide whether to adopt the proposed rule or amendment, subject to the approval of the North Carolina Supreme Court as described in G.S. 84-21;

(2) reject the proposed rule or amendment; or

(3) refer the matter back to the Executive Committee for reconsideration.

(b) Any proposed rule or amendment to a rule adopted by the council shall be transmitted by the secretary to the North Carolina Supreme Court for its review on a schedule approved by the Court, but in no event later than 120 days following the council's adoption of the proposed rule or amendment.

(c) No proposed rule or amendment to a rule adopted by the council shall take effect unless and until it is approved by order of the North Carolina Supreme Court.

(d) The secretary shall promptly transmit the official text of any proposed rule or amendment to a rule adopted by the council and approved by the North Carolina Supreme Court to the Office of Administrative Hearings for publication in the North Carolina Administrative Code.

(e) Any action taken by the council or the North Carolina Supreme Court in regard to any proposed rule or amendment to a rule shall be reported in the next issue of the printed publication referenced in Rule .1401 above.

Proposed Amendments to Eliminate Outdated References to Fee Arbitration

27 N.C.A.C. 1B, Section .0200, Rules Governing Judicial District Grievance Committees

Amendment Pending Approval of the Supreme Court

The proposed amendments eliminate references to "fee arbitration" and replace them with references to "fee dispute resolution" consistent with earlier changes to the rules for the fee dispute resolution program.

.0202 Jurisdiction & Authority of District Grievance Committees

(a) District Grievance Committees are Subject to the Rules of the North Carolina State Bar ...

(c) Grievances Referred to District Grievance Committee - The district grievance committee shall also investigate and consider such grievances as are referred to it for investigation by the counsel of the North Carolina State Bar.

(d) Grievances Involving Fee Disputes

(1) Notice to Complainant of Fee ~~Arbitration~~ Dispute Resolution Program. If a grievance filed initially with the district bar consists solely or in part of a fee dispute, the chairperson of the district grievance committee shall notify the complainant in writing within 10 working days of receipt of the grievance that the complainant may elect to participate in the North Carolina State Bar Fee Dispute ~~Arbitration~~ Resolution Program...

(3) Handling Claims Not Submitted to ~~Arbitration~~ Fee Dispute Resolution by Complainant - If the complainant elects not to participate in the State Bar's Fee Dispute ~~Arbitration~~ Resolution Program, or fails to notify the chairperson that he or she elects to participate within 20 days following mailing of the notice referred to in Rule .0202(d)(1) above, the grievance will be handled in the same manner as any other grievance filed with the district grievance committee.

(4) Referral to Fee Dispute ~~Arbitration~~ Resolution Program - Where a complainant timely elects to participate in fee ~~arbitration~~ dispute resolution, and the judicial district in which the respondent attorney maintains his or her principal office has a fee ~~arbitration~~ dispute resolution committee, the chairperson of the district grievance committee shall refer the portion of the grievance involving a fee dispute to the judicial district fee ~~arbitration~~ dispute resolution committee. If the judicial district in which the respondent attorney maintains his or her principal office does not have a fee ~~arbitration~~ dispute resolution committee, the chairperson of the district grievance committee shall refer the portion of the grievance involving a fee dispute to the State Bar Fee Dispute ~~Arbitration~~ Resolution Program for resolution. If the grievance consists entirely of a fee dispute, and the complainant timely elects to participate in ~~arbitration~~ fee dispute resolution, no grievance file will be established.

(e) ...

.0208 Letter to Complainant Where Local Grievance Alleges Fee Dispute Only

John Smith

Anywhere, NC

Re: Your complaint against Jane Doe

Dear Mr. Smith:

The [ ] district grievance committee has received your complaint against the above-listed attorney. Based upon our initial review of the materials which you submitted, it appears that your complaint involves a fee dispute. Accordingly, I would like to take this opportunity to notify you of the North Carolina State Bar Fee Dispute ~~Arbitration~~ Resolution Program. The program is designed to provide citizens with a means of resolving disputes over attorney fees at no cost to them and without going to court. A pamphlet which describes the program in greater detail is enclosed, along with an application form.

If you would like to participate in the fee ~~arbitration~~ dispute resolution program, please complete and return the form to me within 20 days of the date of this letter. If you decide to ~~go through arbitration~~ participate, ~~in mediation~~ no grievance file will be opened and the [ ] district bar grievance committee will take no other action against the attorney.

If you do not wish to participate in the fee ~~arbitration~~ dispute resolution program, you may elect to have your complaint investigated by the [ ] district grievance committee. If we do not hear from you within 20 days of the date of this letter, we will assume that you do not wish to participate in fee ~~arbitration~~ dispute resolution, and we will handle your complaint like any other grievance. However, the [ ] district grievance committee has no authority to attempt to resolve a fee dispute between an attorney and his or her client. Its sole function is to investigate your complaint and make a recommendation to the North Carolina State Bar regarding whether there is probable cause to believe that the attorney has violated one or more provisions of the Rules of Professional Conduct which govern attorneys in this state.

Thank you for your cooperation.

Sincerely yours,

[ ] Chairperson

[ ] District Bar Grievance Committee

cc: PERSONAL & CONFIDENTIAL

Director of Investigations, The NC State Bar

.0209 Letter to Complainant Where Local Grievance Alleges Fee Dispute and Other Violations

John Smith

Anywhere, NC

Re: Your complaint against Jane Doe

Dear Mr. Smith:

The [ ] district grievance committee has received your complaint against the above-listed attorney. Based upon our initial review of the materials which you submitted, it appears that your complaint involves a fee dispute as well as other possible violations of the rules of ethics. Accordingly, I would like to take this opportunity to notify you of the North Carolina State Bar Fee Dispute ~~Arbitration~~ Resolution Program. The program is designed to provide citizens with a means of resolving disputes over attorney fees at no cost to them and without going to court. A pamphlet which describes the program in greater detail is enclosed, along with an application form. Please be advised that our rules prevent the filing of a Request for Fee Dispute Resolution and a grievance at the same time.

If you would like to participate in the fee ~~arbitration~~ dispute resolution program, please complete and return the form to me within 20 days of the date of this letter. If you decide to ~~go through arbitration~~ participate, the fee ~~arbitration~~ dispute resolution committee will handle those portions of your complaint which involve an apparent fee dispute. ~~The remaining parts of your complaint which do not involve a fee dispute will be investigated by the [ ] district grievance committee.~~

If you do not wish to participate in the fee ~~arbitration~~ dispute resolution program, you may elect to have your entire complaint investigated by the [ ] district grievance committee. If we do not hear from you within 20 days of the date of this letter, we will assume that you do not wish to participate in fee ~~arbitration~~ dispute resolution, and we will handle your entire complaint like any other grievance. However, the [ ] district grievance committee has no authority to attempt to resolve a fee dispute between an attorney and his or her client. Its sole function is to investigate your complaint and make a recommendation to the North Carolina State Bar regarding whether there is probable cause to believe that the attorney has violated one or more provisions of the Rules of Professional Conduct which govern attorneys in this state.

Thank you for your cooperation.

Sincerely yours,

[ ] Chairperson

[ ] District Bar Grievance Committee

cc: PERSONAL & CONFIDENTIAL

Director of Investigations, The NC State Bar

Proposed Amendments to the Certification Standards for the Criminal Law Specialty

27 N.C.A.C. 1D, Section .2500 Certification Standards for the Criminal Law Specialty

Amendment Pending Approval of the Supreme Court

The proposed amendments clarify the examination requirements for applicants for certification in the subspecialty of criminal appellate practice.

.2505 Standards for Certification as a Specialist

Each applicant for certification as a specialist in criminal law, the subspecialty of state criminal law, or the subspecialty of criminal appellate practice shall meet the minimum standards set forth in Rule .1720 of this subchapter. In addition, each applicant shall meet the following standards for certification:

(a) Licensure and Practice

...

(e) Examination.

The applicant must pass a written examination designed to test the applicant's knowledge and ability.

(1) Terms...

(2) Subject Matter...

(3) ~~(B)~~ Required Examination Components.

(A) Criminal Law Specialty.

An applicant for certification in the specialty of criminal law ~~shall take~~ must pass part I ~~(covering state law)~~ of the examination on general topics in criminal law and part II of the examination on ~~(covering~~ federal and state criminal law~~) of the criminal law examination~~.

(B) State Criminal Law Subspecialty.

An applicant for certification in the subspecialty of state criminal law ~~shall take~~ must pass part I of the ~~criminal law~~ examination on general topics in criminal law and part III of the examination on state criminal law.

(C) ~~(3) Requirement of Criminal Law Examination for~~ Criminal Appellate Practice Subspecialty.

An applicant for certification in the subspecialty of criminal appellate practice must ~~successfully~~ pass the criminal appellate practice examination in addition to passing part I of the examination on general topics in criminal law and passing part II (on federal and state criminal law) or part III (on state criminal law) of the examination ~~in criminal law~~. If an applicant for certification in criminal appellate practice is already certified as a specialist in the specialty of criminal law or the subspecialty of state criminal law, ~~then~~ the applicant ~~must take part II (covering federal law) of the examination in criminal law as well as~~ is only required to take and pass the criminal appellate practice examination.

Proposed Amendments to the Rules Concerning the Registration of Prepaid Legal Service Plans

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

Amendment Pending Approval of the Supreme Court

The proposed amendments provide a procedure for the revocation of prepaid legal services plan registrations under certain circumstances. Additional proposed amendments conform the rules to existing practice, clarify the rules, and delete obsolete provisions.

In light of the extent of the amendments and because many of the rules in the existing section were moved and renumbered, existing Section .0300 will be replaced in its entirety as set forth below.

.0301 State Bar May Not Approve or Disapprove Plans

The North Carolina State Bar shall not approve or disapprove any prepaid legal services plan or render any legal opinion regarding any plan. The registration of any plan under these rules shall not be construed to indicate approval or disapproval of the plan.

.0302 Registration Requirement

A prepaid legal services plan ("plan") must be registered with the North Carolina State Bar before its implementation or operation in North Carolina. No licensed North Carolina attorney shall participate in a prepaid legal services plan in this state unless the plan has registered with the North Carolina State Bar and has complied with the rules set forth below. No prepaid legal services plan may operate in North Carolina unless at least one licensed North Carolina attorney has agreed to provide the legal services offered under the plan at all times during the operation of the plan. No prepaid legal services plan may operate in any manner that constitutes the unauthorized practice of law. No plan may operate until its registration has been accepted by the North Carolina State Bar in accordance with these rules.

.0303 Definition of Prepaid Plan

A prepaid legal services plan or a group legal services plan ("a plan") is any arrangement by which a person, firm or corporation, not otherwise authorized to engage in the practice of law, in exchange for any valuable consideration, offers to provide or arranges the provision of specified legal services that are paid for in advance of any immediate need for the specified legal services ("covered services"). In addition to covered services, a plan may provide specified legal services at fees that are less than what a non-member of the plan would normally pay. The North Carolina legal services offered by a plan must be provided by a North Carolina licensed lawyer who is not an employee, director, or owner of the plan. A prepaid legal services plan does not include the sale of an identified, limited legal service, such as drafting a will, for a fixed, one-time fee. [This definition is also found in Rule 7.3(d) of the Revised Rules of Professional Conduct.]

.0304 Registration Procedures

To register with the North Carolina State Bar, a prepaid legal services plan must comply with all of the following procedures for initial registration:

(a) A prepaid legal services plan seeking to operate in North Carolina must file an initial registration statement form with the secretary of the North Carolina State Bar, using a form promulgated by the State Bar, requesting registration.

(b) The owner or sponsor of the prepaid legal services plan must fully disclose in its initial registration statement form filed with the secretary at least the following information: the name of the plan, the name of the owner or sponsor of the plan, a principal address for the plan in North Carolina, a designated plan representative to whom communications with the State Bar will be directed, all persons or entities with ownership interest in the plan and the extent of their interests, all terms and conditions of the plan, all services provided under the plan and a schedule of benefits and fees or charges for the plan, a copy of all plan documents, a copy of all plan marketing and advertising materials, a copy of all plan contracts with its customers, a copy of all plan contracts with plan attorneys, and a list of all North Carolina attorneys who have agreed to participate in the plan. Additionally, the owner or sponsor will provide a detailed statement explaining how the plan meets the definition of a prepaid legal services plan in North Carolina. The owner or sponsor of the prepaid legal services plan will certify or acknowledge the veracity of the information contained in the registration statement, an understanding of the rules applicable to prepaid legal services plans, and an understanding of the law on unauthorized practice.

(c) The Authorized Practice Committee ("committee"), as a duly authorized standing committee of the North Carolina State Bar Council, shall review the initial registration statements submitted by each prepaid legal services plan to determine if the plan, as represented in its registration statement, meets the definition of a prepaid legal services plan as defined in Rule .0303, and therefore should be registered in North Carolina. The committee may appoint a subcommittee to conduct an initial review and to recommend to the committee whether the plan meets the definition of a prepaid legal services plan. The committee shall also establish any deadlines by when registrations may be submitted for review and any additional, necessary rules and procedures regarding the initial and annual registrations, and the revocation of registrations, of prepaid legal services plans.

.0305 Registration

The committee shall review the plan's initial registration statement form to determine whether the plan meets the definition of a prepaid legal services plan. If the plan, as submitted, meets the definition, the committee shall instruct the secretary to issue a certificate of registration to the plan's sponsor. If the plan does not meet the definition, the secretary shall advise the plan's sponsor of the committee's decision and the reasons therefore. Upon notice that the plan's registration has not been accepted, the plan sponsor may resubmit an amended plan registration form or request a hearing before the committee pursuant to Rule .0313 below.

.0306 Requirement to File Amendments

Amendments to prepaid legal services plans and to other documents required to be filed upon registration of such plans shall be filed in the office of the North Carolina State Bar no later than 30 days after the adoption of such amendments. Plan amendments must be submitted in the same manner as the initial registration and may not be implemented until the amended plan is registered in accordance with Rule .0305.

.0307 Annual Registration

After its initial registration, a prepaid legal services plan may continue to operate so long as it is operated as registered and it renews its registration annually on or before January 31 by filing a registration renewal form with the secretary and paying the annual registration fee.

.0308 Registration Fee

The initial and annual registration fees for each prepaid legal services plan shall be $100.

.0309 Index of Registered Plans

The North Carolina State Bar shall maintain an index of the prepaid legal services plans registered pursuant to these rules. All documents filed in compliance with this rule are considered public documents and shall be available for public inspection during normal business hours.

.0310 Advertising of State Bar Approval Prohibited

Any plan that advertises or otherwise represents that it is registered with the North Carolina State Bar shall include a clear and conspicuous statement within the advertisement or communication that registration with the North Carolina State Bar does not constitute approval of the plan by the State Bar.

.0311 State Bar Jurisdiction

The North Carolina State Bar retains jurisdiction of North Carolina licensed attorneys who participate in prepaid legal services plans and North Carolina licensed attorneys are subject to the rules and regulations of the North Carolina State Bar.

.0312 Revocation of Registration

Whenever it appears that a plan no longer meets the definition of a prepaid legal services plan; is marketed or operates in a manner that is not consistent with the representations made in the initial or amended registration statement and accompanying documents upon which the State Bar relied in registering the plan; is marketed or operates in a manner that would constitute the unauthorized practice of law; is marketed or operates in a manner that violates state or federal laws or regulations, including the rules and regulations of the North Carolina State Bar; or has failed to pay the annual registration fee, the committee may instruct the secretary to serve upon the plan's sponsor a notice to show cause why the plan's registration should not be revoked. The notice shall specify the plan's apparent deficiency and allow the plan's sponsor to file a written response within 30 days of service by sending the same to the secretary. If the sponsor fails to file a timely written response, the secretary shall issue an order revoking the plan's registration and shall serve the order upon the plan's sponsor. If a timely written response is filed, the secretary shall schedule a hearing, in accordance with Rule .0313, before the Authorized Practice Committee at its next regularly scheduled meeting and shall so notify the plan sponsor. All notices to show cause and orders required to be served herein may be served by certified mail to the last address provided for the plan sponsor on its most current registration statement or in accordance with Rule 4 of the North Carolina Rules of Civil Procedure and may be served by a State Bar investigator or any other person authorized by Rule 4 of the North Carolina Rules of Civil Procedure to serve process. The State Bar will not renew the annual registration of any plan that has received a notice to show cause under this section, but the plan may continue to operate under the prior registration until resolution of the show cause notice by the council.

.0313 Hearing before the Authorized Practice Committee

At any hearing concerning the registration of a prepaid legal services plan, the committee chair will preside to ensure that the hearing is conducted in accordance with these rules. The committee chair shall cause a record of the proceedings to be made. Strict compliance with the Rules of Evidence is not required, but may be used to guide the committee in the conduct of an orderly hearing. The plan sponsor may appear and be heard, be represented by counsel, and offer witnesses and documents in support of its position and cross-examine any adverse witnesses. The counsel may appear on behalf of the State Bar and be heard, and may offer witnesses and documents. The burden of proof shall be upon the sponsor to establish the plan meets the definition of a prepaid legal services plan, that all registration fees have been paid, and that the plan has operated in a manner consistent with all material representations made in its then current registration statement, the law, and these rules. If the sponsor carries its burden of proof, the plan's registration shall be accepted or continued. If the sponsor fails to carry its burden of proof, the committee shall recommend to the council that the plan's registration be denied or revoked.

.0314 Action by the Council

Upon the recommendation of the committee, the council may enter an order denying or revoking the registration of the plan. The order shall be effective when entered by the council. A copy of the order shall be served upon the plan's sponsor as prescribed in Rule .0312 above.

Proposed Amendments to the Rules on Discipline and Disability

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

Amendment Pending Approval of the Supreme Court

The proposed amendments to the discipline rules revise and replace the existing rule limiting the time period for filing grievances and provide guidelines for the Grievance Committee and for the Disciplinary Hearing Commission when imposing discipline.

.0111 Grievances: Form and Filing

(a) ....

~~(e)~~ Grievances must be instituted by the filing of a written or oral grievance with the North Carolina State Bar Grievance Committee or a district bar Grievance Committee within six years from the accrual of the offense, provided that grievances alleging fraud by a lawyer or an offense the discovery of which has been prevented by concealment by the accused lawyer shall not be barred until six years from the accrual of the offense or one year after discovery of the offense by the aggrieved party or by the North Carolina State Bar counsel, whichever is later. Notwithstanding the foregoing, grievances which allege felonious criminal misconduct may be filed with the Grievance Committee at any time.

~~(f)~~ (e) The counsel may decline to investigate the following allegations:....

(f) Limitation of Grievances.

(1) There is no time limitation for initiation of any grievance based upon a plea of guilty to a felony or upon conviction of a felony.

(2) There is no time limitation for initiation of any grievance based upon allegations of conduct that constitutes a felony, without regard to whether the lawyer is charged, prosecuted, or convicted of a crime for the conduct.

(3) There is no time limitation for initiation of any grievance based upon conduct that violates the Rules of Professional Conduct and has been found by a court to be intentional conduct by the lawyer. As used in this Rule, "court" means a state court of general jurisdiction of any state or of the District of Columbia or a federal court.

(4) All other grievances must be initiated within six years after the last act giving rise to the grievance.

.0113 Proceedings before the Grievance Committee

(a) ....

(h) If probable cause is found and the committee determines that a hearing is necessary, the chairperson will direct the counsel to prepare and file a complaint against the ~~defendant~~ respondent. If the committee finds probable cause but determines that no hearing is necessary, it will direct the counsel to prepare for the chairperson's signature an admonition, reprimand, or censure. If no probable cause is found, the grievance will be dismissed or dismissed with a letter of warning or a letter of caution.

(i)....

(k) Admonitions, Reprimands, and Censures

(1) If probable cause is found but it is determined by the Grievance Committee that a complaint and hearing are not warranted, the committee shall issue an admonition in cases in which the respondent has committed a minor violation of the Rules of Professional Conduct, a reprimand in cases in which the respondent's conduct has violated one or more provisions of the Rules of Professional Conduct and caused harm or potential harm to a client, the administration of justice, the profession, or members of the public, or a censure in cases in which the respondent has violated one or more provisions of the Rules of Professional Conduct and the harm or potential harm caused by the respondent is significant and protection of the public requires more serious discipline. To determine whether more serious discipline is necessary to protect the public or whether the violation is minor and less serious discipline is sufficient to protect the public, the committee shall consider the factors delineated in subparagraphs (2) and (3) below.

(2) Factors that shall be considered in determining whether protection of the public requires a censure include, but are not limited to, the following:

(A) prior discipline for the same or similar conduct;

(B) prior notification by the North Carolina State Bar of the wrongfulness of the conduct;

(C) refusal to acknowledge wrongful nature of conduct;

(D) lack of indication of reformation;

(E) likelihood of repetition of misconduct;

(F) uncooperative attitude toward disciplinary process;

(G) pattern of similar conduct;

(H) violation of the Rules of Professional Conduct in more than one unrelated matter;

(I) lack of efforts to rectify consequences of conduct;

(J) imposition of lesser discipline would fail to acknowledge the seriousness of the misconduct and would send the wrong message to members of the Bar and the public regarding the conduct expected of members of the Bar;

(K) notification contemporaneous with the conduct at issue of the wrongful nature of the conduct and failure to take remedial action.

(3) factors that shall be considered in determining whether the violation of the Rules is minor and warrants issuance of an admonition include, but are not limited to, the following:

(A) lack of prior discipline for same or similar conduct;

(B) recognition of wrongful nature of conduct;

(C) indication of reformation;

(D) indication that repetition of misconduct not likely;

(E) isolated incident;

(F) violation of the Rules of Professional Conduct in only one matter;

(G) lack of harm or potential harm to client, administration of justice, profession, or members of the public;

(H) efforts to rectify consequences of conduct;

(I) inexperience in the practice of law;

(J) imposition of admonition appropriately acknowledges the minor nature of the violation(s) of the Revised Rules of Professional Conduct;

(K) notification contemporaneous with the conduct at issue of the wrongful nature of the conduct resulting in efforts to take remedial action;

(L) personal or emotional problems contributing to the conduct at issue;

(M) successful participation in and completion of contract with Lawyer's Assistance Program where mental health or substance abuse issues contributed to the conduct at issue.

~~(k)~~ (l) Procedures for Admonitions and Reprimands

(1) If probable cause is found but it is determined by the Grievance Committee that a complaint and hearing are not warranted, the committee may issue an admonition or reprimand to the defendant, depending upon the seriousness of the violation of the Rules of Professional Conduct. A record of ~~such~~ any admonition or reprimand issued by the Grievance Committee will be maintained in the office of the secretary.

(2) A copy of the admonition or reprimand will be served upon the ~~defendant~~ respondent in person or by certified mail. A ~~defendant~~ respondent who cannot, with due diligence, be served by certified mail or personal service shall be deemed served by the mailing of a copy of the admonition or reprimand to the ~~defendant's~~ respondent's last known address on file with the NC State Bar. Service shall be deemed complete upon deposit of the admonition or reprimand 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.

(3) Within 15 days after service the ~~defendant~~ respondent may refuse the admonition or reprimand and request a hearing before the commission. Such refusal and request will be in writing, addressed to the Grievance Committee, and served upon the secretary by certified mail, return receipt requested. The refusal will state that the admonition or reprimand is refused.

(4) In cases in which the ~~defendant~~ respondent refuses an admonition or reprimand, the counsel will prepare and file a complaint against the ~~defendant~~ respondent pursuant to Rule .0114 of this subchapter. If a refusal and request are not served upon the secretary within 15 days after service upon the ~~defendant~~ respondent of the admonition or reprimand, the admonition or reprimand will be deemed accepted by the ~~defendant~~ respondent. An extension of time may be granted by the chairperson of the Grievance Committee for good cause shown.

(l) (m) Procedure for Censures

(1) If ~~probable cause is found and~~ the Grievance Committee determines that the imposition of a censure is appropriate, the defendant has violated one or more provisions of the Rules of Professional Conduct and has caused significant harm or significant potential harm to a client, the administration of justice, the profession, or a member of the public, but the misconduct does not require suspension of the defendant's license, the committee will issue a notice of proposed censure and a proposed censure to the ~~defendant~~ respondent.

(2) A copy of the notice and the proposed censure will be served upon the ~~defendant~~ respondent in person or by certified mail. A ~~defendant~~ respondent who cannot, with due diligence, be served by certified mail or personal service shall be deemed served by the mailing of a copy of the notice and proposed censure to the ~~defendant's~~ respondent's last known address on file with the NC State Bar. Service shall be deemed complete upon deposit of the notice and proposed censure 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. The ~~defendant~~ respondent must be advised that he or she may accept the censure within 15 days after service upon him or her or a formal complaint will be filed before the commission.

(3) The ~~defendant's~~ respondent's acceptance must be in writing, addressed to the Grievance Committee, and served on the secretary by certified mail, return receipt requested. Once the censure is accepted by the ~~defendant~~ respondent, the discipline becomes public and must be filed as provided by Rule .0123(a)(3) of this subchapter.

(4) If the ~~defendant~~ respondent does not accept the censure, the counsel will file a complaint against the defendant pursuant to Rule .0114 of this subchapter.

~~(m)~~ (n) ....

.0114 Formal Hearing

(a) ....

(w) If the charges of misconduct are established, the hearing committee will then consider any evidence relevant to the discipline to be imposed, including the record of all previous misconduct for which the defendant has been disciplined in this state or any other jurisdiction and any evidence in aggravation or mitigation of the offense.

~~(1) The hearing committee may consider aggravating factors in imposing discipline in any disciplinary case, including the following factors:~~

~~(A) prior disciplinary offenses;~~

~~(B) dishonest or selfish motive;~~

~~(C) a pattern of misconduct;~~

~~(D) multiple offenses;~~

~~(E) bad faith obstruction of the disciplinary proceedings by intentionally failing to comply with rules or orders of the disciplinary agency;~~

~~(F) submission of false evidence, false statements, or other deceptive practices during the disciplinary process;~~

~~(G) refusal to acknowledge wrongful nature of conduct;~~

~~(H) vulnerability of victim;~~

~~(I) substantial experience in the practice of law;~~

~~(J) indifference to making restitution;~~

~~(K) issuance of a letter of warning to the defendant within the three years immediately preceding the filing of the complaint.~~

~~(2) The hearing committee may consider mitigating factors in imposing discipline in any disciplinary case, including the following factors:~~

~~(A) absence of a prior disciplinary record;~~

~~(B) absence of a dishonest or selfish motive;~~

~~(C) personal or emotional problems;~~

~~(D) timely good faith efforts to make restitution or to rectify consequences of misconduct;~~

~~(E) full and free disclosure to the hearing committee or cooperative attitude toward proceedings;~~

~~(F) inexperience in the practice of law;~~

~~(G) character or reputation;~~

~~(H) physical or mental disability or impairment;~~

~~(I) delay in disciplinary proceedings through no fault of the defendant attorney;~~

~~(J) interim rehabilitation;~~

~~(K) imposition of other penalties or sanctions;~~

~~(L) remorse;~~

~~(M) remoteness of prior offenses.~~

(w) If the charges of misconduct are established, the hearing committee will then consider any evidence relevant to the discipline to be imposed.

(1) Suspension or disbarment is appropriate where there is evidence that the defendant's actions resulted in significant harm or potential significant harm to the clients, the public, the administration of justice, or the legal profession, and lesser discipline is insufficient to adequately protect the public. The following factors shall be considered in imposing suspension or disbarment:

(A) intent of the defendant to cause the resulting harm or potential harm;

(B) intent of the defendant to commit acts where the harm or potential harm is foreseeable;

(C) circumstances reflecting the defendant's lack of honesty, trustworthiness, or integrity;

(D) elevation of the defendant's own interest above that of the client;

(E) negative impact of defendant's actions on client's or public's perception of the profession;

(F) negative impact of the defendant's actions on the administration of justice;

(G) impairment of the client's ability to achieve the goals of the representation;

(H) effect of defendant's conduct on third parties;

(I) acts of dishonesty, misrepresentation, deceit, or fabrication;

(J) multiple instances of failure to participate in the legal profession's self-regulation process.

(2) Disbarment shall be considered where the defendant is found to engage in:

(A) acts of dishonesty, misrepresentation, deceit, or fabrication;

(B) impulsive acts of dishonesty, misrepresentation, deceit, or fabrication without timely remedial efforts;

(C) misappropriation or conversion of assets of any kind to which the defendant or recipient is not entitled, whether from a client or any other source;

(D) commission of a felony.

(3) In all cases, any or all of the following factors shall be considered in imposing the appropriate discipline:

(A) prior disciplinary offenses in this state or any other jurisdiction, or the absence thereof;

(B) remoteness of prior offenses;

(C) dishonest or selfish motive, or the absence thereof;

(D) timely good faith efforts to make restitution or to rectify consequences of misconduct;

(E) indifference to making restitution;

(F) a pattern of misconduct;

(G) multiple offenses;

(H) effect of any personal or emotional problems on the conduct in question;

(I) effect of any physical or mental disability or impairment on the conduct in question;

(J) interim rehabilitation;

(K) full and free disclosure to the hearing committee or cooperative attitude toward proceedings;

(L) delay in disciplinary proceedings through no fault of the defendant attorney;

(M) bad faith obstruction of the disciplinary proceedings by intentionally failing to comply with rules or orders of the disciplinary agency;

(N) submission of false evidence, false statements, or other deceptive practices during the disciplinary process;

(O) refusal to acknowledge wrongful nature of conduct;

(P) remorse;

(Q) character or reputation;

(R) vulnerability of victim;

(S) degree of experience in the practice of law;

(T) issuance of a letter of warning to the defendant within the three years immediately preceding the filing of the complaint;

(U) imposition of other penalties or sanctions;

(V) any other factors found to be pertinent to the consideration of the discipline to be imposed.

(x) ....

Proposed Amendments to the IOLTA Rules and Rules of Professional Conduct

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

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

Amendment Pending Approval of the Supreme Court

The proposed amendments are technical in nature and are intended to correct matters that were overlooked when the amendments to implement mandatory IOLTA were adopted last January.

.1316 IOLTA Accounts

(a) ...

(e) Every lawyer or law firm maintaining IOLTA accounts for North Carolina client funds shall direct the bank in which an IOLTA account is maintained to:

(1) remit interest or dividends, less any deduction for permissible bank service charges, fees, and taxes collected with respect to the deposited funds, at least quarterly to NC IOLTA at the North Carolina State Bar. If the bank does not waive service charges or fees on IOLTA accounts, reasonable customary account maintenance fees may be assessed, but only against accrued interest ~~and funds belonging to the law firm or lawyer maintaining the account~~. Business costs or costs billable to others are the responsibility of the lawyer or law firm and may not be charged against client funds or the interest earned by an IOLTA account but may be deducted from the firm's operating account, billed to the firm, or deducted from funds maintained or deposited by the lawyer in the IOLTA account for that purpose. Such costs include but are not limited to NSF fees, ~~Fees for~~ wire transfer fees, ~~insufficient funds, bad checks,~~ stop payment orders, account reconciliation, negative collected balances, and business services, such as remote capture capability, on-line banking, digital imaging, and CD-ROM statements ~~and check printing are business costs or costs billable to others and may not be charged against the interest earned by an IOLTA account~~.

...

.1318 Certification

Every lawyer admitted to practice in North Carolina shall certify annually on or before June 30 to the North Carolina State Bar that all general trust accounts maintained by the lawyer or his or her law firm ~~in North Carolina~~ are established and maintained as IOLTA accounts as prescribed by Rule 1.15 of the Rules of Professional Conduct and Rule .1316 of ~~the Rules and Regulations of the NC State Bar~~ this subchapter or that the lawyer is exempt from this provision because he or she does not maintain any general trust account(s) in for North Carolina client funds.

Rule 1.15, Safekeeping Property

This rule has ~~four~~ three 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, Interest on Lawyers' Trust Accounts.~~ The ~~first three~~ 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 subparts as well as the annotations appear after the text for Rule 1.15-3....

Rule 1.15-2: General Rules

(a) ....

(p) Interest on Deposited Funds. Under no circumstances shall the lawyer be entitled to any interest earned on funds deposited in a trust account or fiduciary account. Except as authorized by ~~Rule 1.15-4,~~ Rule .1316 of subchapter 1D of the Rules and Regulations of the North Carolina State Bar, any interest earned on a trust account or fiduciary account, less any amounts deducted for bank service charges and taxes, shall belong to the client or other person or entity entitled to the corresponding principal amount. ~~Under no circumstances shall the lawyer be entitled to any interest earned on funds deposited in a trust account or fiduciary account.~~

Proposed Amendments to the Regulations Governing the Administration of the CLE Program

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

The proposed amendment clarifies when a lawyer is billed for attendee fees that are not paid by a sponsor of a program.

.1606 Fees

(a) Sponsor Fee - ....

Proposed Amendments to the Rules Governing Specialization

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

Section .2900, Certification Standards for the Elder Law Specialty

The proposed rule amendments allow a specialist to take CLE courses that are not in the specialty practice area or a related field but, because of their advanced nature or particular subject matter, will improve the lawyer's proficiency as a specialist. Proposed Section .2900 contains the rules for a new specialty in elder law. Note that because the section is entirely new, it is not printed in bold, underlined text.

.1721 Minimum Standards for Continued Certification of Specialists

(a) ....

(b) Upon written request of the applicant and with the recommendation of the appropriate specialty committee, the board may for good cause shown waive strict compliance with the criteria relating to substantial involvement, continuing legal education, or peer review, as those requirements are set forth in the standards for continued certification. Before or after taking a continuing legal education course that is not in the specialty or a related field, a specialist may petition the board to approve the program as satisfying the continuing legal education criteria for recertification. The petition shall show the relevancy of the program to the specialist's proficiency as a specialist, and be referred to the specialty committee for its recommendation prior to a decision by the board.

.1725 Areas of Specialty

There are hereby recognized the following specialties:

(1) ....

(9) elder law.

Section .2900 Certification Standards for the Elder Law Specialty

[Note: This is an entirely new section and therefore not shown in bold, underlined print.]

.2901 Establishment of Specialty Field

The North Carolina State Bar Board of Legal Specialization (the board) hereby designates elder law as a field of law for which certification of specialists under the North Carolina Plan of Legal Specialization (see Section .1700 of this subchapter) is permitted.

.2902 Definition of Specialty

The specialty of elder law is the practice of law involving the counseling and representation of older persons and their representatives relative to the legal aspects of health and long term care planning; public benefits; surrogate decision-making, legal capacity; the conservation, disposition, and administration of the estates of older persons; and the implementation of decisions of older persons and their representatives relative to the foregoing with due consideration to the applicable tax consequences of an action, or the need for more sophisticated tax expertise.

Lawyers certified in elder law must be capable of recognizing issues that arise during counseling and representation of older persons, or their representatives, with respect to abuse, neglect, or exploitation of the older person, insurance, housing, long term care, employment, and retirement. The elder law specialist must also be familiar with professional and non-legal resources and services publicly and privately available to meet the needs of the older persons, and be capable of recognizing the professional conduct and ethical issues that arise during representation.

.2903 Recognition as a Specialist in Elder Law

If a lawyer qualifies as a specialist in elder law by meeting the standards set for the specialty, the lawyer shall be entitled to represent that he or she is a "Board Certified Specialist in Elder Law."

.2904 Applicability of Provisions of the North Carolina Plan of Legal Specialization

Certification and continued certification of specialists in elder law shall be governed by the provisions of the North Carolina Plan of Legal Specialization (see Section .1700 of this subchapter) as supplemented by these standards for certification.

.2905 Standards for Certification as a Specialist in Elder Law

Each applicant for certification as a specialist in elder law shall meet the minimum standards set forth in Rule .1720 of this subchapter. In addition, each applicant shall meet the following standards for certification in elder law:

(a) Licensure and Practice - An applicant shall be licensed and in good standing to practice law in North Carolina as of the date of application. An applicant shall continue to be licensed and in good standing to practice law in North Carolina during the period of certification.

(b) Substantial Involvement - An applicant shall affirm to the board that the applicant has experience through substantial involvement in the practice of elder law.

(1) Substantial involvement shall mean during the five years immediately preceding the application, the applicant devoted an average of at least 700 hours a year to the practice of elder law, but not less than 400 hours in any one year. "Practice" shall mean substantive legal work done primarily for the purpose of providing legal advice or representation, or a practice equivalent.

(2) "Practice equivalent" shall mean service as a law professor concentrating in the teaching of elder law (or such other related fields as approved by the specialty committee and the board) for one year or more. Such service may be substituted for one year of experience to meet the five-year requirement set forth in Rule .2905(b)(1) above.

(c) Substantial Involvement Experience Requirements - In addition to the showing required by Rule .2905(b), an applicant shall show substantial involvement in elder law by providing information regarding the applicant's participation, during the five years immediately preceding the date of the application, in at least sixty (60) elder law matters in the categories set forth in Rule .2905(c)(3) below.

(1) As used in this section, an applicant will be considered to have participated in an elder law matter if the applicant:

(A) provided advice (written or oral, but if oral, supported by substantial documentation in the client's file) tailored to and based on facts and circumstances specific to a particular client;

(B) drafted legal documents such as, but not limited to, wills, trusts, or health care directives, provided that those legal documents were tailored to and based on facts and circumstances specific to the particular client;

(C) prepared legal documents and took other steps necessary for the administration of a previously prepared legal directive such as, but not limited to, a will or trust; or

(D) provided representation to a party in contested litigation or administrative matters concerning an elder law issue.

(2) Of the 60 elder law matters:

(A) Forty (40) must be in the experience categories listed in Rule .2905(c)(3)(A) through (E) with at least five matters in each category;

(B) Ten (10) must be in experience categories listed in Rule .2905(c)(3)(F) through (M), with no more than five in any one category; and

(C) The remaining ten (10) may be in any category listed in Rule .2905(c)(3), and are not subject to the limitations set forth in Rule .2905(c)(2)(B) or (C).

(3) Experience Categories:

(A) Health and Personal Care Planning including giving advice regarding, and preparing, advance medical directives (medical powers of attorney, living wills, and health care declarations) and counseling older persons, attorneys-in-fact, and families about medical and life-sustaining choices, and related personal life choices.

(B) Pre-Mortem Legal Planning including giving advice and preparing documents regarding wills, trusts, durable general or financial powers of attorney, real estate, gifting, and the financial and tax implications of any proposed action.

(C) Fiduciary Representation including seeking the appointment of, giving advice to, representing, or serving as executor, personal representative, attorney-in-fact, trustee, guardian, conservator, representative payee, or other formal or informal fiduciary.

(D) Legal Capacity Counseling including advising how capacity is determined and the level of capacity required for various legal activities, and representing those who are or may be the subject of guardianship/conservatorship proceedings or other protective arrangements.

(E) Public Benefits Advice including planning for and assisting in obtaining Medicaid, supplemental security income, and veterans benefits.

(F) Advice on Insurance Matters including analyzing and explaining the types of insurance available, such as health, life, long term care, home care, COBRA, medigap, long term disability, dread disease, and burial/funeral policies.

(G) Resident Rights Advocacy including advising patients and residents of hospitals, nursing facilities, continuing care retirement communities, assisted living facilities, adult care facilities, and those cared for in their homes of their rights and appropriate remedies in matters such as admission, transfer and discharge policies, quality of care, and related issues.

(H) Housing Counseling including reviewing the options available and the financing of those options such as: mortgage alternatives, renovation loan programs, life care contracts, and home equity conversion.

(I) Employment and Retirement Advice including pensions, retiree health benefits, unemployment benefits, and other benefits.

(J) Income, Estate, and Gift Tax Advice, including consequences of plans made and advice offered.

(K) Public Benefits Advice, including planning for and assisting in obtaining Medicare, social security, and food stamps.

(L) Counseling with regard to age and/or disability discrimination in employment and housing.

(M) Litigation and Administrative Advocacy in connection with any of the above matters, including will contests, contested capacity issues, elder abuse (including financial or consumer fraud), fiduciary administration, public benefits, nursing home torts, and discrimination.

(d) Continuing Legal Education - An applicant must earn no less than forty-five (45) hours of accredited continuing legal education (CLE) credits in elder law and related fields during the three full calendar years preceding application and the year of application, with not less than nine (9) credits earned in any of the three calendar years. Related fields shall include the following: estate planning and administration, trust law, health and long term care planning, public benefits, surrogate decision-making, older persons' legal capacity, social security disability, Medicaid/Medicare claims and taxation. No more than twenty-four (24) credits may be earned in the related fields of estate taxation or estate administration.

(e) Peer Review - An applicant must make a satisfactory showing of qualification through peer review. An applicant must provide the names of ten lawyers or judges who are familiar with the competence and qualification of the applicant in the specialty field. Written peer reference forms will be sent by the board or the specialty committee to each of the references. Completed peer reference forms must be received from at least five of the references. All references must be licensed and in good standing to practice in North Carolina and have substantial practice or judicial experience in elder law or in a related field as set forth in Rule .2905(d). An applicant consents to the confidential inquiry by the board or the specialty committee of the submitted references and other persons concerning the applicant's competence and qualification.

(1) A reference may not be related by blood or marriage to the applicant nor may the reference be a partner or associate of the applicant at the time of the application.

(2) The references shall be given on standardized forms mailed by the board to each reference. These forms shall be returned directly to the specialty committee.

(f) Examination - An applicant must pass a written examination designed to demonstrate sufficient knowledge, skills, and proficiency in the field of elder law to justify the representation of special competence to the legal profession and the public. The examination shall be given annually in written form and shall be administered and graded uniformly by the specialty committee or by any ABA accredited elder law certification organization with which the board contracts pursuant to Rule .1716(10) of this subchapter.

.2906 Standards for Continued Certification as a Specialist

The period of certification is five years. Prior to the expiration of the certification period, a certified specialist who desires continued certification must apply for continued certification within the time limit described in Rule .2906(d) below. No examination will be required for continued certification. However, each applicant for continued certification as a specialist shall comply with the specific requirements set forth below in addition to any general standards required by the board of all applicants for continued certification.

(a) Substantial Involvement - The specialist must demonstrate that, for each of the five years preceding application, he or she has had substantial involvement in the specialty as defined in Rule .2905(b) of this subchapter.

(b) Continuing Legal Education - The specialist must earn seventy-five (75) hours of accredited continuing legal education (CLE) credits in elder law or related fields during the five calendar years preceding application, with not less than ten (10) credits earned in any calendar year. Related fields shall include the following: estate planning and administration, trust law, health and long term care planning, public benefits, surrogate decision-making, older persons' legal capacity, social security disability, Medicaid/Medicare claims and taxation. No more than forty (40) credits may be earned in the related fields of estate taxation or estate administration.

(d) Time for Application - Application for continued certification shall be made not more than 180 days nor less than 90 days prior to the expiration of the prior period of certification.

(e) Lapse of Certification - Failure of a specialist to apply for continued certification in a timely fashion will result in a lapse of certification. Following such lapse, recertification will require compliance with all requirements of Rule .2905 of this subchapter, including the examination.

(f) Suspension or Revocation of Certification - If an applicant's certification has been suspended or revoked during the period of certification, then the application shall be treated as if it were for initial certification under Rule .2905 of this subchapter.

.2907 Applicability of Other Requirements

The specific standards set forth herein for certification of specialists in elder 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 Plan for Certification of Paralegals

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

Amendment Pending Approval of the Supreme Court

The proposed amendments allow the board's review panel to take into consideration reformation of character and other mitigating factors when determining whether an applicant will be denied certification because of a conviction of a crime. The proposed amendments also revise the review and appeal procedures when an applicant for certification as a paralegal fails the examination. The right to review a failed exam is allowed upon the condition that the applicant is barred from retaking the exam until the content of the exam is entirely replaced. In addition, the right to require regrading of the exam is eliminated because exams are electronically scored and regrading is unnecessary.

.0119 Standards for Certification of Paralegals

(a) ....

(c) Notwithstanding an applicant's satisfaction of the standards set forth in Rule .0119(a) or (b), no individual may be certified as a paralegal if:

(1) ...

(3) the individual has been convicted of a criminal act that reflects adversely on the individual's honesty, trustworthiness, or fitness as a paralegal, provided, however, the board may certify an applicant if, after consideration of mitigating factors, including remorse, reformation of character, and the passage of time, the board determines that the individual is honest, trustworthy, and fit to be a certified paralegal; or

(4) ....

.0122 Right to Review and Appeal to Council

(a) ....

(e) Failure of Written Examination. Within 30 days of the mailing of the notice from the board's executive director that an individual has failed the written examination, the individual may review his or her examination upon the condition that the individual will not take the examination again until such time as the entire content of the examination has been replaced. Review of the examination shall be at the office of the board at a time designated by the executive director. The individual shall be allowed not more than three hours for such review and shall not remove the examination from the board's office or make photocopies of any part of the examination.

(1) Request for Review by the Board. ....
(2) Regrading Subcommittee. Upon receipt of a request for review of a failed examination, the chair of the Certification Committee shall appoint a subcommittee consisting of at least three members of the Certification Committee. All information shall be submitted to the subcommittee in blind form by the staff. The subcommittee shall re-grade the entire examination and shall make a report and recommendation on whether to change the grade to passing to the panel appointed by the chair of the board to hear the review. The review shall thereafter follow the procedures set forth in paragraph (d) of this rule.

Proposed Amendments to the Rules on Discipline and Disability

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

Amendment Pending Approval of the Supreme Court

The proposed amendments provide for enhanced disciplinary sanctions as a function of prior discipline. The proposed amendments were originally published in the Winter 2008 edition of the Journal in a proposed new rule (Rule .0131). Upon reconsideration, it was determined that rewording would improve the clarity of the proposed amendments and that the proposed amendments should be placed within the two existing rules on the range of discipline that may be imposed by the Grievance Committee and by the Disciplinary Hearing Commission.

.0113 Proceedings before the Grievance Committee

(a) ...

(k) Admonitions, Reprimands, and Censures

...

~~(k)~~ (l) Effect of Prior Discipline.

(1) If a member is found culpable of professional misconduct in any proceeding in which discipline may be imposed and the member has a record of one or two prior impositions of discipline, the degree of discipline imposed in the current proceeding shall be greater than that imposed in the immediate prior proceeding unless discipline was last imposed more than six years prior to the current proceeding or the offense for which discipline was last imposed was so inconsequential that imposing greater discipline in the current proceeding would be manifestly unjust.

(2) If a member is found culpable of professional misconduct in any proceeding in which discipline may be imposed and the member has a record of three or more prior impositions of discipline within the past six years, the degree of discipline in the current proceeding shall be no less than a suspension unless the mitigating circumstances are so compelling as to warrant a lesser degree of discipline.

(3) Rule .0115(a) and (b) notwithstanding, a record of discipline is not a prerequisite to the imposition of any appropriate form of discipline, including disbarment, as authorized by N.C. Gen. Stat. A7A084-28 and Chapter 1B of these rules.

~~(l)~~ (m) Procedures for Admonitions and Reprimands

...

[Re-lettering remaining paragraphs.]

.0114 Formal Hearing

(a) ...

...

(x) Effect of Prior Discipline.

(1) If a member is found culpable of professional misconduct in any proceeding in which discipline may be imposed and the member has a record of one or two prior impositions of discipline, the degree of discipline imposed in the current proceeding shall be greater than that imposed in the immediate prior proceeding unless discipline was last imposed more than six years prior to the current proceeding or the offense for which discipline was last imposed was so inconsequential that imposing greater discipline in the current proceeding would be manifestly unjust.

(2) If a member is found culpable of professional misconduct in any proceeding in which discipline may be imposed and the member has a record of three or more prior impositions of discipline within the past six years, the degree of discipline in the current proceeding shall be no less than a suspension unless the mitigating circumstances are so compelling as to warrant a lesser degree of discipline.

(3) Rule .0115(a) and (b) notwithstanding, a record of discipline is not a prerequisite to the imposition of any appropriate form of discipline, including disbarment, as authorized by N.C. Gen. Stat. A7A084-28 and Chapter 1B of these rules.

~~(x)~~ (y) In any case ...

[Re-lettering remaining paragraphs.]

Proposed Amendments to the Discipline and Disability Rules to Change Terminology

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

Amendment Pending Approval of the Supreme Court

Participants in the disciplinary system and observers occasionally become confused when trying to distinguish between the hearing “committees” of the Disciplinary Hearing Commission (DHC), the Commission as a whole, and the Grievance Committee. This problem is compounded by the Discipline and Disability Rules in which the phrase “hearing committee” is used to denote a three-member panel of the DHC appointed by the chair of the DHC to preside over a public hearing of a discipline or disability matter. To reduce this confusion, it is proposed that in each of the rules listed below, the word “panel” will be substituted for the word “committee” whenever the latter word is used to refer to a three-member panel of the DHC presiding over a public hearing. Because these technical amendments do not affect the substance of the rules, the rules are listed but not re-printed below. (See the title of Rule .0109 below for an example of the proposed amendment.)

Rule .0103, Definitions

Rule .0104, State Bar Council: Powers and Duties in Discipline and Disability Matters

Rule .0107, Counsel: Powers and Duties

Rule .0108, Chairperson of the Hearing Commission: Powers and Duties

Rule .0109, Hearing Panel ~~Committee~~: Powers and Duties

Rule .0110, Secretary: Powers and Duties in Discipline and Disability Matters

Rule .0114, Formal Hearing

Rule .0118, Disability Hearings

Rule .0119, Enforcement of Powers

Rule .0123, Imposition of Discipline; Finding of Incapacity or Disability; Notice to the Courts

Rule .0125, Reinstatement

Proposed Amendments to the Procedures for Administrative Suspension

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

Amendment Pending Approval of the Supreme Court

Proposed amendments to the rules on administrative suspension for failure to timely fulfill a duty of membership (e.g., pay membership dues, complete annual CLE, return CLE annual report form, etc.) will require a lawyer who is served with an order of suspension to wind down his or her law practice within 30 days after the order goes into effect. The wind-down obligations are the same as those imposed when a lawyer receives a disciplinary suspension or is disbarred. Under the proposed amendments, if a lawyer under administrative suspension fails to fulfill the wind-down obligations, the member is subject to professional discipline.

Other proposed amendments make Rule .0904 consistent with prior amendments to Rule .0903 (approved by the Supreme Court in March 2008) that eliminate the recitation of the obligations of membership enforceable under the rule in favor of a generic reference thereto and eliminate the requirement of service pursuant to Rule 4 of the Rules of Civil Procedure in favor of service by registered or certified mail at the member’s last address on record with the State Bar.

.0903 Suspension for Failure to Fulfill Obligations of Membership

(a) Procedure for Enforcement of Obligations of Membership

…

(b) Notice

Whenever it appears that a member has failed to comply, in a timely fashion, with an obligation of membership in the State Bar as established by the administrative rules of the State Bar or by statute, the secretary shall prepare a written notice directing the member to show cause, in writing, within 30 days of the date of service of the notice why he or she should not be suspended from the practice of law.

The notice shall be served on the member by mailing a copy thereof by registered or certified mail return receipt requested to the last-known address of the member according to the records of the North Carolina State Bar or such later address as may be known to the person effecting the service. Notice may also be by personal service ~~pursuant to Rule 4 of the North Carolina Rules of Civil Procedure and may be served~~ by a State Bar investigator or any other person authorized by Rule 4 of the North Carolina Rules of Civil Procedure to serve process.

(d) Entry of Order of Suspension Upon Failure to Respond to Notice to Show Cause.

Whenever a member fails to respond in writing within 30 days of the service of the notice to show cause upon the member, and it appears that the member has failed to comply with an obligation of membership in the State Bar as established by the administrative rules of the State Bar or by statute, the council may enter an order suspending the member from the practice of law. The order shall be effective 30 days after proof of service on the member. ~~A copy of the~~ The order shall be served on the member by mailing a copy thereof by registered or certified mail return receipt requested to the last-known address of the member according to the records of the North Carolina State Bar or such later address as may be known to the person effecting the service. Notice may also be by personal service ~~pursuant to Rule 4 of the North Carolina Rules of Civil Procedure and may be served~~ by a State Bar investigator or any other person authorized by Rule 4 of the North Carolina Rules of Civil Procedure to serve process. Unless the member complies with or fulfills the obligation of membership within 30 days after service of the order, the obligations of a disbarred or suspended member to wind-down the member’s law practice within 30 days set forth in Rule .0124 of Subchapter 1B of these rules shall apply to the member upon the effective date of the order of suspension. If the member fails to fulfill the obligations set forth in Rule .0124 of Subchapter 1B within 30 days of the effective date of the order, the member shall be subject to professional discipline.

(e) Procedure Upon Submission of a Timely Response to a Notice to Show Cause

(1) …

(3) Order of Suspension

Upon the recommendation of the Administrative Committee, the council may enter an order suspending the member from the practice of law. The order shall be effective 30 days after proof of service on the member. ~~A copy of the~~ The order shall be served on the member by mailing a copy thereof by registered or certified mail return receipt requested to the last-known address of the member according to the records of the North Carolina State Bar or such later address as may be known to the person effecting the service. Notice may also be by personal service ~~pursuant to Rule 4 of the North Carolina Rules of Civil Procedure and may be served~~ by a State Bar investigator or any other person authorized by Rule 4 of the North Carolina Rules of Civil Procedure to serve process. Unless the member complies with or fulfills the obligation of membership within 30 days after service of the order, the obligations of a disbarred or suspended member to wind down the member’s law practice within 30 days set forth in Rule .0124 of Subchapter 1B of these rules shall apply to the member upon the effective date of the order of suspension. If the member fails to fulfill the obligations set forth in Rule .0124 of Subchapter 1B within 30 days of the effective date of the order, the member shall be subject to professional discipline.

(f) Late Compliance

…

.0904 Compliance After Suspension for Failure to Fulfill Obligations of Membership ~~Pay Fees or Assessed Costs, or to File Certificate of Insurance Coverage~~

(a) Reinstatement Within 30 Days of Service of Suspension Order. A member who receives an order of suspension for failure to comply with an obligation of membership nonpayment of the annual membership fee, late fee, Client Security Fund assessment, district bar annual membership fee, and/or costs assessed against the member by the chairperson of the Grievance Committee, the Disciplinary Hearing Commission, and/or the secretary or council of the North Carolina State Bar, and/or failure to file a certificate of insurance coverage as required by Rule .0204 of Subchapter A, and/or a pro hac vice registration statement as required by Rule .0101 of subchapter H, may preclude the order from becoming effective by submitting a written request and satisfactory showing within 30 days after service of the suspension order that the member has complied with or fulfilled the obligations of membership set forth in the order of certification of insurance coverage, registration of pro hac vice admission, and/or payment of the membership fee, late fee, Client Security Fund assessment, district bar annual membership fee, assessed costs, and has paid the costs of the suspension and reinstatement procedure, including the costs of service. Such member shall not be required to file a formal reinstatement petition or pay a $125 reinstatement fee.

(b) Reinstatement More than 30 Days after Service of Suspension Order. At any time more than 30 days after service of an order of suspension on a member, a member who has been suspended for failure to comply with an obligation of membership nonpayment of the membership fee, late fee, Client Security Fund assessment, district bar annual membership fee, and/or costs assessed against the member by the chairperson of the Grievance Committee, the Disciplinary Hearing Commission, and/or the secretary or council of the North Carolina State Bar and/or failure to file a certificate of insurance coverage, and/or file a pro hac vice registration statement, may petition the council for an order of reinstatement.

The petition shall set out facts showing the following:

(1) ...

(5) that the member has filed a certificate of insurance coverage for the current year; ~~and~~

(6) that the member has filed any overdue pro hac vice registration statement for which the member was responsible, and

(7) that, during the 30 day period after the effective date of the order of suspension, the member fulfilled the obligations of a disbarred or suspended member set forth in Rule .0124 of Subchapter 1B, or that such obligations do not apply to the member due to the nature of the member’s legal employment.

(d) Procedure for Review of Reinstatement Petition

Proposed Amendments to the Rules of Professional Conduct

27 N.C.A.C. 2, Revised Rules of Professional Conduct, Rule 0.1, Preamble; Rule 1.8, Conflict of Interest: Current Clients: Specific Rules; Rule 3.8, Special Responsibilities of a Prosecutor

The proposed amendments to the Preamble of the Rules of Professional Conduct declare that lawyers should not discriminate against anyone on the basis of race, gender, age, or other protected status or personal characteristic. The proposed amendments to Rule 1.8(e) permit lawyers to provide financial assistance to distressed litigation clients under certain circumstances. The proposed amendments to Rule 3.8 bear upon a prosecutor’s responsibilities when information indicating a possible wrongful conviction comes to the prosecutor’s attention.

0.1 Preamble: A Lawyer’s Responsibilities

[1] A lawyer, as a member of the legal profession, is a representative of clients, an officer of the legal system, and a public citizen having special responsibility for the quality of justice.

[2] ...

[5] While employed in a professional capacity, a lawyer should avoid knowingly manifesting through word or deed bias or prejudice based upon a person’s race, gender, national origin, religion, age, disability, sexual orientation, marital status, or other protected status or personal characteristic. This does not, however, prohibit legitimate advocacy when such status or personal characteristic is material to the issues in a proceeding.

[6] ~~[5]~~ …

[Re-numbering remaining paragraphs.]

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; and

(3) a lawyer representing an indigent client may provide financial assistance for essential needs such as food, rent, and utilities provided there is no obligation to repay and there was no representation to the client prior to representation that such financial assistance would be provided.

...

Comment

[1] ...

Financial Assistance

[10] Lawyers may not subsidize lawsuits or administrative proceedings brought on behalf of their clients, including making or guaranteeing loans to their clients for living expenses, because to do so would encourage clients to pursue lawsuits that might not otherwise be brought and because such assistance gives lawyers too great a financial stake in the litigation. These dangers do not warrant a prohibition on a lawyer lending a client court costs and litigation expenses, including the expenses of medical examination and the costs of obtaining and presenting evidence, because these advances are virtually indistinguishable from contingent fees and help ensure access to the courts. Similarly, exceptions allowing lawyers representing indigent clients to pay court costs and litigation expenses regardless of whether these funds will be repaid and allowing lawyers to provide financial assistance, without expectation of repayment, to indigent clients who are in dire financial circumstances and unable to pay for essential needs such as housing, utilities, or food are is warranted. Moreover, it is not a violation of this Rule to provide holiday gifts or money for holiday gifts for an indigent client or the children of an indigent client if there is no obligation or expectation of repayment.

Rule 3.8, Special Responsibilities of a Prosecutor

The prosecutor in a criminal case shall:

(a) ...

(g) when the prosecutor knows of new, credible, and material post-conviction evidence that a reasonable person in the position of the prosecutor would conclude casts substantial doubt on the guilt of a convicted defendant, disclose the evidence to a court or other authority, the North Carolina Innocence Inquiry Commission, the public defender, or the defendant, as appropriate.

Comment

[1] ...

[7] When a prosecutor knows of new, credible, and material evidence, received after a conviction, that a reasonable person in the position of the prosecutor would conclude casts substantial doubt on the guilt of a convicted defendant, the prosecutor shall disclose the evidence to enable investigation by an appropriate authority or by the convicted defendant. Evidence that effectuates the duty to disclose must be sufficiently clear and convincing so as to cast substantial doubt on the guilt of a convicted defendant. The prosecutor is not required to initiate an investigation or to take remedial action. The duty to disclose applies without regard to the jurisdiction in which defendant was convicted. The disclosure may be made, as appropriate, to the court or other appropriate authority, such as the chief prosecutor of the jurisdiction where the conviction occurred, the North Carolina Innocence Inquiry Commission, the public defender in the district in which the defendant was convicted, or the defendant. Consistent with the objectives of Rules 4.2 and 4.3, disclosure to a represented defendant must be made through the defendant’s counsel, and, in the case of an unrepresented defendant, would ordinarily be accompanied by a request to a court for the appointment of counsel to assist the defendant in taking such legal measures as may be appropriate.

[8] A prosecutor’s independent judgment, made in good faith, that the evidence is not of such nature as to trigger the disclosure obligation of section (g), though subsequently determined to have been erroneous, does not constitute a violation of this Rule.

Proposed Amendments to the Regulations 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 provide for an increase to the fee charged to sponsors and attendees of approved CLE courses to support the activities of the Chief Justice's Equal Access to Justice Commission. A portion of the increase ($0.25) will be retained by the State Bar to defray its costs for the collection of and accounting for the fee.

.1606 Fees

(a) Sponsor Fee - The sponsor fee, a charge paid directly by the sponsor, shall be paid by all sponsors of approved activities presented in North Carolina and by accredited sponsors located in North Carolina for approved activities wherever presented, except that no sponsor fee is required where approved activities are offered without charge to attendees. In any other instance, payment of the fee by the sponsor is optional. The amount of the fee, per approved CLE hour per active member of the North Carolina State Bar in attendance, is ~~$1.25~~ $3.00. This amount shall be allocated as follows: $1.25 to the Board of Continuing Legal Education to administer the CLE program; $1.00 to ~~plus such additional amount as determined by the council as necessary to support~~ the Chief Justice's Commission on Professionalism ~~but not to exceed $1.00~~; $.050 to the Chief Justice's Equal Access to Justice Commission; and $0.25 to the State Bar to administer the funds distributed to the commissions. The fee is computed as shown in the following formula and example which assumes a 6-hour course attended by 100 North Carolina lawyers seeking CLE credit ~~and further assumes that the fee-per-hour is $2.25 which includes as assessment of $1.00 for the Chief Justice's Commission on Professionalism~~:

Fee: ~~$2.25~~ $3.00 x Total Approved CLE Hours (6) x Number of NC Attendees (100) = Total Sponsor Fee ~~($1350)~~($1800)

(b) Attendee Fee - The attendee fee is paid by the North Carolina attorney who requests credit for a program for which no sponsor fee was paid. An attorney will be invoiced for any attendees fees owed following the submission of the attorney's annual report form pursuant to Rule .1522(a) of this subchapter. Payment shall be remitted within 30 (thirty) days of the date of the invoice. The amount of the fee, per approved CLE hour for which the attorney claims credit, is ~~set at $1.25~~ $3.00. This amount shall be allocated as follows: $1.25 to the Board of Continuing Legal Education to administer the CLE program; $1.00 to ~~plus such additional amount as determined by the council as necessary to support~~ the Chief Justice's Commission on Professionalism ~~but not to exceed $1.00~~; $.050 to the Chief Justice's Equal Access to Justice Commission; and $0.25 to the State Bar to administer the funds distributed to the commissions.A0 It is computed as shown in the following formula and example which assumes that the attorney attended an activity approved for 3 hours of CLE credit ~~and that the fee-per-hour is $2.25 which includes an assessment of $1.00 for the Chief Justice's Commission on Professionalism~~:

Fee: ~~$2.25~~ $3.00 x Total Approved CLE hours (3.0) = Total Attendee Fee ~~($6.75)~~ ($9.00)

(c) Fee Review - The board will review the level of the fee at least annually and adjust it as necessary to maintain adequate finances for prudent operation of the board in a nonprofit manner. ~~The fee charged to sponsors and attendees will be increased only to the extent necessary for those fees to pay the costs of administration of the CLE program.~~ The council shall annually review the assessments for the Chief Justice's Commission on Professionalism and the Chief Justice's Equal Access to Justice Commission and adjust it them as necessary to maintain adequate finances for the operation of the ~~commission~~ commissions.

(d)...

Proposed Amendments to the Plan for Certification of Paralegals

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

To incentivize timely submissions, the proposed amendment imposes a $25.00 late fee for delinquent applications for continued certification (recertification).

.0120 Standards for Continued Certification of Paralegals

(a) ...

(c) A late fee of $25.00 will be charged to any certified paralegal who fails to file the renewal application within forty-five (45) days of the due date; provided, however, a renewal application will not be accepted more than ninety (90) days after the due date. Failure to renew shall result in lapse of certification.

Proposed Amendments to the Rules of Professional Conduct

27 N.C.A.C. 2, Rules of Professional Conduct, Rule 1.15, Safeguarding Property

The proposed amendment deletes the term “credit union” from the definition of what is considered a “bank” because the deposits of clients held in a credit union trust account are not covered by federal deposit insurance unless the clients are themselves members of the credit union.

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) ...