Dear Members of Judicial District 40,

I was honored to represent this judicial district bar at the State Bar Council’s most recent quarterly meeting.  The full synopsis of the quarterly meeting is below. The State Bar will also send out an email of its own.

I wanted to advise you the next quarterly meeting will take place here in Asheville at The Renaissance Hotel.  The dates are July 18-21, 2023.  Please know that most of the meetings are open to the public, and I encourage you to consider joining us.  Once the schedule of meetings is published (usually the final version is the week before the meeting) I will send it out so you can see what is on tap in case anything interests you.

Please do not hesitate to contact me with any concerns or questions about the State Bar Council or anything else of which I can be of assistance.  Thank you.

Sincerely yours,

Anna Hamrick, State Bar Councilor

NC Board Certified Specialist – Workers’ Compensation
Grimes Teich Anderson LLP
828-251-0800

 

NORTH CAROLINA STATE BAR
SYNOPSIS OF COUNCIL ACTION
at the
APRIL 2023 QUARTERLY MEETING

APPOINTMENTS
At its meeting on April 21, 2023, the Council made the following appointments:

Disciplinary Hearing Commission – The Council reappointed Brian O. Beverly, Irving L. Joyner and DeWitt “Mac” McCarley to three-year terms.

Grievance Resolution Board (formerly Inmate Grievance Resolution Board) – The Council voted to recommend to the Governor’s Office the reappointment of Robert E. Campbell.

RECOMMENDATIONS FOR APPOINTMENTS SOUGHT
Anyone interested in being appointed to serve on boards, commissions, or committees to which the State Bar makes appointments should email the State Bar’s Executive Director, Alice Neece Mine, at amine@ncbar.gov, or Lanice Heidbrink at lheidbrink@ncbar.gov, and express that interest, being sure to attach a current resume. Please submit before July 7, 2023. The Council will make the following appointments at its July meeting:

Board of Legal Specialization (3-year terms) – There are three appointments to be made. Laura V. Hudson (public member) and Nancy Ray (non-specialist lawyer member) are not eligible for reappointment. Jan E. Pritchett is eligible to serve one more year in the capacity of chair.

Description – The Board of Legal Specialization is a 9-member board comprised of six lawyers (at least one of whom cannot be a board-certified specialist) and three public members. The board establishes policy relative to the execution of the specialization program’s mission and is responsible for oversight of the operation of the program subject to the statutes governing the practice of law, the authority of the Council, and the rules of the board. The specialization board meets four times a year.

The specialization program assists in the delivery of legal services to the public by identifying to the public those lawyers who have demonstrated special knowledge, skill, and proficiency in a specific field and seeks to improve the competency of members of the bar by establishing an additional incentive for lawyers to participate in continuing legal education and to meet the other requirements of specialization.

Commission on Indigent Defense Services (4-year terms) – There is one appointment to be made. Stacey Rubain is eligible for reappointment.
Description – The Commission on Indigent Defense Services establishes the policies governing the work of the Office of Indigent Defense Services (IDS). IDS oversees the legal representation for indigent defendants and others entitled to counsel in North Carolina. IDS trains, qualifies, and sets performance standards for attorneys, as well as determines the most appropriate and cost-effective methods for delivering legal defense services in each of the state’s judicial districts. The organization’s programmatic work includes efforts to increase communication and resource-sharing with the private bar; the development of legal training programs, often in partnership with the UNC School of Government; the establishment of a specialized Office of the Juvenile Defender; and the creation of performance guidelines for appointed counsel across several practice areas. IDS also works regularly with the Offices of the Capital Defender and Appellate Defender to recruit and evaluate attorneys for their respective rosters, ensure their appointments in a timely and equitable manner, and to support them with expert services.

The Commission on Indigent Defense Services consists of thirteen commissioners who are appointed by various officials and organizations including the Governor, the Chief Justice, the Speaker of the House of Representatives, and the President Pro Tempore of the Senate. The State Bar Council has one appointment to the commission. The commission meets on a quarterly basis, often virtually.

North Carolina Dispute Resolution Commission (3-year terms) – There is one appointment to be made. Charlot F. Wood is not eligible for reappointment.

Description – The North Carolina Dispute Resolution Commission is an 18-member body established by N.C. Gen. Stat. §7A-38.2. Appointments to the Commission are made by all branches of government. The President of the North Carolina State Bar makes two appointments.

The commission certifies and regulates private mediators who serve the courts of this State. The commission also recommends policy, rules, and rule revisions relating to dispute resolution in North Carolina’s courts; provides support to court-based mediation programs; certifies mediation training programs; serves as a clearinghouse for information about court-based mediation programs; and assists other state agencies interested in or providing dispute resolution services to their constituencies.

IOLTA Board of Trustees (3-year terms) – There are three appointments to be made. John S. Arrowood and John J. Keane (public member) are eligible for reappointment. Anita Brown-Graham is not eligible for reappointment.

Description – The IOLTA Board of Trustees is a 9-member board comprised of at least six North Carolina lawyers. The board establishes policy relative to the execution of IOLTA’s mission and is responsible for oversight of the operation of the program subject to the statutes governing the practice of law, the authority of the council, and the rules of the board.
The IOLTA Board usually meets three times per year (April, September, and December) with other meetings scheduled as needed.

NC IOLTA is a non-profit program created by the NC State Bar that works with lawyers and banks across the state to collect net interest income generated from lawyers’ general, pooled trust accounts for the purpose of funding grants to providers of civil legal services for the indigent and programs that further the administration of justice.

RANDOM AUDITS
Lawyers selected for audit are randomly drawn from a list generated from the State Bar’s membership database based upon judicial district membership designations. The randomly selected judicial districts used to generate the lists for the second quarter of 2023 are District 15, composed of Bladen, Brunswick and Columbus counties, and District 33 composed of Davidson and Davie counties.

ETHICS COMMITTEE

Council Actions
At its meeting on April 21, 2023, the State Bar Council adopted one ethics opinion: 2023 Formal Ethics Opinion 1, Sale or Closure of Law Practice and Proper Handling of Aged Client Files (opinion clarifies a lawyer’s professional responsibility when closing and/or selling a law practice and when handling aged client files). Additionally, the Council voted to publish a proposed amendment to Rule 1.8(e) of the North Carolina Rules of Professional Conduct that would create a new exception to the general prohibition on providing financial assistance to a client in connection with pending or contemplating litigation. More information about the proposed amendment to Rule 1.8(e) appears in the “Proposed Amendments Published for Comment” section below.

Ethics Committee Actions
At its meeting on April 20, 2023, the Ethics Committee considered eight inquiries, including the opinion and proposed rule amendment noted above. Five inquiries were sent or returned to subcommittee for further study, including Proposed 2022 FEO 4, Billing Considerations for Overlapping Legal Services; Proposed 2023 FEO 2, Confidentiality Clause that Restricts a Lawyer’s Right to Practice; and an inquiry addressing a lawyer’s ability to obligate a client’s estate to pay the lawyer for any time spent defending the lawyer’s work in drafting and executing the client’s will. No new opinions were published for comment this quarter.

The Ethics Committee welcomes comments on the proposed formal ethics opinions. Comments may be submitted by email to ethicscomments@ncbar.gov.

GRIEVANCE COMMITTEE
During the quarter, the Grievance Committee considered 164 files. The committee dismissed 109 files. One file was abated and seven files were dismissed and retained. One file was continued. Two lawyers were referred to the Trust Accounting Compliance Program, one lawyer was referred to the Lawyer Assistance Program, five lawyers received letters of caution, eight lawyers received letters of warning, three lawyers received admonitions, three lawyers received reprimands, and eight lawyers were referred to the Disciplinary Hearing Commission for trial.

RULE AMENDMENTS

Amendments Pending Approval by the Supreme Court

At its meeting on April 21, 2023, the Council of the North Carolina State Bar voted to adopt the following rule amendments for transmission to the North Carolina Supreme Court for its approval. (For the complete text of the rule amendments, see the Winter 2023 and Spring 2023 editions of the Journal or visit the State Bar website: www.ncbar.gov.)

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

• Rules .1501 to .1527
• Rules .1601 to .1606

The Board of Continuing Legal Education proposed comprehensive revisions to the rules governing the CLE program with the objective of improving the State Bar’s regulation of mandatory CLE by reducing costs, complexity, and hassle for both the regulator and the regulated. The proposed rule amendments will change fundamental aspects of how the CLE requirements are enforced including the adoption of a two-year reporting and compliance cycle, the elimination of the annual report requirement, and the elimination of the credit hour attendee fee in favor of program application fees and an annual attendance fee assessment of active State Bar members. Rollover credit of up to 12 CLE hours has been retained. It is proposed that Section .1600 of the CLE rules be deleted entirely.

Proposed Amendments Published for Comment

Also at its April meeting, the Council voted to publish for comment the following proposed rule amendments:

Proposed Amendments to the Rules of Professional Conduct
27 N.C.A.C.02, Section .0100, Client-Lawyer Relationship

• Rule 1.08 Conflict of Interest: Current Clients: Specific Rules

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

Proposed Amendments to the Discipline and Disability Rules
27 N.C.A.C. 1B, Section .0100, Discipline and Disability of Attorneys

• Rule .0113, Proceedings Before the Grievance Committee

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

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

• Rule .1517, Exemptions
• Rule .1520, Requirements for Program Approval
• Rule .1522, Registered Sponsors
• Rule .1525, Professionalism Requirement for New Members (PNA)

Rules .1517, .1520, .1522, and .1525 were previously amended and published for comment in the Spring 2023 edition of the Journal as part of the comprehensive revision of the rules governing mandatory CLE. The additional proposed amendments to Rules .1517, .1520, .1522, and .1525 published for comment this quarter make the following changes: extend the existing exemption from CLE for members of the judiciary and judicial law clerks and add an exemption from CLE for lawyers who are full-time employees of the General Assembly; add an annual renewal fee for on-demand programs; create a Registered Sponsor status that can be granted by the CLE Board to sponsors that meet certain requirements; and limit the presentation of PNA programs to registered sponsors and judicial district bars approved by the Board to offer such programs.

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

• Rule .1723, Revocation or Suspension of Certification of a Specialist
• Rule .1725, Areas of Specialty
• Rule .3407, Applicability of Other Requirements

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

Dear Members of Judicial District 40,

I was honored to represent this judicial district bar at the State Bar Council’s most recent quarterly meeting.  The full synopsis of the quarterly meeting is available here.  The State Bar will send out an email of its own next week, but I wanted to reach out with my personal observations and highlight some important items for you to review in the synopsis and when you receive your copy of the State Bar Journal.

You may notice a new format to these updates.  In an effort to make the councilor reports more consistent across the State, the Bar has developed this template for councilors to use.  I am asking Lisa-Gaye Hall to send it with your Bar Briefs, as opposed to it coming to you as a separate email from me.  I figured we can all use less in our inbox.  Please let me know your thoughts on the new look!

In addition to the synopsis in the above link, here are a few of my thoughts and comments:

Our new President, Marcia Armstrong, has started us off on a great year.  Some of her areas of focus for the year are addressing legal deserts, reviewing the random audit process, and helping with lawyer succession planning.

I am on the following committees for 2023:  Appointments, Communications (chair), Distinguished Service Award, Executive and Grievance.  I look forward to working on these committees and trying to make the Bar work for you.  As I am chair of Communications, I am especially eager to hear if you have any suggestions or thoughts on how the Bar communicates with you.  For example, do you want more updates?  What do you think about the Bar’s website (we are revamping it this year and I would love to hear your thoughts)?  Where can the Bar improve how it communicates with you?  Please let me know – thank you!

On the CLE front, the final rules are not yet done, but it looks like the Bar is moving toward allowing 12 hours of carryover and having us report every two years (instead of the originally proposed term of every three years).

Here are the most recent statistics on some of the Bar activities:  (these may not be of much interest, but I like how it gives you some quantifier of what the Bar spends a lot of its time doing during the year).

During the fourth quarter, ACAP staff responded to 1,649 phone calls from members of the public and placed 69 calls to lawyers. Staff also responded to 886 emails from members of the public and attorneys and responded to 417 letters from inmates. In addition, there were 16 translations completed of fee dispute petitions submitted in Spanish. Intake logged 3,859 entries.

The State Bar opened 128 petitions for fee dispute resolution during the quarter.  In 2018, 1,247 grievance files were opened. In 2019, 1,254 grievance files were opened. In 2020, 927 grievance files were opened. In 2021, 986 grievance files were opened. In 2022, 1,404 grievance files were opened. As of January 13, 57 grievance files have been opened in 2023.  As of January 13, 1,629 grievances were pending. One hundred ninety-six grievances were stayed. Thirty-five pending files were in judicial district grievance committees or had been returned by district grievance committees within the past 30 days. The OOC had made its recommendation in 139 of the pending cases and the cases were ready for the Grievance Committee’s decision. Of the remaining 1,259 files in which no recommendation has yet been made, 272 were more than six months old. In the fourth quarter of 2022, 121 files were dismissed by the Grievance chair or by the Grievance chair and a vice chair.

The realm of Ethics, the Staff Counsel on Ethics responded to 946 ethics inquiries in the last quarter.

The following are on the horizon in new opinions:

1. Proposed 2023 Formal Ethics Opinion 1:  The Sale or Closure of a Law Practice and Proper Handling of Aged Client Files.  This proposed opinion clarifies a lawyer’s professional responsibility when closing and/or selling a law practice and when handling aged client files.
2. Proposed 2023 Formal Ethics Opinion 2:  Confidentiality Clause that Restricts a Lawyer’s Right to Practice.  This proposed opinion rules that a confidentiality clause contained in a settlement agreement

that restricts a lawyer’s ability to disclose publicly available information violates Rule 5.6.

Please do not hesitate to contact me with any concerns or questions about the State Bar Council or anything else of which I can be of assistance.  Thank you.

Sincerely yours, Anna Hamrick

Dear Friends and Colleagues –

I hope you are well. The Bar Council held the annual meeting in Raleigh October 18-21. As it was the Annual Meeting, we installed new officers and received reports from various bar-related entities.

The new officers are:

1. Marcia Armstrong, President.  Marcia is a board-certified family lawyer from Smithfield.
2. Todd Brown, President-Elect.  Todd is a lawyer in Charlotte practicing complex civil litigation.
3. Matthew W. Smith, Vice-President.  Matt practices in a variety of areas of law in Eden.
4. Darrin D. Jordan of Salisbury completed his excellent tenure as our President, and is now Past President.

General Bar Business:

1. Ethics Committee:

The Council Approved Proposed 2022 FEO 5, Client Paying Public Adjuster-Witness a Contingency Fee.  The opinion provides a lawyer may call as an expert witness a public adjuster who will collect a statutorily authorized contingency fee paid by the client.

Regarding Proposed 2022 FEO 4, Billing Considerations for Overlapping Legal Services:  This opinion remains in subcommittee for another quarter.  The Committee received only one comment in the entire State, and it came from one of our Buncombe Bar members.  This one comment is the only reason it was sent back to the subcommittee for further consideration.  I mention this to illustrate the power of the comment.  Please know that they do read the comments, and they take them very seriously.  If you are a lawyer who travels for work and uses your downtime while traveling (say while you are driving in the car or waiting in the airport) to conduct business for clients for which you are not travelling, you may want to read the proposed rule and consider commenting.

It is probable the subcommittee will meet at least once over the next quarter.  If it does, the meeting will be streamed on our YouTube page if you would like to see it.

Random Audit Report

I thought it might be interesting to see the recent results of the 2022 Third Quarter Random Audit Report.  As you see, it does not apply to our District, but could provide some valuable insight as to areas of common concern.  The report provides as follows:

Judicial Districts 30 and 35 were randomly selected for random audit for the third quarter of 2022.  Lawyers randomly selected for audit are drawn from a list generated from the State Bar’s database based upon judicial district membership designations in the database.  District 30, composed of Union County was previously audited in 1988, 1993, 1997, 2001, 2005, 2013 and 2019. District 30 has a listing of 314 lawyers. 25 audits were conducted collectively representing 47 lawyers.

District 35, composed of Avery, Madison, Mitchell, Watauga, and Yancey counties, was previously audited in 1990, 1993, 1996, 2001, 2006, 2012 and 2016. District 35 has a listing of 177 lawyers. 14 audits were conducted collectively representing 38 lawyers.

The Ethics Committee recommended to open grievance investigations on four lawyers/firms based on the audit results and the significance of the violations found.

Areas of common rule deficiencies include:

(a) 22% failed to maintain images of cleared checks or maintain them in the required format;

(b) 21% failed to perform quarterly transaction reviews;

(c) 19% failed to review bank statements and cancelled checks each month;

(d) 17% failed to sign, date and/or maintain reconciliation reports;

(e) 14% failed to identify the client on confirmations of funds received/disbursed by wire/electronic/online transfers;

(f) up to 10% failed to:

• perform monthly bank statement reconciliations;
• perform quarterly reconciliations;
• prevent over-disbursing funds from the trust account resulting in negative client balances;
• prevent bank service fees being paid with entrusted funds;
• maintain a ledger of lawyer’s funds used to offset bank service fees;
• take the required one-hour trust account management CLE course;
• identify the client and source of funds, when the source was not the client, on the original deposit slip;
• properly deposit funds received with a mix of trust and non-trust funds into the trust account;
• properly record the bank date of deposit on the client’s ledger;
• indicate on the face of each check the client from whose balance the funds were withdrawn;
• promptly remit to clients funds in possession of the lawyer to which clients were entitled;
• provide written accountings to clients at the end of representation or at least annually if funds were held more than twelve months;
• escheat unidentified/abandoned funds as required by GS 116B-53;
• provide a copy of the Bank Directive regarding checks presented against insufficient funds;
• use business size checks containing the Auxiliary On-Us field.

Areas of consistent rule compliance:

• properly maintained a ledger for each person or entity from whom or for whom trust money was received;
• removed signature authority from employee(s) responsible for performing monthly or quarterly reconciliations;
• promptly removed earned fees or cost reimbursements;
• signed trust account checks (no signature stamp or electronic signature used);
• properly maintained records that are retained only in electronic format.

Judicial Districts randomly selected for audit for the fourth quarter of 2022 are District 12, composed of Harnett and Lee counties, and District 22 composed of Caswell and Rockingham counties.

2. Grievance Committee: 

During the third quarter of 2022, the Attorney Client Assistance Program staff responded to 2,034 phone calls from members of the public and placed 78 calls to lawyers. Staff also responded to 1,046 emails from members of the public and attorneys and responded to 579 letters from inmates. In addition, there were 11 translations completed of fee dispute petitions submitted in Spanish. Intake logged 4,170 entries this quarter.

The State Bar opened 124 requests for fee dispute resolution during the first quarter, all of which were assigned to the two State Bar facilitators.

In 2018, 1,247 grievance files were opened. In 2019, 1,254 grievance files were opened. In 2020, 927 grievance files were opened. In 2021, 986 grievance files were opened. As of October 10, 1,061 grievance files have been opened in 2022.

As of October 10, 1,577 grievances were pending. One hundred ninety-eight grievances were stayed. Thirty-one pending files were in judicial district grievance committees or had been returned by district grievance committees within the past 30 days. The OOC had made its recommendation in 83 of the pending cases and the cases were ready for the Grievance Committee’s decision. Of the remaining 1,265 files in which no recommendation has yet been made, 259 were more than six months old. In the third quarter of 2022, 248 files were dismissed by the Grievance chair or by the Grievance chair and a vice chair. There were no inquiries about lawyer advertising in the third quarter of 2022.

Ninety-four lawyers have completed the Trust Account Compliance Program since its inception. Six lawyers accepted offers to participate in the TAC Program after the July 2022 Quarterly Meeting. The Bar currently supervises forty-five participants. The Bar also monitors four DHC defendants whose stayed suspensions include trust account compliance conditions and oversees compliance with random audit corrections.

3. Below please find selected parts of presented annual reports:

The Board of Law Examiners Annual Report

1,376 applications were received for the 2022 North Carolina Bar Examinations, a decrease from the 1,449 applications filed for the 2021 North Carolina Bar Examinations.

The February 2022 bar examination was administered to 348 applicants. The overall pass rate for the examination was 50.29%, and the examination proceeded without incident.  Of the 114 first-timers from North Carolina law schools, 69 passed for a rate of 60.53%. 61 of the 96 first-timers from out-of-state law schools passed for a rate of 63.54%. Of the 138 applicants who had taken the examination previously, 45 passed for a 32.61% pass rate. The July 2022 bar examination was administered to 835 applicants. The overall pass rate for the examination was 68.02%. Of the 492 first-timers from North Carolina law schools, 377 passed for a rate of 76.63%. 144 of the 198 first-timers from out-of-state law schools passed for a rate of 72.73%. Of the 145 applicants who had taken the examination previously, 47 passed for a 32.41% pass rate.

The Board continues to receive a significant number of requests for special testing accommodations for the 2022 bar examinations. At the February 2022 bar examination, the Board received 37 requests for special testing accommodations and provided special testing accommodations for 29 applicants due to a disability. For the July 2022 examination, the Board received 67 such requests and granted 54 of these petitions.

North Carolina continues to be the first among states to let applicants know the results of their examination. Most jurisdictions release their July results between late October and mid-November, and some come even later. The Board released results to applicants for the July 2022 bar examination on September 1, 2022. The Board expects to issue licenses to applicants meeting all requirements in late September. This is a great help to applicants whose jobs hinge on licensure.

North Carolina continues to remain a popular place to practice law and seek legal employment. Numbers of comity applications have increased over the course of 2022. Since January 1, 2022, the Board has received 151 comity applications.

Annual Report of Board of Continuing Legal Education

Lawyers continue to meet and exceed their mandatory continuing legal education requirements. By mid-March 2022, 27,491 annual report forms had been filed electronically for the 2021 compliance year. Ninety-nine percent of the active members of the North Carolina State Bar complied with the mandatory CLE requirements for 2021. The report forms show that North Carolina lawyers took a total of 376,085 hours of CLE in 2021, or 14 CLE hours on average per active member of the State Bar. This is two hours above the mandated 12 CLE hours per year.

The CLE program operates on a sound financial footing and has done so almost from its inception over thirty years ago. Funds raised from attendee and non-compliance fees not only support the administration of the CLE program but also supplement three programs that are fundamental to the administration of justice and the promotion of the professional conduct of lawyers in North Carolina. The program’s total 2021 contribution to the operation of the Lawyers Assistance Program (LAP) was $334,844.73. As of September 30, 2022, the board has also collected and distributed $283,488.46 to support the work of the Equal Access to Justice Commission and $283,488.46 to supplement the work of the Chief Justice’s Commission on  Professionalism. In addition, the CLE program generated $70,378.93 to cover the State Bar’s costs for administering the CLE-generated funds for the LAP and the two commissions.

This year the CLE Board has proposed sweeping changes to its rules and procedures to improve the program. We are hopeful to have final recommendations to submit to the Council in early 2023

Annual Report of the Board of Legal Specialization

North Carolina’s Legal Specialization program exists for two reasons: first, to assist in the delivery of legal services to the public by identifying lawyers who have demonstrated special knowledge, skill, and proficiency in a specific field, so that the public can more closely match its needs with available services; and second, to improve the competency of the Bar. Under the guidance of the Board of Legal Specialization, and with the tireless efforts of the specialty committees and staff, our program is stronger than ever and continually achieving the very purpose for which the State Bar Council created the program in 1985. On top of that, our program is entirely self-sufficient. With the addition of 57 new specialists last November, there are nearly 1,100 certified legal specialists in North Carolina. The State Bar’s specialization program certifies lawyers in thirteen specialties. This spring, we received 111 applications from lawyers seeking certification. Of these applicants, 98 met the substantial involvement, CLE, and peer review standards for certification and were approved to sit for their respective specialty exams. In 2020 and 2021, due to public health considerations stemming from the COVID-19 pandemic, we administered our specialty certification exams using remote proctoring through ExamSoft, the software program our Board has employed in administering our exams for the past 7 years. Our experience with remote proctoring has been a resounding success, both from the

examinees’ and staff’s perspective. This year, we are offering our exams both in-person and via remote proctoring based upon the examinee’s and/or the specialty committee’s preference. We expect to continue to offer the option to take the certification exams remotely in the future, thereby increasing access to our program across the state by eliminating the barriers of time and travel that may have previously prevented lawyers from pursuing certification. To assist lawyers interested in becoming certified specialists but who are not yet qualified, in 2018 we successfully created and implemented a new process allowing lawyers to fill out a Declaration of Intent form. We continue to utilize this form to track, communicate with, and assist interested lawyers regarding the lawyer’s eligibility under the applicable certification standards.

Last year, the board, with the Council’s support, made significant strides in clarifying an existing specialty area of law and in creating a new specialty certification. First, the board approved important amendments to the administrative rules governing the criminal law specialty – these amendments clarify the criminal law specialty by creating a new sub-specialty focused on federal criminal law practice and ensure consistency among what will be three sub-specialties within criminal law: state criminal law, federal criminal law, and juvenile delinquency. Second, the board approved the creation of a new specialty in child welfare law. This area of law was identified to the board as a developing and increasingly important area of law in need of a resource for the public to identify lawyers who have objectively demonstrated their proficiency in the field.  Both efforts were considered and adopted by the Supreme Court, and the board has certified the first individuals under these new specialties.

Annual Report of the Board of Paralegal Certification

Seventeen years after the first application for paralegal certification was accepted by the board in 2005, there are today over 3,700 North Carolina State Bar certified paralegals.  In 2020, and as a product of the COVID pandemic, our program successfully pivoted to administer our certification exams via remote proctoring. Our proactive measures paid off – we continued to administer our exams despite the ever-present uncertainties brought by the COVID pandemic, and we have seen an overall increase in the number of examinees over the past eighteen months due to the exam being more accessible to paralegals across the state. Importantly, the software used to remote proctor the exams has produced minimal, if any, technological issues for examinees and assists us in ensuring the integrity of our exam. On April 23, 2022, we administered our paralegal certification exam to 140 applicants via remote proctoring; of those applicants, 83 achieved passing scores and were so certified by the board. On October 15, 2022, we will administer our paralegal certification exam via remote proctoring to approximately 200 applicants. We anticipate designating a total of over 200 new certified paralegals in 2022. We had one of our highest application years in 2021, and the total number of applicants 2022 was equally impressive. We had hoped the switch to remote proctoring would enable more paralegals to pursue paralegal certification, particularly those who ordinarily could not afford the time or the travel expense of taking the exam at one of our traditional testing locations. I am delighted to report that our hope has become our experience, and I am proud that our program converted the difficulties of 2020 and 2021 into opportunities to evolve our program for the betterment of legal services offered by paralegals in all parts of our state. Also, in 2022, the board will have considered over 3,700 recertification applications. To maintain certification, a certified paralegal must complete six hours of continuing paralegal education (CPE) credits annually, including one hour of ethics.

Client Security Fund Annual Report

Pursuant to the Rules of Administration and Governance of the Client Security Fund of The North Carolina State Bar (the “Fund”), the Board of Trustees submits this annual report covering the period October 1, 2021, through September 30, 2022.

The Fund was established by order of the Supreme Court dated October 10, 1984 and commenced operations January 1, 1985. As stated by the Supreme Court, the purpose of the Fund is “. . . to reimburse, in whole or in part in appropriate cases and subject to the provisions and limitations of the Supreme Court and [the] Rules, clients who have suffered financial loss as a result of dishonest conduct of lawyers engaged in the private practice of law in North Carolina … .” Claims Procedures The Fund reimburses clients of North Carolina attorneys where there was wrongful taking of the clients’ money or property in the nature of embezzlement or conversion, which money or property was entrusted to the attorney by the client by reason of an attorney/client relationship or a fiduciary relationship customary in the practice of law. Applicants are required to show that they have exhausted all viable means to collect those losses from sources other than the Fund as a condition to reimbursement by the Fund. Specific provisions in the Rules declare that certain types of losses are non-reimbursable. All reimbursements are a matter of grace in the sole discretion of the Board and not a matter of right. Reimbursement may not exceed $100,000 to any one applicant based on the dishonest conduct of an attorney.

During the period October 1, 2021 – September 30, 2022, the Board decided 65 claims, compared to 61 claims decided the preceding fiscal year. For a variety of reasons under its rules, the Board denied 40 of the 65 claims in their entirety. Of the 25 remaining claims, some were paid in part and some in full. Reimbursements authorized by the Board totaled $349,722.88.

NC IOLTA Annual Report

NC IOLTA funded organizations providing legal assistance and representation. In 2021, NC IOLTA provided funding of more than $4.8 million to 15 organizations that provide legal aid to individuals, families, and children. Grants support access to housing and shelter, family safety, and healthcare, and protect the basic human rights of North Carolinians.  NC IOLTA supported conversations about unmet civil legal needs in North Carolina. With support from NC IOLTA, the NC Equal Access to Justice Commission released the 2020 Legal Needs Assessment in April 2021, the first comprehensive assessment of civil legal needs in North Carolina in more than two decades. NC IOLTA continues to support conversations about how we can improve the availability of legal services.

NC IOLTA grantees continued service to those most in need.  Grantees closed more than 31,000 cases impacting 91,000 household members. Of 38,000 clients served, nearly 7,000 were seniors, 2,200 were children, and 2.000 were veterans. Pro bono volunteers contributed 16,000 of service.

NC IOLTA released the 2023 IOLTA grant application and information in August. In anticipation of the grant cycle, the Board approved several changes to grant policies and criteria. The deadline for submission of grant requests was on September 23. 37 requests were submitted for funding exceeding $7.83 million. Staff are reviewing applications and meeting with applicants to collect additional information prior to the Board’s review of applications later this year. 2023 awards will be finalized and announced in mid-December.

The next quarterly meeting will take place January 17-20, 2023.

Thank you, and please let me know if you have any questions, concerns, or criticisms.  I will do my best to help.

Take care,

Anna

Dear Friends and Colleagues –

I hope you are well. Though Albert Einstein said “time is an illusion,” my tardiness in this report is very real, and I apologize. This report about the April meeting is much later than I would have liked, and I hope it has not caused you any inconvenience.

On the issue of time, one of the biggest pieces of news to come out of the meeting is that the CLE rules are being significantly overhauled. Please see below for a preview of an article that will soon be published in the NCSB Journal:

(TL; DR: (this is what the kids apparently say when they don’t have the band-width to read something – it stands for “Too Long, Didn’t Read”).  Here is my take on the new rules if you don’t feel like reading the article now: they change the reporting requirements so one needs to do 36 hours of CLE in three years, rather than 12 hours per year. You can take the 36 hours at whatever point you choose during three years. This does not change your annual CLE requirements if you wish to maintain any board certification. Is this a good idea, or will one be tempted to kick the can down the road and then have a 36 hour marathon in January of the year one’s hours are due? Time will tell!)

CLE Board Proposes Sweeping Changes to CLE Rules

On March 12, 2022, the North Carolina State Bar’s Board of Continuing Legal Education (CLE Board) approved large-scale amendments to its rules following a multi-year review process. The CLE Board believes that these proposed changes will have the combined effect of providing more flexibility for lawyers while also improving efficiency for the CLE program. This Executive Summary details the key changes. The full text of proposed rule changes follows this summary. Lawyers are encouraged to read both the summary and the full-text version of the proposed amendments.

The rules of the Continuing Legal Education program were originally adopted by Order of the Supreme Court in 1987. While various minor changes have been made in the 35 years since adoption, the general structure of the CLE program remains unchanged since its inception. Requirements that once made practical sense (e.g., the Annual Report Form requirement), and administrative tasks that were easier to accomplish when there were fewer licensed lawyers (e.g., collecting fees based on credit hours), have become both inefficient and unnecessary.

Beginning in 2020, the Board of Continuing Legal Education undertook an all-encompassing review of its rules to create a more efficient and flexible CLE program. The review included meetings with State Bar CLE directors in other states, where board members were able to ask questions and learn what works best around the country. The review process was conducted transparently (meetings are available on the State Bar’s YouTube page), and the Board received regular feedback from CLE providers, including the North Carolina Bar Association.

The proposed rule changes were presented to the North Carolina State Bar Council in April and were subsequently approved for publication. The CLE Board and the Council are very interested in receiving comments from both lawyers and sponsors. In addition to publication in this edition of the Journal, we intend to hold multiple question and answer sessions for lawyers, and we are available to meet with bar groups and other professional associations over the next quarter. The CLE Board, along with the Council, will review any comments received. Following the comment period, if no substantive changes are needed, the rules will come back before the State Bar Council for adoption. The adopted rules will then be sent to the Supreme Court for its review and approval. It is the Board’s desire that these new rules will be effective beginning with the 2023 CLE year.

KEY CHANGES TO CLE RULES

Increase Reporting Period

Three-year reporting period for lawyers to complete their CLE requirements. Lawyers split into 3 reporting groups.

Reason: Gives lawyers more flexibility to take courses at their own pace and eases administrative burden on CLE staff.

No “Grace Period”

The CLE year will run from March 1 through the end of February.

Reason: Most lawyers do not realize that the CLE year ends in December, and that January/February is meant to be a grace period. A clean 12-month CLE year is more efficient for everyone.

Eliminate Annual Report

The requirement to file an Annual Report is eliminated.

Reason: If a lawyer’s CLE record shows compliance with the requirements, a filing requirement is unnecessary.

No Carry-Over Credit

Carry-over credit from one period to another is prohibited.

Reason: The trade-off for a 3-year reporting period is eliminating carry-over credit. This will also increase administrative efficiency.

Change Fee Structure

Changes from a $3.50/hr fee to program application fees and an annual CLE attendance fee (likely $25) paid during the membership dues process.

Reason: Improves efficiency for the CLE program, reduces a lawyer’s annual cost of attendance (currently $42), and eliminates “bill collecting.”

Improved Enforcement

Lawyers who fail to complete their hours requirements will be subject to additional compliance fees and a more streamlined suspension process.

Reason: With additional flexibility comes increased individual responsibility and accountability.

ADDITIONAL INFORMATION

• As part of the 36-hour requirement over three years, lawyers must complete at least:

o 6 Ethics hours (Professional Responsibility, Professionalism, or Social Responsibility);

o 1 Professional Well-Being and Impairment (PWI) hour; and

o 1 Technology Training hour.

• The CLE Board intends to create staggered reporting periods so that roughly one-third of lawyers are reporting each year. This will require a one-time modification to the rules where one-third of lawyers have a 1-year/12-hour requirement and one-third have a 2-year/24-hour requirement before starting the three-year reporting period.

• Program application fees will be based on the number of credit hours sought for approval and will be due upon submission of the program application.

• Courses offered for free will have a reduced application fee and will be searchable in the CLE Course Directory.

• On-Demand programs will be approved for three years and thereafter may be renewed annually as long as the program continues to meet accreditation standards.

• Eliminating carry-over credit may frustrate lawyers who like to stay ahead on their requirements. The reasons for eliminating carry-over credit include:

o A three-year reporting period provides the flexibility and additional time that carry-over credit now provides.

o If carry-over credit was permitted (36-hours, for example) then lawyers could theoretically take 72 hours in year 1 of their reporting period and not have to complete another CLE program for 8 or 9 years. This is not a good way to ensure continued competency in the profession.

o The elimination of carry-over credit improves administrative efficiency, and the Board believes it is an acceptable trade-off for the additional flexibility provided to lawyers in these changes.

• The additional credit for teaching CLE courses (6 hours for every hour taught) remains the same.

• The Substance Abuse and Mental Health program definition is modernized and is now called Professional Well-Being and Impairment (PWI).

• A new type of ethics program called “Social Responsibility” is created and is defined as “a program, directly related to the practice of law, devoted to education about diversity, inclusion, bias, or equal access to justice.” The program is not mandatory. Lawyers can choose to take Social Responsibility programs as part of their 6-hour ethics requirement.

• Exemptions will be claimed during the annual membership dues renewal process and will be effective for one year. Exempt lawyers will not be assessed an annual attendance fee.

• To encourage and recognize service to the profession, the CLE Board recommends that State Bar Councilors be exempt from CLE requirements in the same manner as members of the Board of Law Examiners.

• There will be increased penalties for late-compliance, and a faster process for administrative suspensions due to non-compliance. Notices to Show Cause and Orders of Suspension will operate in tandem without the need for additional Council action.

• The designation of “Registered Sponsor” is eliminated.

• Sponsors failing to timely submit attendance reports will be charged a late reporting fee and also prohibited from having new courses approved for credit until the report is filed.

• The CLE Board intends to maintain its historical funding in support of the Chief Justice’s Commission on Professionalism (CJCP) and the Equal Access to Justice Commission (EAJC).

• Specialists should note that these changes do NOT impact the CLE requirements for obtaining and maintaining specialty certification through the Board of Legal Specialization. Existing specialists and lawyers intending to apply for specialty certification in their practice area should consult the administrative rules governing their specific specialty for a full list of CLE requirements associated with specialty certification (including annual, cumulative, and content requirements).

In other NCSB news:

1. Upon recommendation from the Issues Committee, the Full Council adopted the following written Diversity, Equity, and Inclusion (DEI) Statement:

Lawyers swear an oath to defend the United States and North Carolina Constitutions. These constitutions decree all persons are created equal and endowed with certain inalienable rights and guarantee all persons equal protection of the laws. The North Carolina Constitution also specifically prohibits discrimination by the State against any person because of race, color, religion, or national origin. The North Carolina State Bar considers diversity and inclusion essential elements of promoting equity and preventing discrimination. Diversity encompasses characteristics that make each of us unique. Equity promotes fairness by aiming to ensure fair treatment, access, opportunity, resources, and advancement for everyone to succeed. Inclusion fosters a collaborative and respectful environment where diversity of thought, perspective, and experience is valued and encouraged. The North Carolina State Bar therefore recognizes diversity, equity and inclusion as core values and is committed to being intentional about incorporating diversity, equity and inclusion into its operations and mission.

This will be published on the State Bar’s website in the About Us section, Lawyer’s Handbook, State Bar Journal, and on social media as appropriate.

2. Grievance Committee: The Grievance Committee dismissed 115 files, continued 4 files, referred one lawyer to the Lawyer Assistance Program, referred 3 lawyers to the Trust Accounting Compliance program, issued 12 letters of warning, 4 admonitions, 4 reprimands, 1 censure and referred 9 cases to the Disciplinary Hearing Commission.

3. Ethics Committee: The Ethics Committee introduced one FEO to be adopted by Council:

a. 2022 Formal Ethics Opinion 1

Attorney Serving Dual Role of Guardian ad Litem and Advocate

Proposed opinion rules that an attorney appointed by the court as the Guardian ad Litem

and the Attorney Advocate in an abuse, neglect, and dependency proceeding may not

testify as a witness unless directed to do so by the court.

The Ethics Committee proposed three Formal Ethics Opinions for Publication:

a. Proposed 2022 Formal Ethics Opinion 2

Limited Representation in a Criminal Matter

Proposed opinion rules that a privately retained lawyer may provide limited representation to a criminal defendant who has been appointed counsel.

b. Proposed 2022 Formal Ethics Opinion 3

Inclusion on Allied Professional’s List of Recommended Lawyers

Proposed opinion rules that a lawyer may be included in an allied professional’s list of recommended lawyers provided that the professional does not disseminate the lawyer’s name and information in a manner that is prohibited by the Rules of Professional Conduct.

c. Proposed 2022 Formal Ethics Opinion 4

Billing Considerations for Overlapping Legal Services

Proposed opinion rules that a lawyer may not separately bill multiple clients a full hourly rate when the lawyer provides legal services to all clients simultaneously. Any increase in the lawyer’s efficiency in providing legal services must be passed on to the client.

The Ethics Committee is also publishing a rule amendment –

Rule 1.19 – expansion of the current prohibition on lawyers having sex with clients; the rule will now prohibit not just sexual activity with clients but also sexual communications with clients. These amendments are in response to increased reports of sexually inappropriate (and unsolicited) communications between lawyers and clients.

4. In January 2020, the Council established a Subcommittee on Regulatory Change under the umbrella of the Issues Committee. The subcommittee was tasked to “study the various efforts taking place in the U.S. and abroad aimed at examining and proposing potential changes to the regulatory structure of the legal profession, with a focus on how regulatory changes could improve access to justice.” A lot of people worked very hard on this committee. The subcommittee was going to present its findings at the April meeting, but it became clear this would have to wait until the July meeting after many questions were raised about the report and its conclusions and intentions.

The subcommittee made six recommendations, including “Pursue a Limited License for Nonlawyers/paraprofessionals.” Before the subcommittee could even make its presentation, it became clear there were a lot of questions and the matter would need to be tabled until July. It is unclear to me what will take place on this matter going forward, but we will learn more in July and I will keep you posted.

Episode 11 of the State Bar’s BarTalk podcast is now available!  This episode is a recap of the April Quarterly Meeting.  BarTalk – Episode 11

Please let me know if you have any questions, concerns or criticisms. I will do my best to help. Take care, Anna