THE NORTH CAROLINA STATE BAR

SPRING JOURNAL2018

IN THIS ISSUE NC Uniform Power of Attorney Act page 8 Tying the Knot? Or Just Moving In? page 20 To Build a Courthouse page 22 NORTH CAROLINA PRO BONO RESOURCE CENTER

NC PRO BONO REPORTINGREPORRTTING DEADLINE: MARCH 31, 2018 WHAT SHOULD I REPORT? The NC Pro Bono Reporting Form collects information about all the activities encouraged in NC Rule of Professional Conduct 6.1: pro bono legal service, legal service at a substantially reduced fee, activity that improves the law, the legal system, or the legal profession, non-legal community service, and financial support of legal service providers. HOW DO I REPORT? Visit ncprobono.org/volunteer/reporting and provide information about the activities included in NC Rule of Professional Conduct 6.1. You will need basic information about your number of pro bono hours, organizations through which you provided pro bono legal service, and types of pro bono legal services you provided. You will not need specific totals of hours or amounts for the other types of activities included in Rule 6.1. Finally, you will need your NC State Bar ID Number to submit your entry. WHY SHOULD I REPORT? There are three major reasons to report your pro bono legal service: (1) it’s a way to showcase attorney volunteerism in NC -- we want to share the good work being done by the legal profession in our state; (2) it’s an opportunity to encourage your peers to grow their pro bono involvement by sharing about your own engagement; and (3) it’s an opportunity for recognition -- attorneys who report at least 50 hours of pro bono legal service in a year will be inducted into that year’s cohort of the NC Pro Bono Honor Society and receive a certificate from the Supreme Court of North Carolina recognizing their achievement. CONNECT ncprobono.org 919.890.1090 facebook.com/ncprobono PO Box 2448 WITH US twittetwitter.com/ncprobonor.com/ncprobono Raleigh, NC 27602 THE NORTH CAROLINA STATE BAR JOURNAL FEATURES Spring 2018 Volume 23, Number 1 8 The North Carolina Uniform Power of Editor Attorney Act: A Practical Introduction Jennifer R. Duncan for Real Estate Practitioners By James E. Creekman 18 General Assembly Eliminates Access © Copyright 2018 by the North Carolina to Civil Justice Act State Bar. All rights reserved. Periodicals By Jennifer M. Lechner postage paid at Raleigh, NC, and additional offices. Opinions expressed by contributors 19 On the Way to the Courthouse—The are not necessarily those of the North Law of the Letter Carolina State Bar. POSTMASTER: Send By R. Michael Wells Sr. address changes to the North Carolina State Bar, PO Box 25908, Raleigh, NC 27611. 20 Tying the Knot? Or Just Moving In? The North Carolina Bar Journal invites the By Robert A. Mason submission of unsolicited, original articles, essays, and book reviews. Submissions may 22 To Build a Courthouse be made by mail or email (jduncan@ By G. Gray Wilson ncbar.gov) to the editor. Publishing and edi- torial decisions are based on the Publications 25 New Pro Bono Regional Councils Committee’s and the editor’s judgment of Convene the quality of the writing, the timeliness of By Jared S. Smith the article, and the potential interest to the readers of the Journal. The Journal reserves 26 The Criminal Court System is the the right to edit all manuscripts. The North Theatre of the Real Carolina State Bar Journal (ISSN 10928626) By John G. Gehring is published four times per year in March, June, September, and December under the direction and supervision of the council of the North Carolina State Bar, PO Box 25908, Raleigh, NC 27611. Member rate of $6.00 per year is included in dues. Nonmember rates $10.73 per year. Single copies $5.36. The Lawyer’s Handbook $16.09. Advertising rates available upon request. Direct inquiries to Director of Communications, the North Carolina State Bar, PO Box 25908, Raleigh, North Carolina 27611, tel. (919) 828-4620.

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THE NORTH CAROLINA STATE BAR JOURNAL 3 DEPARTMENTS 34 Lawyer Assistance Program BAR UPDATES 5 President’s Message 36 Pathways to Wellbeing 42 In Memoriam 6 State Bar Outlook 38 IOLTA Update 51 Client Security Fund 28 The Disciplinary Department 40 Legal Ethics 52 Distinguished Service Award 30 Trust Accounting 41 Proposed Ethics Opinions 53 Law School Briefs 31 Legislative Update 45 Rule Amendments 32 Legal Specialization

Officers 13: Michael R. Ramos, Shallotte 27A: Timothy L. Patti, Gastonia John M. Silverstein, Raleigh 14: Dorothy Hairston Mitchell, 27B: Rebecca J. Pomeroy, Lincolnton President 2017-2018 Durham 28: Anna Hamrick, Asheville G. Gray Wilson, Winston-Salem William S. Mills, Durham 29A: H. Russell Neighbors, Marion President-Elect 2017-2018 15A: Charles E. Davis, Mebane 29B: Christopher S. Stepp, C. Colon Willoughby Jr., Raleigh 15B: Charles Gordon Brown, Chapel Hill Hendersonville Vice President 2017-2018 16A: Terry R. Garner, Laurinburg 30: Gerald R. Collins Jr., Murphy L. Thomas Lunsford II, Chapel Hill 16B: David F. Branch Jr., Lumberton Secretary-Treasurer 16C: Richard Buckner, Rockingham Public Members Mark W. Merritt, Charlotte/Chapel Hill 17A: Matthew W. Smith, Eden Thomas W. Elkins, Raleigh Past-President 2017-2018 17B: Thomas W. Anderson, Pilot Dr. Joseph E. Johnson, Greensboro Mountain Mohan Venkataraman, Morrisville Councilors 18: Barbara R. Christy, Greensboro By Judicial District Stephen E. Robertson, Greensboro Executive Director 1: C. Everett Thompson II, Elizabeth 18H: Raymond A. Bretzmann, High L. Thomas Lunsford II City Point 2: G. Thomas Davis Jr., Swan 19A: Herbert White, Concord Assistant Executive Director Quarter 19B: Clark R. Bell, Asheboro Alice Neece Mine 3A: Charles R. Hardee, Greenville 19C: Darrin D. Jordan, Salisbury 3B: Debra L. Massie, Beaufort 19D: Richard Costanza, Southern Pines Counsel 4: Robert W. Detwiler, Jacksonville 20A: John Webster, Albemarle Katherine Jean 5: W. Allen Cobb Jr., Wilmington 20B: H. Ligon Bundy, Monroe 6: W. Rob Lewis II, Ahoskie 21: Michael L. Robinson, Winston- Editor 7: Randall B. Pridgen, Rocky Mount Salem Jennifer R. Duncan 8: C. Branson Vickory III, Goldsboro Kevin G. Williams, Winston- 9: Paul J. Stainback, Henderson Salem Publications Editorial Board 9A: Alan S. Hicks, Roxboro 22A: Kimberly S. Taylor, Taylorsville Darrin D. Jordan, Chair 10: Heidi C. Bloom, Raleigh 22B: Sally Strohacker, Mocksville Nancy Black Norelli, Vice Chair Walter E. Brock Jr., Raleigh 23: John S. Willardson, Wilkesboro Phillip Bantz (Advisory Member) Nicholas J. Dombalis II, Raleigh 24: Andrea N. Capua, Boone Richard G. Buckner Theodore C. Edwards II, Raleigh 25: M. Alan LeCroy, Morganton Andrea Capua Katherine Ann Frye, Raleigh 26: David N. Allen, Charlotte Margaret Dickson (Advisory Member) Robert Rader, Raleigh Robert C. Bowers, Charlotte John Gehring (Advisory Member) Donna R. Rascoe, Raleigh A. Todd Brown, Charlotte Ashley London (Advisory Member) Warren Savage, Raleigh Mark P. Henriques, Charlotte Stephen E. Robertson 11A: Eddie S. Winstead III, Sanford Dewitt McCarley, Charlotte Christopher S. Stepp 11B: Marcia H. Armstrong, Smithfield Nancy Black Norelli, Charlotte John Webster 12: Lonnie M. Player Jr., Fayetteville Eben T. Rawls, Charlotte

4 SPRING 2018 THE PRESIDENT’S MESSAGE

The View from Here

B Y J OHN M. SILVERSTEIN

fter a nearly 30-year tenure in morning to a parking lot adjacent to a state struggles to a better place through positive a suburban office building, park. A car that belonged to an attorney changes. It is last on the agenda because the three years ago the world friend had been discovered abandoned, and a presentation is so powerful that any subject headquarters of my law firm, group of his friends was requested to meet that followed would lose its significance. SatiskyA & Silverstein, LLP, relocated to the there to assist the law enforcement officers It is not the purpose of this article to dis- top floor of an older two-story building on who had been called in to investigate. About cuss the litany of issues that impair the well- Hillsborough Street in an area near down- a dozen of us received instructions from being of lawyers, nor to address the signifi- town Raleigh that is transitioning from a police officers who would first enter the park cant number of practitioners who are directly quiet neighborhood of small retail and office entrance near the vehicle, and then enlist our affected. The impact of that impairment on uses to a prime destination assistance in a search if it was our profession and the communities in for more intensive mixed-use needed. We didn’t have to which we practice is well documented. “The developments featuring high wait long. The officers Path to Lawyer Well-Being: Practical rise buildings with offices, informed us that they found Recommendations for Positive Change,” restaurants, stores, and apart- our friend’s body at a picnic published by the National Task Force on ments. Before our move, I table a few hundred feet into Lawyer Well-Being in August 2017, contains argued with Howard Satisky, the park. We shuffled our a comprehensive analysis of the challenges my partner of more than 40 feet on the cold pavement we face as a profession and our potential for years, over who would occu- not wanting to stay or leave finding better paths to follow. The report py the spacious office with as we struggled with our dis- contains specific recommendations and large windows overlooking belief at what we knew to be structural, institutional, and suggested rule Raleigh’s gateway from the true—our friend had com- changes for stakeholders like state bar regula- west, Hillsborough Street, mitted suicide at the age of tors, CLE, bar associations, law schools, the and who would be relegated 40. I still wish there was judiciary, and law firms to help shift the cul- to the smaller office adjacent to venerable, something I could have done, and something ture of the profession away from stigmatizing but much sleepier, West Street. I lost; conse- that could have been done for him. help-seeking behavior to creating a profes- quently, this article is being written from the At his funeral we were advised not to try sional landscape that encourages lawyers to large office with the sounds of traffic and to understand what led to this act, but to be seek help when they need it. In November train blasts as my inspiration. grateful that we could not understand what 2017 I attended the NCLAP annual meet- One of the disadvantages of occupying a he did or why he did it. Those words were ing, and was impressed by the work of our large office is the necessity to cover the extra helpful, but not comforting. Not long after- volunteers and with their commitment to space on the blank walls with pictures, art, wards, my friend’s widow cleaned out his law address the challenges identified by the task and memorabilia. Like most, my walls fea- office and gave me a token of remembrance force. NCLAP Executive Director Robynn ture reminders of people and milestones that had been displayed in his office—the Moraites and her staff do an excellent job of important to me and my career. One of the framed Disraeli quote. When I look at it interacting with North Carolina lawyers and smallest, but most significant, is a framed now, I still remember the surreal experience coordinating our volunteers. Our volunteers quote which has been in my possession for of seeing his car, isolated in the parking lot, are dedicated to helping individuals, secure more than 30 years. It is just one line of print while waiting for the words we did not want in the knowledge that guiding them to better on white paper surrounded by a black back- to hear, but knew would come. paths also helps their families, firms, and ground in a slender chrome frame. The Each year the officers and staff representa- communities. quote is by British Prime Minister Benjamin tives of the State Bar visit four district bars to I am hopeful that the publication of the Disraeli, who said in 1851, “Justice is truth provide an informational overview of the State National Task Force on Lawyer Well-Being will in action.” But it is not the words that are Bar’s structure and activities. The final presen- both develop greater awareness of the important to me, it is the circumstances lead- tation is always the most interesting and com- continuing need to provide assistance to ing to its acquisition that is the reason it pelling. It is delivered by a NC Lawyer impaired lawyers, and prompt key stakeholders remains on my wall. Assistance Program volunteer, and generally identified in the report to implement the In December, 1985 I received a call one includes his or her honest and descriptive weekend asking me to come early the next details of a difficult journey from personal CONTINUED ON PAGE 24

THE NORTH CAROLINA STATE BAR JOURNAL 5 STATE BAR OUTLOOK

Saving Paper

B Y L. THOMAS L UNSFORD II

y wife and I are the every active member of the State Bar and Now, it must be said that these questions authors of what we the LCL is mailed only to people who have were asked in a sort of contextual vacuum. believe to be the world’s foolishly expressed an interest in our fami- The cost of printing and mailing the mag- longest Christmas letter. ly—the recipients of both publications are azine was, for instance, not mentioned in ThisM belief, though unsubstantiated by the hardy perennials. In each case there are the survey. As it happens, we expect to Guinness Book, is almost certainly shared really only two surefire ways to unsub- spend something in the neighborhood of by most, if not all, of the people who annu- scribe—death and disbarment, and I’m not $140,000 of your dues money this year to ally receive it. Those lucky few, who consti- too sure about death. The publications also make sure that you receive the thing itself, tute our list or “base,” share an affinity for tangible as opposed to its digital facsimile, which is would probably assign it media. To be sure, both can essentially costless. That’s not chicken feed, other superlatives as well, be had and enjoyed in an to be sure, but it’s not a terribly significant like: most prolix, least nec- electronic format, but I component of our operational budget of essary, most politically would contend that the about $9,500,000. And, it’s not unmarried incorrect, least likely to be experience of each is dimin- to revenue. We annually receive about completely read, and, of ished by device and digitiza- $40,000 of advertising income that offsets course, most ecologically tion. Honestly, who can the expense of publication. So, while it isn’t burdensome—owing to its deny the pleasure and satis- cheap to be tangible, it’s a luxury we can palpable and “pulpable” faction of owning a really probably afford for the time being. contribution to municipal fine piece of Yuletide corre- We learned a few other things from the landfills throughout North spondence? And who survey. When important information America each January. wouldn’t rather thumb a regarding the profession is time-sensitive Though small in compari- glossy magazine than click and can’t wait to be inked, it’s most wel- son to the holiday avalanche of Amazonian on a fleeting binary image? And yet, the come in the form of email from the State cardboard, our ten-page letters are, when common wisdom seems to be that most of Bar. Although we have been quite diligent consigned to the dust bin of history, quite our readers—who are younger and more in pushing out content through our social impressive additions to the fossil record of hip to technology with each passing year— media platforms, it appears that nothing which our family can be justifiably proud. prefer to consume their media, including beats good old reliable email when it comes And yet, one wonders if there might be a holiday greetings and professional periodi- to a news flash from Raleigh. Other better and more socially responsible way cals, in cyberspace. insights gleaned from your responses were for our words to “echo through eternity”? Last fall we decided to test that hypoth- anecdotal rather than quantifiable. It All of this is by way of saying that I’ve esis, at least as far as the State Bar Journal is appears that many of you value the maga- been thinking a lot about paper lately—its concerned, by surveying the lawyers of zine as a kind of tangible representation of value, its waste, its retention, and its North Carolina. Among other things, our your affiliation with and connection to the importance in our personal and profession- members were asked in an emailed ques- profession through the organized Bar. al lives. Now, I understand that the tionnaire whether they would prefer to Whether it’s read or not, its presence on the Lunsford Christmas Letter (the “LCL”), receive the Journal in an electronic or hard corner of your desk or even in your rest- though an item of vast cultural significance copy format. Participation in the survey room bespeaks your identification with us and near universal appeal, may not be an was decent, if not overwhelming. About all. In a professional world where fragmen- entirely useful metaphor for consideration 14% of the membership responded. The tation seems to be accelerating, it is a rare of the State Bar and its reliance on paper. majority of those responding—about shared symbol of what we still have—and But there are commonalities that are com- 56%—expressed a preference for the hard hope to have—in common. pelling and instructive, especially when you copy, as did 46% of the respondents under Of course, the Journal isn’t merely deco- compare our merry missive with its regula- the age of 40. Interestingly, about 62% of rative. It is reasonably well read, according tory counterpart—the State Bar Journal. the younger group said that they would not to your responses. The feature to which Although the composition of our mailing “opt out” if given the choice to remove most of you turn inevitably—and first—is, lists is different—the Journal is sent to themselves from the Journal’s mailing list. naturally, the disciplinary page. Like

6 SPRING 2018 wrecks on Interstate 40 and wardrobe mal- attempt to comply has been inordinately functions during the Super Bowl’s half-time time-consuming and frustrating. Concerned show, you just can’t bear to look away. Now, that some of our records don’t quite fit with- I must say that the information reported in the newly prescribed categories, and that therein, and your Pavlovian response to it, is we might “guess wrong” and prematurely nothing to be ashamed of. Rather, it mirrors destroy records that turn out to have been the experience of lawyers throughout the misclassified, members of our staff have country. Everyone who occupies my office sought small amendments to the new “func- in our sister states reports the same phenom- tional schedules” specific to the State Bar. enon. We all want to see who got “stung,” Few accommodations have as yet been and we like to heave that collective sigh of allowed. Instead, the officials in charge have relief in recognition of the fact that it wasn’t responded by assuring our people that viola- any of us. That experience of the discipli- tions of the new law are “only misde- nary page is, oddly enough, part of what meanors.” Small comfort, that. defines and unifies lawyers, not just in The retention and destruction of public North Carolina but across the entire coun- records is serious business. We have an obli- try. It is a good thing. gation to handle such public property in a Although the data is unclear, it appears responsible and lawful manner. In so doing that an embarrassingly large number of you we must manage an incredible volume of flee directly from the disciplinary page to paper, for which space can be reserved the executive director’s column. No one indefinitely only at great expense and con- knows why this should be so, but some siderable inconvenience. We need certainty have said that the author’s characteristic as to how to proceed. We also need rules of departure from the norms of good legal reason. In that regard, we were recently writing is perversely appealing, offering advised of the various ways in which public thrills of the sort heretofore associated documents that are properly subject to mainly with wrecks and wardrobe malfunc- destruction can—and cannot—be lawfully tions. Others readily admit that they sim- destroyed. Surprisingly, they cannot be WWee add value to your ply have an unhealthy appetite for irrever- simply “thrown away.” They must be oblit- ence, unsupported assertion, the passive erated. Allowable methods include, we practice by extending your voice, and topics that are presumptively were told, burning, shredding, and immer- expertise and helping your uninteresting. Whatever the cause, the fact sion in acid vats. Regrettably, we were not clients reachreach their that you’re guilty of reading this far into my advertent to this when we were designing philanthrphilanthropicopic goals. article on the printed page can always be our new building a few years ago. Had we plausibly denied, if necessary. If, however, only known, acid vats could have been eas- you arrived at this point by means of your ily incorporated in our mail room where so CALL 800.532.1349800.532.1349 computer, the offending “click” has already much unwanted paper tends to arrive at NCCONCCOMMUNITYFOUNDATION.ORGMMUNITYFOUNDAATTTION.ORGION been permanently recorded and we “know the State Bar. As I understand it, the regu- who you are.” You might as well confess. lations requiring such draconian methods Actually, confession is more of an issue were prompted a while back when some- in regard to the destruction of State Bar body who had custody of records that were ought to be risked at the county dump. publications than their creation or con- ripe for destruction thought it would be a Still, the bulk of the State Bar’s paper is sumption. Recently, our agency—like good idea to just throw the stuff away. As it subject to disclosure under the Public almost every other organ of state govern- happened, the material contained confi- Records Act. Whether or not it’s in the ment—became subject to new regulations dential information not suitable for those hands of the public at any given time, it is of byzantine complexity regarding the dis- who like to do their reading at the landfill. certainly liable to be and is there for the position of public records. It has been In order to prevent this sort of thing from asking. Why it can’t be placed in the “circu- ordained that a new “one size fits all” happening again, it was decreed that lar file” when it’s due for destruction is scheme of classifying public records will destructive technologies like those listed beyond me. And I don’t understand why supplant the old “retention schedules” that above would be required in every case as a the lawyers of North Carolina must bear were customized over many years to kind of “Final Solution” to the paper prob- the cost of acid vats and shredders. Thank accommodate the vastly different kinds of lem. That made good sense in regard to goodness people can still throw away the records generated by agencies as unlike as sensitive material not in the public domain. Lunsford Christmas letter with a clear con- the State Bar and the Department of The State Bar’s investigative grievance files, science. After all, it’s only a misdemeanor. n Transportation. Although the effort is no for instance, ought never to see the light of doubt well-intentioned and the people in day. And no document bearing personal L. Thomas Lunsford II is the executive charge are just doing their jobs, our nascent information like social security numbers director of the North Carolina State Bar.

THE NORTH CAROLINA STATE BAR JOURNAL 7 The North Carolina Uniform Power of Attorney Act: A Practical Introduction for Real Estate Practitioners

B Y J AMES E. CREEKMAN

an we all agree that dealing with a power of

attorney in North Carolina has long been, at

best, a frustrating experience? Well, help is

on the way! On July 20, 2017, Governor

Cooper signed SenateC Bill 569, “An Act to Adopt the Uniform Power of Attorney Act in this ©iStockphoto.com/DNY59

State,” into law as Session Law 2017-153. It took effect on January 1, 2018, and if you haven’t already done so, you need to read it if you practice real estate law or are called upon to consider powers of attorney.

At the 10,000 foot level, the new law Section of the North Carolina Bar l The “Act” refers to the North Carolina repeals or amends many of the existing Association, which was very careful in its Uniform Power of Attorney Act, codified as statutes dealing with powers of attorney and drafting efforts to invite comments, sugges- Chapter 32C of the North Carolina General adopts the Uniform Power of Attorney Act as tions, and input from a wide variety of inter- Statutes. drafted by the National Conference of ested groups, including the North Carolina l A “POA” is a power of attorney—that Commissioners on Uniform State Laws, Bankers Association, clerks of court, registers is, a document signed by the principal that albeit with a multitude of tweaks and modi- of deeds, advocates for the elderly, the North appoints and empowers the attorney-in-fact. fications tailored specifically to our needs in Carolina Department of Justice, and other l The “principal” is the individual who North Carolina. sections of the North Carolina Bar grants authority to an attorney-in-fact in a The effort to get the legislation intro- Association. POA. duced and passed was admirably undertaken Just so we’re clear on terminology—for l The “agent” is the attorney-in-fact by the Estate Planning and Fiduciary Law ease of reference in this Article: named in a POA and authorized by the POA

8 SPRING 2018 to act on behalf of the principal. “Agent” is listing specific categories of authority that of the agent must be determined by reference the term used throughout the Act in lieu of cannot be implied from a grant of general to the powers described in existing § 32A- “attorney-in-fact.” authority—they can only be granted by 2—not the much more broadly defined l The “existing law” refers to statutes cur- express language in a POA. powers contained in Article 2 of the Act. As rently in effect regarding powers of attorney, l Article 3 offers three statutory forms: a practical matter, this means that when you many of which are amended or repealed and a statutory form POA, an agent’s certifica- evaluate the authority of an agent under a replaced by the Act. tion, and a limited POA for real property Statutory Short Form POA signed before As happens with many complex pieces of transactions. January 1, 2018, § 32A-1 is still alive and legislation, changes made to a bill during the l Article 4 clarifies the relationship of the well, and you must determine the agent’s legislative process can result in minor incon- Act to other law and pre-existing powers of authority under existing § 32A-2, not sistencies or incorrect cross-references in the attorney. Chapter 32C. bill as finally enacted. That happened here. 2. The rules regarding durability have As a result, minor technical corrections to the The Key Things You Need To Know been greatly refined and turned topsy-turvy. Act will likely be forthcoming, probably dur- 1. Effective January 1, 2018, the existing The Act redefines incapacity and changes ing next year’s legislative session. law is (mostly) out and the Act is (mostly) the rules regarding the durability of a POA No effort will be made here to provide a in. and the requirements for registering a POA. detailed analysis of the new law; delve into While the transition from old to new is First a review of existing law: the rights, duties, and obligations of an agent fairly smooth, it is not entirely seamless. l An agent cannot act on behalf of a prin- named in a POA; or identify needed techni- Residuals of the existing law will continue in cipal after the principal becomes “incapaci- cal corrections. Instead, after a brief overview effect even after being repealed and replaced. tated” or “mentally incompetent” unless the of the Act, this article focuses on some criti- Chapter 32A of the North Carolina POA is a “durable” POA. The terms “inca- cal things that you as a real estate practitioner General Statutes is the existing law that gov- pacitated” and “mentally incompetent” are need to know about the Act and its interface erns POAs. Beginning January 1, 2018, only not defined, and, with one exception, there is with existing law. Article 3 (Health Care Powers of Attorney) no clear mechanism to determine whether a and Article 4 (Consent to Health Care for principal has become incapacitated or men- A Brief Overview of Organization and Minor) remained in effect—the rest of tally incompetent. The exception relates to a Purpose Chapter 32A was repealed and replaced by POA that becomes effective only when the As a practical matter, existing law pro- the Act. Or so it seems. principal becomes incapacitated or mentally vides little more than a template for a North According to new § 32C-4-403(a) of the incompetent (i.e., it is a “springing” POA Carolina short form POA, rigid rules regard- Act: triggered by the principal’s subsequent inca- ing durable POAs and an agent’s authority to l The Act applies to a POA created pacity or mental incompetence). In that case, make gifts from the principal’s estate, and before, on, or after January 1, 2018, unless existing § 32A-8 provides that, unless a third limited guidance for third parties dealing (i) the POA contains a clear indication of a person dealing with an agent has actual with an agent. contrary intent, or (ii) the application of a knowledge to the contrary, the third person The Act covers much more territory. It is particular provision of the Act would sub- can rely on an affidavit executed by the agent rationally organized, relatively straight-for- stantially impair the rights of a party. setting forth that such condition exists as ward, and divided into four Articles: l A rule of construction or presumption conclusive proof that the principal is inca- l Article 1 contains definitions and gen- provided by the Act applies to POAs execut- pacitated or mentally incompetent. eral provisions covering the scope of the Act, ed before January 1, 2018, unless (i) the l A POA is not a “durable” POA unless it when a POA is considered durable, the POA contains a clear indication of a contrary says it is, either by indicating it has been requirements for executing a POA, how the intent, or (ii) the application of the rule of signed pursuant to Article 2 of Chapter 32A, law that governs the meaning and effect of a construction or presumption would substan- by including the phrase, “This power of POA is determined, the relationship between tially impair the rights of a party created attorney shall not be affected by my subse- an agent and a court-appointed fiduciary, under North Carolina law in effect prior to quent incapacity or mental incompetence,” when a POA becomes effective, how a POA January 1, 2018, in which case the Act’s rule or, “This power of attorney shall become may be terminated, rules relating to the of construction or presumption does not effective after I become incapacitated or agent, guidance for third parties dealing with apply and the superseded rule of construc- mentally incompetent,” or by including sim- agents, and the relationship of the Act to tion or presumption applies. ilar words showing the principal’s intent that other laws. In short, the Act (including the presump- the authority conferred is exercisable l Article 2 sets forth detailed descriptions tion of durability discussed below) applies to notwithstanding the principal’s subsequent of an agent’s authority relating to specific POAs signed before January 1, 2018. So far, incapacity or mental incompetence. subjects such as “real property,” “tangible so good. l Also, there are two separate but related personal property,” and “banks and other But there is one glaring exception to this: rules under existing law regarding the regis- financial institutions.” In addition, Article 2 If you are dealing with a Statutory Short tration (i.e., recording) of a durable POA in addresses concerns that an agent’s authority Form POA signed before January 1, 2018, the office of the register of deeds: might be used to dissipate the principal’s under the authority of existing § 32A-1, then l A durable POA can be registered in the property or alter the principal’s estate plan by new § 32C-4-403(d) states that the authority register of deeds office before or after the

THE NORTH CAROLINA STATE BAR JOURNAL 9 principal becomes incapacitated or men- the principal does not terminate” the POA. l Incapacity based on the principal’s tally incompetent. However, a durable “Incapacity,” in turn, is precisely defined as unavailability may be verified by an attorney POA that has not been registered ceases follows in § 32C-1-102(6): at law, a judge, or an appropriate governmen- to be valid when the principal becomes Incapacity. – The inability of an individ- tal official (such as an officer acting under the incapacitated or mentally incompetent ual to manage property or business affairs authority of the US Department of State, a unless (and until) it is duly registered in because the individual has any of the follow- military officer, or a sworn federal or state the appropriate register of deeds office. ing statuses: law enforcement officer). l Once a durable POA has been duly reg- 1. An impairment in the ability to receive An agent’s authority to act on behalf of an istered in the appropriate register of deeds and evaluate information or make or incapacitated principal under a springing office, then all acts performed thereafter communicate decisions even with the use durable POA does not automatically termi- by the agent pursuant to the durable POA of technological assistance. nate when the principal regains capacity— during any period of incapacity or mental 2. Is missing, detained, including incar- the POA and the agent’s authority continue incompetence of the principal have the cerated in a penal system, or outside the in effect until formally terminated. same effect as, and are fully binding to the United States and unable to return. 3. The Act covers more than North same extent as, would be the case were the l According to § 32C-1-104, a POA is a Carolina POAs. principal not incapacitated or mentally durable POA unless it “expressly provides The Act is much broader in its scope than incompetent. that it is terminated by the incapacity of the existing law—pursuant to § 32C-1-103, the The practical implications of these two principal.” This is the complete opposite of Act covers all POAs (including POAs from existing rules are as follows: existing law, which says a POA is not a other states and foreign countries) except for l As long as the principal is fully compe- “durable” POA unless it says it is. the following: tent to act on the principal’s own behalf (i.e., However, as is the case under existing law, it l A power to the extent it is coupled with the principal is neither incapacitated nor is important to remember that if a POA is an interest, including a power given to or for mentally incompetent), a durable POA does NOT a durable POA, the agent’s authority to the benefit of a creditor in connection with a not have to be registered. act on the principal’s behalf automatically ter- credit transaction. A “power coupled with an l If a durable POA is duly registered in minates when the principal becomes incapaci- interest” frequently appears in loan agree- the appropriate register of deeds office tated. ments, security instruments, and other com- before the principal becomes incapacitated l The Act does not require a POA mercial contracts—these powers are not gov- or mentally incompetent, the agent can con- (whether or not it is durable) to be registered erned by the Act. tinue to act without interruption after the (i.e., recorded) in the office of the register of l A power to make health care decisions. principal becomes incapacitated or mentally deeds. An effective health care POA must still com- incompetent. However, it is important to remember that ply with Article 3 of Chapter 32A, and an l If the durable POA has not been duly existing G.S. 47-28 continues to require a POA effective consent to provide health care for a registered in the appropriate register of involved in a real estate transaction to be regis- minor must still comply with Article 4 of deeds office before the principal becomes tered (i.e., recorded) in the office of the register Chapter 32A. incapacitated or mentally incompetent, the of deeds, regardless of whether or not it is l A proxy or other delegation to exercise agent cannot act on behalf of the principal durable. voting rights or management rights with after the principal becomes incapacitated or l If the POA is what is commonly known respect to an entity. To give a simple example mentally incompetent unless and until the as a “springing” or contingent POA—that is, of this exception, assume the president of a POA is duly registered in the appropriate one that becomes effective at a future date or corporation signs a general POA authorizing register of deeds office. Once the POA is upon the occurrence of a future event or con- his son to act as the president’s agent. While duly registered, the agent can resume acting tingency such as the principal’s incapacity— the president can give broad authority to the on behalf of the principal. Stated more sim- new § 32C-1-109(b) permits the principal to son to act on behalf of the president as an ply, the authority of the agent to act is auto- authorize the agent or someone else to pro- individual, the president cannot give an matically suspended when the principal vide written verification that the event or agent authority to act on president’s behalf as becomes incapacitated or mentally incom- contingency has occurred. president of the company—only the compa- petent, but is restored from the date of reg- If the principal’s incapacity is the trigger ny can confer that authority. Thus, the Act istration if the durable POA is subsequently for a springing POA and the principal has does not apply to the extent a POA purports properly registered. However, actions taken not authorized anyone to make that determi- to delegate management rights with respect by the agent during the period of suspension nation or the authorized person is unable or to an entity. are not validated by the subsequent registra- unwilling to make the determination, new § l A power created on a form prescribed tion of the POA. 32C-1-109(c) provides a default mechanism by a government or governmental subdivi- The rules regarding durable POAs are for each category of incapacity to verify the sion, agency, or instrumentality for a govern- entirely different under the Act, and the Act principal’s incapacity: mental purpose. is much cleaner and clearer in its approach to l Incapacity based on the principal’s 4. The Act provides clarity regarding the durability: impairment may be verified by two physi- execution and validity of a POA. l A “durable” POA is defined in § 32C- cians or licensed psychologists after they have Here are the basic rules regarding the 1-102(2) as one in which the “incapacity of personally examined the principal. execution and validity of a POA according

10 SPRING 2018 to new § 32C-1-105 and § 32C-1-106 of pal’s signature: “Signature affixed by Statutory Short Form Power of Attorney” is the Act: designee in the presence of (names and signed by the principal and acknowledged l A POA signed in North Carolina before addresses of principal and witnesses)”; before a notary public. It doesn’t matter January 1, 2018, is valid if its execution com- and when or where the POA was signed and plied with the North Carolina law in effect at (5) The notary notarizes the signature acknowledged. The meaning and effect of the time the POA was signed. through an acknowledgment, oath or the POA will be determined by North l A POA signed in North Carolina on or affirmation, jurat, or verification or Carolina law. after January 1, 2018, is valid if it is (i) signed proof. l A POA indicates that it is governed by by the principal or in the principal’s con- If the POA will be signed by the principal Kansas law. It doesn’t matter when or where scious presence by another individual direct- by using a “mark” or by someone else on the POA was signed and acknowledged. The ed by the principal to sign the principal’s behalf of the principal at the principal’s direc- meaning and effect of the POA will be deter- name on the POA, and (ii) acknowledged tion, you need to pay careful attention to the mined by Kansas law. (i.e., notarized). requirements in G.S. 10B-20. If you don’t, l A POA makes no mention of any state These signing requirements are new and you run the risk that the POA will be invalid. and is absolutely silent as to what law con- warrant further comment. Without doubt, l A POA signed outside North Carolina trols. The meaning and effect of the POA the principal must be legally competent at is valid in North Carolina if, when the POA will be determined by the law of the state the time the POA is signed. So here’s the rub: was executed, the execution complied with in which the POA was signed and acknowl- How do you actually have the principal sign either (i) the law of the jurisdiction that edged. the POA and have the principal’s signature determines the “meaning and effect” of the 6. The Act’s rules governing termination duly acknowledged when the principal, POA (as discussed below), or (ii) the federal of a POA are more comprehensive than in although mentally competent and not inca- requirements for a military POA. the existing law. pacitated, is physically unable to sign his or Two final comments regarding these The revocation of a POA under existing her name, but can either sign with a “mark” issues are significant. First, a signature on a law is governed by § 32A-13. The correspon- or direct someone to sign the principal’s POA is presumed to be genuine if the prin- ding provision in the Act is § 32C-1-110. name on the principal’s behalf? The answer is cipal acknowledges the signature before a Unlike under existing law, the Act draws a embedded in G.S. 10B-20(d) and (e): notary public or other individual authorized clear distinction between the termination of (d) A notary may certify the affixation of by law to take acknowledgements. Second, a POA and termination of the agent’s a signature by mark on a record presented unless there is a statute that provides other- authority under the POA. for notarization if: wise, a photocopy or electronically transmit- Under the Act, a POA terminates when (1) The mark is affixed in the presence ted copy of an original POA has the same any of the following occur: of the notary; effect as the original. l The principal dies. (2) The notary writes below the mark: 5. The Act clarifies which law controls. l If the POA is not durable, the principal “Mark affixed by (name of signer by According to § 32C-1-107 of the Act, becomes incapacitated. mark) in presence of undersigned the “meaning and effect” of a POA is deter- l The principal revokes the POA. notary”; and mined by (i) the law of the jurisdiction indi- l The POA provides that it terminates. (3) The notary notarizes the signature cated in the POA, or (ii) in the absence of l The purpose of the POA is accom- by performing an acknowledgment, any such indication, the law of the jurisdic- plished. oath or affirmation, jurat, or verification tion in which the POA was executed. The l The principal revokes the agent’s or proof. Official Commentary to the Uniform Power authority or the agent dies, becomes incapac- (e) If a principal is physically unable to of Attorney Act contains the following itated, or resigns, and the POA does not pro- sign or make a mark on a record present- observation: vide for another agent to act under the POA. ed for notarization, that principal may The phrase, “the law of the jurisdiction l A guardian of the principal’s estate or designate another person as his or her indicated in the power of attorney,” is general guardian terminates the POA. designee, who shall be a disinterested intentionally broad, and includes any Under the Act, an agent’s authority under party, to sign on the principal’s behalf statement or reference in a power of attor- a POA terminates when any of the following pursuant to the following procedure: ney that indicates the principal’s choice of occur: (1) The principal directs the designee to law. Examples of an indication of jurisdic- l The principal revokes the authority in sign the record in the presence of the tion include a reference to the name of writing. notary and two witnesses unaffected by the jurisdiction in the title or body of the l The agent dies, becomes incapacitated, the record; power of attorney, citation to the jurisdic- resigns, or is removed. (2) The designee signs the principal’s tion’s power of attorney statute, or an l The court enters a decree of divorce name in the presence of the principal, explicit statement that the power of attor- between the principal and the agent, unless the notary, and the two witnesses; ney is created or executed under the laws the POA provides otherwise. (3) Both witnesses sign their own names of a particular jurisdiction. l The POA terminates. to the record near the principal’s signa- The following examples may help illus- l A guardian of the principal’s estate or ture; trate this rule: general guardian terminates the agent’s (4) The notary writes below the princi- l A POA identified as a “North Carolina authority.

THE NORTH CAROLINA STATE BAR JOURNAL 11 There are also several ancillary “rules” in § or destroyed, with the intent and for the erly exercising the agent’s authority, (i) you 32C-1-110 of the Act relating to termination purpose of revoking it, by the principal or may rely upon the POA as being valid and worthy of mention: by another person in the principal’s pres- still in effect, the agent’s authority as being l A POA does not become “stale”— ence and at the principal’s direction, while genuine, valid, and still in effect, and the unless a POA provides for termination the principal is not incapacitated. agent as not having exceeded and having upon a certain date or after the passage of a 7. Section 32C-1-111 of the Act address- properly exercised the agent’s authority; and period of time, lapse of time since execu- es coagents and successor agents. (ii) you will not be responsible for any breach tion is irrelevant to the POA’s validity. This A principal may (i) designate two or more of fiduciary duty by the agent, including any provision validates old POAs that have not persons in a single POA to act as coagents, breach of loyalty, any act of self-dealing, or been terminated. (ii) designate one or more successor agents to any misapplication of money or other prop- l A new POA doesn’t automatically ter- act if an agent resigns, dies, becomes incapac- erty paid or transferred as directed by the minate an old POA. To effect a revocation, a itated, is for some reason not qualified to act, agent. This safe harbor applies without subsequently executed POA must expressly or declines to serve, and/or (iii) grant author- regard to whether or not you demand or revoke a previously executed POA or state ity to designate one or more successor agents receive a certification from the agent (as dis- that all other POAs are revoked. The require- to an agent or other person designated by cussed below). ment for express revocation prevents inad- name, office or functions. When you are asked to accept a POA, vertent revocation when the principal l Unless the POA expressly requires coa- existing § 32A-40(b) permits you to require intends for one agent to have limited author- gents to act jointly, each coagent may exercise an affidavit from the agent stating that the ity that overlaps with broader authority held the coagents’ authority independently with- agent has no actual knowledge of the revoca- by another agent. out the knowledge, consent, or joinder of tion of the POA or facts that would cause the Section 32C-1-110 of the Act has two any other coagent or coagents. agent to question the authenticity or validity very important “savings” provisions: l Unless the POA provides otherwise, if of the POA—in short, that the POA is valid l A termination event is not effective as to any one or more coagents resigns, dies, and in effect according to its terms. You are the agent or any person dealing with the becomes incapacitated, or otherwise fails to entitled to rely on that affidavit as long as agent who, without actual knowledge of the act, the remaining agent or coagents may you are acting in good faith and have no termination event, acts in good faith under continue to act. actual knowledge to the contrary. the POA. l Unless the POA provides otherwise, a Section 32C-1-119(d) goes far beyond l If the POA is a non-durable POA, the successor agent has the same authority as that existing § 32A-40(b). If you are presented incapacity of the principal is not effective as granted to the original agent. However, a with, and asked to accept, a POA, you may to the agent or any person dealing with the successor agent may not act until all prede- request, and, as long as you are acting in agent who, without actual knowledge of cessor agents have resigned, died, become good faith and without actual knowledge to principal’s incapacity, acts in good faith incapacitated, are no longer qualified to the contrary, you may rely without further under the POA. serve, or have declined to serve. investigation upon, any one or more of the In either case, an act so performed, unless 8. What are the “safe harbors” you can following: otherwise invalid or unenforceable, binds the rely on when presented with a POA, and l A certification executed by the agent to principal and the principal’s successors in what can you request from the agent? the effect that the agent did not have actual interest. Article 5 of existing Chapter 32A (§ 32A- knowledge at the time of the POA is present- Section 32C-1-110(g) of the Act also pro- 40 through § 32A-43) addresses the fre- ed to you (i) that the POA is void, invalid, or vides specific guidance as to how a principal quently encountered problem of persons terminated, (ii) that the agent’s authority is may revoke a POA: refusing to accept a POA. These issues are void, invalid, or terminated, or (iii) of facts l If the POA has been registered in an addressed in considerable detail in § 32C-1- that would cause the agent to question the office of the register of deeds, the principal 119 and § 32C-1-120 of the Act. authenticity or validity of the POA. A certi- must register an “instrument of revocation” Section 32C-1-119(b) and (c) provide fication meeting these requirements is suffi- in that office executed and acknowledged by two important safe harbor protections for cient proof to you that (i) the POA is authen- the principal while the principal is not inca- you if you accept a POA: tic and valid and has not been terminated, pacitated, together with proof of service on l If you in good faith accept an acknowl- (ii) the agent’s authority is valid and has not the agent in the manner prescribed for serv- edged (i.e., notarized) POA without actual been terminated, and (iii) other factual mat- ice under Rule 5 of the North Carolina Rules knowledge that the principal’s signature is ters stated in the certification regarding the of Civil Procedure. not genuine, you may rely upon the pre- principal, agent, or POA are true. l If the POA has not been registered in an sumption that the principal’s signature is If the exercise of the POA requires execu- office of the register of deeds, it may be genuine. This provision restates the safe har- tion and delivery of an instrument that is revoked by one of the following methods: bor that appears in § 32C-1-105 of the Act. recordable, you may require that the certifi- l A subsequent written revocatory docu- l If you in good faith accept a POA with- cation be prepared and executed so as to be ment executed and acknowledged by the out actual knowledge that the POA is void, recordable—i.e., acknowledged or in the principal while the principal is not inca- invalid, or terminated, that the purported form of an affidavit with an appropriate pacitated. agent’s authority is void, invalid, or terminat- jurat. Section 32C-3-302 provides a statuto- l Being burnt, torn, canceled, obliterated, ed, or that the agent is exceeding or improp- ry form that, if used, satisfies the require-

12 SPRING 2018 ments for an agent’s certification. l An English translation of the POA if the POA contains, in whole or in part, language MEMBERSHIP BENEFITS other than English. l An opinion of counsel as to any matter of law concerning the POA if you provide in a writing or other record the reason for your request. This provision may be particularly useful when a POA is presented to you that is not a standard North Carolina POA. For example, when presented with a POA that appears to be a Kansas POA, you may Get entertainment deals, request an opinion from a Kansas attorney confirming that (i) the POA was validly exe- hotel discounts, Fastcase cuted under Kansas law, (ii) the POA has been properly acknowledged, (iii) the POA is and more on the new a durable POA, and (iv) after describing or identifying the transaction to be undertaken North Carolina Bar by the agent on the principal’s behalf, the agent has appropriate authority under the Association app — just POA and Kansas law to effect the transaction without exceeding or improperly exercising for NCBA members. the agent’s powers. The principal is responsible for the expense of an English translation or an opin- ion of counsel requested under § 32C-1-120 unless the request is made more than seven business days after the POA is presented for VisitVisit to learn more. acceptance. ncbarncbar.org/members.org/members 9. When may you be liable for refusing to accept a POA? As is currently the case under existing § sons discussed below. translation, or opinion of counsel you 32A-41, a person who unreasonably refuses In addition, you are not authorized to requested in reasonably satisfactory form to accept a POA is exposed to potential lia- require an additional or different form of within a reasonable period of time. bility under § 32C-1-120(e) of the Act. POA if the POA you are presented reason- l You believe in good faith that the POA Patterned in part after existing § 32A-42, ably appears to authorize the agent to con- is not valid or that the agent does not have new § 32C-1-120 contains a laundry list of duct the business the agent desires to con- the authority to perform the act requested, statutory exceptions that permit you to duct. whether or not you have requested or have refuse to accept a POA without incurring You are not required to accept a POA if been provided a certification, a translation, liability. any of the following circumstances exist, and or an opinion of counsel. However, to avoid potential liability, there you are not exposed to liability if you refuse l You have reasonable cause to question are some timelines you need to observe care- to accept it for one of the following reasons: the authenticity or validity of the POA or the fully when presented with a POA: l The POA has not been duly acknowl- appropriateness of its exercise by the agent. l No later than seven business days after edged. l The agent or principal has previously being presented with an acknowledged POA l You are not otherwise required to breached any agreement with you, whether and being asked to accept it, you must engage in a transaction with the principal in in an individual or fiduciary capacity. accept the POA, refuse to accept the POA the same circumstances. l You make, or have actual knowledge for one of the reasons discussed below, or l Engaging in a transaction with the that another person has made, a report to the request a certification, a translation, or an agent or the principal in the same circum- local adult protective services office or law opinion of counsel from the agent (as dis- stances would be inconsistent with applica- enforcement stating a good faith belief that cussed in #8 above). ble federal law. the principal may be subject to physical or l If you request a certification, a transla- l You have actual knowledge of the termi- financial abuse, neglect, exploitation, or tion, or an opinion of counsel, then within nation of the agent’s authority or of the POA abandonment by the agent or a person acting five business days after your receipt of the before exercise of the power. for or with the agent. requested items in reasonably satisfactory l Your request for a certification, a trans- There are three additional grounds for form, you must either accept the POA or lation, or an opinion of counsel is refused. refusing to accept a POA that are specifically refuse to accept the POA for one of the rea- l You did not receive a certification, intended to protect banks and other financial

THE NORTH CAROLINA STATE BAR JOURNAL 13 institutions, but which may apply to others provide detailed descriptions of general the principal. as well. A person asked to accept a POA is authority relating to specific subjects such as l In matters relating to revocable and not required to do any of the following: “real property,” “tangible personal property,” irrevocable trusts created by the principal as l Open an account for a principal at the and “banks and other financial institutions.” settlor, an agent may not do either of the fol- request of an agent if the principal is not cur- Pursuant to § 32C-2-202, a principal lowing unless the POA or the terms of the rently a customer of the person asked to may incorporate any or all of the powers list- trust expressly grants the agent that authority: accept the POA. ed in § 32C-2-204 through § 32C-2-117 in l Exercise the powers of the principal as l Make a loan to the principal at the full into the POA either by a reference to the settlor of a revocable trust in accordance request of the agent. short descriptive term for the subject used in with G.S. 36C-6-602.1. l Permit an agent to conduct business not the Act or to the section number. In addi- l Exercise the powers of the principal as authorized by the terms of the POA, or oth- tion, § 32C-2-202 permits a principal to settlor of an irrevocable trust to consent erwise not permitted by applicable statute or modify any authority incorporated by refer- to the trust’s modification or termination regulation. ence in a POA. If a POA grants to an agent in accordance with G.S. 36C-4-411(a). If you are presented with a POA, you authority to do all acts that a principal could And here’s a related, but incredibly will not be “deemed” to have unreasonably do, the agent has the general authority important, rule against self-dealing that refused to accept the POA solely on the described in § 32C-2-204 through § 32C-2- appears in § 32C-2-201(c): Even if the POA basis of your failure to accept the POA 216 (but not § 32C-2-217, which addresses authorizes the agent to do any of the specific within seven business days or, if you have the agent’s authority to make gifts on behalf actions identified above, unless the POA pro- promptly requested a certification, a trans- of the principal—as noted below, the author- vides otherwise, the agent may not exercise lation, or an opinion of counsel, prior to ity to make gifts on behalf of the principal “general” or “specific” authority under a your receipt of requested items in reason- requires specific authority). POA to create in the agent, or in an individ- ably acceptable form. Specific Grant of Authority ual to whom the agent owes a legal obliga- 10. How does the Act guard against Now let’s shift to acts that require a “spe- tion of support, any interest in the principal’s abuse on the part of an agent? cific” grant of authority. § 32C-2-201 pro- property, whether by gift, right of survivor- At the outset, it is important to remember vides heightened requirements for granting ship, beneficiary designation, disclaimer, or that an agent appointed under a POA is a authority for actions that could dissipate the otherwise. This rule can be very important in fiduciary. According to § 32C-1-114 of the principal’s property or alter the principal’s real estate transactions. Act, the agent must always act (i) in accor- estate plan. More specifically, § 32C-2- So what does all of this mean in practical dance with the principal’s reasonable expec- 201(a) lists the following specific categories terms? When trying to determine whether an tations to the extent actually known by the of authority that cannot be implied from agent’s action will be within the scope of the agent and, otherwise, in the principal’s best any grant of general authority, but which agent’s authority and consistent with the interest, (ii) in good faith, (iii) loyally for the may be granted only through express lan- agent’s fiduciary duty to the principal, here principal’s benefit, (iv) only within the scope guage in the POA: are questions you need to consider: of authority granted in the POA, and (v) in l An agent may not do any of the follow- l Is the proposed action within the scope a manner so as not to create a conflict of ing on behalf of the principal or with the of the general authority granted to the agent? interest that impairs the agent’s ability to act principal’s property unless the POA expressly l Is the proposed action one which impartially in the principal’s best interest. grants the agent that authority: requires specific authority? If so, does the In exchange for mandated acceptance of l Make a gift. However, even if the agent POA expressly grant that specific authority? an agent’s authority, the Act does not require is expressly authorized to make a gift, that l Will the proposed action create in the persons dealing with an agent to investigate right is limited by § 32C-2-201(b) and agent, or in an individual to whom the the agent or the agent’s actions. However, (c) and by § 32C-2-217. agent owes a legal obligation of support, safeguards against abuse by the agent are pro- l Create or change rights of survivorship. any interest in the principal’s property, vided by creating what is essentially a two- l Create or change a beneficiary designa- whether by gift, right of survivorship, bene- tier system when granting an agent authority. tion. ficiary designation, disclaimer, or other- Section 32C-1-201 of the Act draws a sharp l Delegate authority granted under the wise? If so, does the POA expressly author- distinction between acts that may be per- POA. ize such self-dealing? formed by an agent under a “general” grant l Waive the principal’s right to be a bene- l Even if the proposed action is author- of authority and acts that require a “specific” ficiary of a joint and survivor annuity, ized by the POA, is the proposed action con- grant of authority. including a survivor benefit under a sistent with the agent’s fiduciary duty to the General Grant of Authority retirement plan. principal? Let’s talk first about what may be per- l Exercise fiduciary powers that the prin- 11. So what are the categories of author- formed by an agent under a “general” grant cipal has authority to delegate. ity listed in Article 2 of the Act? of authority. As noted earlier, Article 2 of the l Renounce or disclaim property, includ- No attempt will be made here to discuss Act addresses the authority of an agent under ing a power of appointment. in detail any of the categories of authority a POA. More specifically, § 32C-2-203 l Exercise authority over the content of listed in Article 2 of the Act. For our purpos- addresses general issues relating to authority, electronic communication, as defined in es here, a listing of the section titles is suffi- while § 32C-2-204 through § 32C-2-217 18 U.S.C. § 2510(12), sent or received by cient:

14 SPRING 2018 § 32C-2-204. Real property only the specific categories of actions that There is no corresponding statutory form § 32C-2-205. Tangible personal property the principal intends to authorize. under existing law. § 32C-2-206. Stocks and bonds As you review the new North Carolina This new form was the product of close § 32C-2-207. Commodities and options Statutory Short Form Power of Attorney collaboration between the Estate Planning § 32C-2-208. Banks and other financial form, keep in mind that the POA is durable, and Fiduciary Law Section of the NCBA, the institutions effective immediately, and does not revoke Real Property Section of the NCBA, and the § 32C-2-209. Operation of entity any existing POAs. North Carolina Bankers Association to help § 32C-2-210. Insurance and annuities Also, the section of the form addressing resolve a persistent problem: whether the § 32C-2-211. Estates, trusts, and other specific authority very intentionally does not authority granted to the agent in a limited beneficial interests cover two trust-related matters: whether the POA presented at or immediately before the § 32C-2-212. Claims and litigation agent can exercise the powers of the principal closing of a real estate transaction is suffi- § 32C-2-213. Personal and family main- as settlor of a revocable trust in accordance ciently specific to the transaction and suffi- tenance with G.S. 36-6-602.1, or the powers of the ciently broad in its scope, particularly when § 32C-2-214. Benefits from governmen- principal as settlor of an irrevocable trust to financing is involved. The related question is tal programs or civil or military service consent to the trust’s modification or termi- critical: Should the agent be permitted to § 32C-2-215. Retirement plans nation in accordance with G.S. 36C-4- execute transaction-related documents on § 32C-2-216. Taxes 411(a). The drafters of the legislation proper- the principal’s behalf? § 32C-2-217. Gifts authorized by general ly believed that these trust-related provisions The new statutory form will hopefully be authority should not be included in a “boiler-plate” used widely as a standard limited POA that § 32C-2-218. Gifts authorized by court statutory form, but rather should be includ- provides great flexibility for an agent to han- order ed in a POA only after thoughtful consider- dle real estate closings on behalf of the prin- § 32C-2-219. Certain acts authorized by ation by the trust settlor with the advice of cipal. The new form: the court competent counsel. l Grants the agent full authority to act Real estate practitioners will need to The introductory language in § 32C-3- on behalf of the principal with respect to become intimately familiar with the authori- 301 indicates that the new form is a “nonex- certain identified real property, all tangible ties listed in § 32C-2-204 (real property), § clusive method to grant a power of attorney” personal property related to the property, 32C-2-205 (tangible personal property), and and that a document “substantially” in the and all financial transactions relating to the § 32C-2-208 (banks and other financial form of the one set forth in § 32C-3-301 property. institutions). “may be used to create a statutory form l Incorporates by reference the general 12. The new statutory short form POA power of attorney that has the meaning and authority to act with respect to real property will be very useful. effect prescribed by [Chapter 32C].” This as set forth in § 32C-2-204, tangible person- Article 3 of the Act provides three statu- leaves ample wiggle room for the short form al property as set forth in § 32C-2-205, and tory forms: POA to be “tweaked.” It is not identical to banks and other financial institutions as set 1. § 32C-3-301. Statutory form power of the statutory short form POA appearing in § forth in § 32C-2-208. attorney 32C-3-301. l Specifically states the authority granted 2. § 32C-3-302. Agent’s certification 13. The “Agent’s Certification” should to the agent may be exercised by the agent 3. § 32C-3-303. Limited power of attor- be routinely used in real estate transactions. even though the exercise of that authority ney for real property. The second statutory form, the “Agent’s may benefit the agent or a person to whom The “North Carolina Statutory Short Certification as to the Validity of Power of the agent owes an obligation of support, Form Power of Attorney” in § 32C-3-301 Attorney and Agent’s Authority,” appears in thereby resolving the potential problem of of the Act is the updated counterpart to the § 32C-3-302. This form is patterned after self-dealing. existing § 32A-1 statutory short form gen- the Affidavit of Attorney-in-Fact set forth in Unless an expiration date is specified in eral POA. It contains, in plain language, existing § 32A-40(d). According to § 32C-1- the POA, the authority of the agent auto- instructions to the principal and agent. 119(d)(1), if you are asked to accept a POA, matically expires one year from the date of Step-by-step prompts are given for designa- you may rely on the accuracy of the state- the POA. Actions taken by the agent while tion of the agent and successor agents and ments contained in the certification without the POA remains in effect continue to bind the grant of general and specific authority. further investigation if you are acting in good the principal even after the agent’s authority In the section of the form addressing gener- faith and have no actual knowledge to the expires. al authority, the principal must initial the contrary. You should routinely require an There is one small issue that may require subjects for which the principal wishes to Agent’s Certification in every real estate your thoughtful attention. The introductory delegate general authority to the agent. In transaction. language in the form’s Grant of Authority the section of the form addressing specific 14. The new “Limited Power of authorizes the agent to act for the principal authority, certain categories of specific Attorney for Real Property” will prove very with respect to “all financial transactions authority are listed, preceded by a warning useful for real estate attorneys. relating to the Property,” and the authority to the principal about the potential conse- The third statutory form, “North granted expressly includes the authority to quences of granting such authority to an Carolina Limited Power of Attorney for act with respect to banks and other financial agent. The principal is instructed to initial Real Property,” appears in § 32C-3-303. institutions as set forth in § 32C-2-208.

THE NORTH CAROLINA STATE BAR JOURNAL 15 That section applies only to dealing with one signing the promissory note to the bank to G.S. 47-43.1, the authority of the agent banks and other financial institutions. and will be the only one benefitting from signing a deed or deed of trust on behalf of The unresolved question is this: Is the the loan? the principal that purports to be under seal is general language that authorizes the agent to Under the Act, the answer is apparently called into question unless the POA was exe- act for the principal with respect to “all “yes.” New § 32C-204(10) was drafted cuted by the principal under seal. financial transactions relating to the expressly to address this situation: With Fortunately, SL 2017-153 fully resolves Property” sufficient to cover private financ- respect to any real property owned or this issue: ing that does not involve a bank or other claimed to be owned by the principal’s l The Act does not require a POA to be financial institution? spouse and in which the principal’s only executed under seal, and it is worth noting If private financing is anticipated, you interest is a marital interest, [the agent may] that the statutory POA forms set forth in § should consider adding appropriate language waive, release, or subordinate the principal’s 32C-3-301and § 32C-3-303 of the Act do to the limited POA. inchoate right pursuant to G.S. 29-30 to not indicate that they are under seal. 15. On the subject of self-dealing, here’s claim an elective life estate in the real proper- l Section 32C-2-203(3) expressly author- another thing you need to think about. ty, regardless of whether the waiver, release, izes an agent to “[e]xecute, acknowledge, Let’s assume that Ma signs a POA or subordination will benefit the agent or a seal, deliver, file, or record any instrument or appointing Pa as her agent, granting Pa gen- person to whom the agent owes an obliga- communication the agent considers desirable eral authority to do all acts that Ma could do. tion of support. to accomplish a purpose of a transaction....” The POA expressly authorizes Pa to make 16. Finally, let’s talk about “seal.” (Emphasis added) gifts (including to himself) and to exercise In years gone by, a deed was not a deed l Section 2.3 of SL 2017-153 amends authority that may benefit Pa. It’s a very unless it was “executed under seal.” While G.S. 47-43.1 by changing the phrase “attor- broad POA. Ma is now incapacitated and in purists may have blanched, others rejoiced ney-in-fact” to “agent” each time it appears a nursing home. Pa wants to borrow money when the requirement for a conveyance of and by deleting the last sentence of the from the bank and use the family home as real property to be executed under seal was statute. Effective January 1, 2018, G.S. 47- collateral. In the following scenarios, keep in abolished in 1999 with the passage of G.S. 43.1 will read as follows: mind new § 32C-1-114(d): 39-6.5. § 47-43.1. Execution and acknowledg- When exercising a power under the Unfortunately, G.S. 39-6.5 didn’t fully ment of instruments by attorneys or power of attorney, an act by an agent that is resolve the seal issue, at least insofar as it attorneys-in-fact. in good faith for the best interest of the prin- involved an instrument signed by an agent When an instrument purports to be exe- cipal is not voidable and the agent is not under the authority of a POA. Existing G.S. cuted by parties acting through another by liable solely because the agent also benefits 47-43.1 currently provides as follows: virtue of a power of attorney, it shall be suf- from the act or has an individual or conflict- When an instrument purports to be exe- ficient if the attorney or agent signs such ing interest in relation to the property or cuted by parties acting through another instrument either in the name of the princi- affairs of the principal. by virtue of a power of attorney, it shall be pal by the attorney or agent or signs as attor- Now consider the following situations: sufficient if the attorney or attorney-in- ney or agent for the principal; and if such Ma either owns the house or the house is fact signs such instrument either in the instrument purports to be under seal, the seal owned by Ma and Pa as tenants by the entire- name of the principal by the attorney or of the agent shall be sufficient. ty. Can Pa use the POA to sign Ma’s name to attorney-in-fact or signs as attorney or The elimination of the last sentence of a deed of trust encumbering Ma’s house to attorney-in-fact for the principal; and if G.S. 47-43.1 permits an agent to sign an secure his debt to the bank? such instrument purports to be under instrument under seal on behalf of the prin- Despite § 32C-1-114(d), this should seal, the seal of the attorney-in-fact shall cipal as of January 1, 2018, regardless of cause you heartburn, particularly if Ma will be sufficient. For such instrument to be whether the POA was signed by the principal not derive any apparent benefit from the executed under seal, the power of attor- under seal. loan. However, if the purpose of the loan is ney must have been executed under seal. to fix up the home or to help pay Ma’s nurs- (Emphasis added) A Parting Observation ing homes bill, a strong argument can be This statute, which is now almost 70 Dealing with POAs will still be difficult made that Pa can execute the deed of trust on years old, has long harbored risk for real and challenging, particularly in real estate Ma’s behalf as her agent. That argument estate practitioners. transactions. However, many of the frustra- becomes even stronger if Ma is a co-borrower Consider, for example, a pre-printed deed tions we have endured in recent years will on the note. or deed of trust form that indicates it is being eventually evaporate, provided we take time Now let’s change the facts a bit. The executed under seal and the word “seal” to become familiar with the Act and begin home is titled in Pa’s name, which means appears after the grantor’s name in the signa- using the new statutory forms, particularly that Ma has only an inchoate marital inter- ture block. If the deed or deed of trust says it the new limited POA for real property trans- est in the property. Let’s further assume that is being executed under seal (even if it is no actions. Good luck! n Ma will not derive any benefit from the longer required to be executed under seal), is proceeds of the loan. Can Pa use the POA the signature of the agent on behalf of the Prior to his recent retirement, James E. to sign Ma’s name to a deed of trust encum- principal sufficient if the POA was not exe- Creekman was with Ward and Smith, PA, in bering their home when Pa will be the only cuted by the principal under seal? According Raleigh.

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B Y J ENNIFER M. LECHNER

Leena and Ryan (names changed) divorced years ago and continued to co-parent their chil- dren. But when Ryan began using drugs, his paranoia escalated. He began calling their school—and Leena’s home—at all hours, rant- ing about how the children were being hurt or ©iStockphoto.com/blackred kidnapped. Then Leena discovered that during weekend visits Ryan was giving the children knives before they went to sleep to “protect themselves.” Leena was determined to keep her kids safe, but couldn’t afford an expensive custody battle. She also knew she couldn’t navigate the legal system alone. Leena won sole custody of the children with help from Pisgah Legal Attorney Sara Player. Leena smiles and says, “I loved Sara. She really the “access to justice gap” for eligible North nificant reduction of service capacity and listened to me and helped me understand exact- Carolinians—a lofty charge, given that the legal representation for thousands of North ly what I needed to do.” most recent report from the Legal Services Carolinians. This cut not only impacts our Losing custody has been an important wake- Corporation on this topic documents that citizens, but also impairs judicial system up call for Ryan. “When I took full custody, he 86% of the civil legal problems reported by accessibility, effectiveness, and efficiency. To realized that I wasn’t playing around.” Ryan is low-income Americans received inadequate date, no stated policy goal has been articulat- now working to stay clean and is getting mental or no legal help. ed for the repeal of the ACJA. health treatment. Leena is cautiously optimistic Currently, 23% of North Carolinians— Upon indication that the Access to Civil and allows him supervised visits with the kids 2.2 million people—qualify for legal servic- Justice Act was under threat, the NC Equal at her home. es from these legal aid organizations. This Access to Justice Commission unanimously vast amount of need for civil legal aid has adopted a resolution in support of the act or 27 years the North Carolina grown 30% since 2008, while state funding and its funding. The North Carolina Bar Access to Civil Justice Act has consistently decreased over that same Association, the North Carolina Advocates (ACJA) helped provide access time period. At the height of state support, for Justice, and other bar organizations and to justice for North Carolina’s North Carolina directly appropriated or stakeholder groups advocated against the most vulnerable citizens, dedicated fees and fines totaling over $6.1 repeal and elimination of funding. includingF seniors, homeless veterans, domes- million to support access to justice. In this Ultimately, however, the widespread support tic violence victims, the poor, and the dis- past legislative session, the North Carolina from our legal profession for this essential abled. This act provided the mechanism for General Assembly repealed the Access to core of our justice system did not meet suc- funding from court filing fees to support the Civil Act and removed the allocation of cess in the legislative session. three primary civil legal aid providers in $1.50 from civil and criminal fees that fund Nevertheless, attorneys continue to North Carolina: Legal Aid of North the act, withdrawing approximately $1.7 respond. Pro bono attorneys have stepped in Carolina, Charlotte Center for Legal million in funding. to help meet the needs that will continue to Advocacy (formerly Legal Services of The new loss of the Access to Civil Justice grow as a result of this loss of funding. Still, Southern Piedmont), and Pisgah Legal Act funds, which constitute over half of the Services. These organizations work to bridge remaining state funding, will result in a sig- CONTINUED ON PAGE 25

18 SPRING 2018 On the Way to the Courthouse—The Law of the Letter

B Y R. MICHAEL W ELLS S R .

It was just a letter, after all. But I came to much like the idle pocket change I carried valuable skill as a problem solver. You do see I had it all wrong. home, unused, every day. And to appreciate yourself and others a disservice if you do not Years ago as a young lawyer I got a call again the power of what I had for so long step out a bit and take more chances on the from an older gentleman who had a problem mistakenly viewed as an ordinary thing. law of the letter—a chance to help everyday with a bill he had received. He was shaken Sometimes the most ordinary of prob- citizens shed the tug and pull of some of life’s that he was getting past-due letters. lems contains any number of possible legal everyday problems, no matter how ordinary I wrote a letter as a courtesy to the service threads. If you slip too far into gauging what and routine those problems may seem to provider to straighten out the facts, and it you don’t know, you miss the chance to solve you. They certainly are not ordinary or rou- worked. what you do know: the importance of tine to them. A quick conference and quick letter car- addressing real problems with real people by The busiest among us, whatever your ried the day, and that was that. I brought no simply framing the basic facts and options, profession, will tell you a call or letter here special skill or talent to the task. Just my and lending them your sorting-out voice of and there in a full week of activity is not time, and my everyday sorting-out-the-facts experience. And volunteering to do what going impact adversely your ability to get experience. The successful result would not many callers would often not know to do on your other tasks done for your family and get this matter spotlighted in NC Lawyers their own: writing a quick letter, making a your organization. And my, my, my, the Weekly, but I came to see its success was of a needed phone call, nudging another party to good you can do. different kind. make a matter right, or making sure a more My sense from this and other experiences My initial too-narrow view of the value I timid soul is not unfairly disadvantaged. is that you have no real idea of the value you had rendered changed over the next seven The solutions are often less about the let- can render to others. Wordsworth called days. I received in rapid order a heartfelt ter of the law—knowing every little thing these “little unremembered acts of kindness.” voicemail message from the older gentleman, about every little part—than about the law You won’t get your name up in lights, but another voicemail message from his only of the letter: simply taking the time to offer isn’t that the point? While some may not be child in Richmond expressing deep thanks your experience as a calibrator of facts and amazed by your acts of kindness, try surpris- for helping his growing-more-disoriented options when you allow another’s real life ing them anyway. Because kindness, especial- widowed dad, and a following letter from the dilemma to catch your eye. And you do not ly for discerners of facts and solutions, is cal- older gentleman himself in his shaky hand- have to be a lawyer to do that. ibrated in different ways. And sometimes it’s writing. The older gentleman was a product If you are a lawyer, provide any appropri- sweetly measured out one letter at a time, in of the Great Depression, and his worry ate disclaimers a rough summary of a set of the disguise of a seemingly ordinary thing. n touched the root of one of his bedrock val- facts may require. Who knows? A years-later ues: you pay your bills, and on time. answer to a small question penned by the R. Michael Wells Sr. is a partner with Wells I never saw my pro bono client again, but NC Court of Appeals could be an important Law, PLLC in Winston-Salem. He is a past I held on to his emotional letter of gratitude one. But your most important task now is member of the State Bar Ethics Committee and for many years. When I braved to clean out likely how you answer in the court of life past president of the North Carolina Bar my desk’s center drawer I would read it what a Nobel Laureate stated is life’s most Association. again. It served to remind me of the persistent and urgent question: What are you This article is from the blog On the Way to charge—even in my active, swirling days as a doing today for others? the Courthouse, which can be found online at busy lawyer—to find and give out the special What I’ve learned about life on the way to Tothecourthouseblogspot.com, and is reprinted currency of kindness I carried with me, the courthouse is this: You possess a deep and with permission.

THE NORTH CAROLINA STATE BAR JOURNAL 19 Tying the Knot? Or Just Moving In?

B Y R OBERT A. MASON

hen a client tells me that he or she is considering a sec-

ond marriage, for terribly unromantic reasons (I guess

I’m the anti-cupid...darn lawyer!) I recommend that ©iStockphoto.com/cobalt the client plan carefully—very carefully—before goingW into a later-in-life second marriage. The religious prescription not to enter a marriage

“unadvisedly or lightly” applies in spades to a later marriage.

“Bob,” a client once asked, “are you sug- consider in further detail. witch” (that’s according to Dad’s surviving gesting we see an attorney before the preach- relations) will be entitled either to half the real er?” My answer: “Yes.” Intestacy and Poorly Planned Testacy property (if Dad is survived by one child) or Here’s why. As attorneys we might question the sanity to one-third (if Dad is survived by more than Some of the most spectacular legal messes of any couple that enters into a late marriage one child). I have had to clean up have been after the with no wills. It happens. The North Fortunately, the right to an intestate share death of a second spouse when there had Carolina Intestate Succession Act1 provides is waivable.3 been no (or poor) advance planning. that a surviving spouse is entitled to a share of But perhaps love truly is blind, and the Adult step-siblings (who may not even real and personal property of a deceased newlyweds have downloaded snazzy, but sim- know or like each other) can be counted on spouse depending upon how many children ple and inexpensive,4 “I love you wills” that to be looking out for whatever it is that they (and other descendants) survive the deceased leave everything to the surviving spouse with believe their natural parents accumulated for spouse (and whether any parents survive, but the understanding that she or he will “do the them. since we’re discussing late-in-life second mar- right thing.” The prior-marriage-children can Most “planning” I have seen of late-mar- riages, I’ll assume there are no surviving par- be your clients if you’re a litigator. riers (is that a word?) consists of simple ver- ents).2 If Dad dies intestate survived by his Even with wills that leave everything to bal agreements to the effect of “what is yours “precious bride” (Dad’s term of endearment) the children of the deceased spouse, there is yours, and what is mine is mine.” Lawyers of just a few years, she will take the first may be problems with an “elective share” know that won’t cut it. Most of the following $60,000 of his personal property and take statute. difficulties can be addressed with a well- either one-half or one-third of everything drafted prenuptial agreement. over $60,000 depending upon whether Dad Elective Share and Year’s Allowance All couples are different, but here is a par- is survived by just one or more than one Statutes tial list of issues that may be important to child. If Dad had any real property, the “evil Like most other states, North Carolina

20 SPRING 2018 has an “elective share” scheme.5 The elective absence of a guardian of the person or a valid Advise checking those out before heading to share statute enables a surviving spouse to health care power of attorney, the spouse the altar. “elect” to receive a share of the deceased stands atop the heap of decision-makers, fol- spouse’s estate, the size of which depends lowed by the children of the principal. This Income and Transfer Taxes upon how long the couple was married. A may not go over well with Mom’s children There may be some tax planning advan- marriage of less than five years entitles the given that the loser she’s marrying has had tages to marrying if estate and gift taxes are a survivor to a total of 15% of the deceased three earlier wives pass away under less than concern, because many planning techniques spouse’s estate. (For example, if Hilda left clear circumstances. are available to married couples only. On the Henry $10,000 pursuant to the terms of her other hand, if their estates are large enough to will, but had an estate of $1,000,000, Henry The Family Home pose transfer tax issues after the recently enact- could elect another $140,000). After five Naturally the newlyweds do not want to ed Tax Cuts and Jobs Act ($11.2 million for years, the percentage pops to 25% of the see the bride or groom evicted upon the death an individual and $22.4 million for a married estate, then to 33% after ten years, and to of the other. On the other hand, children can couple), any planning should be undertaken 50% after 15 years.6 become quite emotional over what may be by sophisticated trusts and estates counsel. One interesting South Carolina case made perceived as “their home.” Chances are, put- Income taxes might also drop if one waves a few years ago.7 ting the house in both spouse’s names is not a spouse is earning significantly more than his The deceased owner of Hooters (you good idea. Advise a life estate or, perhaps bet- or her new spouse. know, the restaurant famous for...large burg- ter, a trust. ers and chicken wings) left $1 million a year Some years ago I met with the children of Long Term Care (Nursing Home) or for 20 years to his quite younger surviving the recently deceased Mrs. Jones. Mrs. Jones Medicaid Planning spouse. She felt $20 million wasn’t enough, so had been living in her home for 45 years, the This is a big consideration for older people she elected for 1/3 of Mr. Hooter’s estate. Mr. same home in which she and the late Mr. considering remarriage. Medicaid rules and Hooter’s son (not the widow Hooter’s son, by Jones had raised their children. Mrs. Jones regulations do not recognize any plans or the way) objected and claimed the South married Burt five or six years prior to my promises a couple has made in a prenuptial Carolina elective share statute (which is simi- meeting with the children. Shortly after her agreement when it comes to Medicaid and lar to North Carolina’s) is unconstitutional. remarriage, as the children had just discov- nursing home benefits. A carefully drafted Yours truly believes that argument had as ered, Burt’s name “appeared on the deed” (as prenuptial agreement is worthless if these much chance as a hoot owl in, well, Horry the children described it). All admitted that, issues arise. All Medicaid programs consider County. Hooter Jr. and the widow Hooter while Mom was a “free spirit,” she was per- the assets of the couple. While rare, some settled for an undisclosed sum. fectly sane up until the fatal stroke. The attor- couples have divorced within a few years of Notwithstanding the right of an elective ney who had drafted the deed had done an marriage when one spouse in declining health share, a surviving spouse is entitled to a “year’s effective job of creating a tenancy by the (usually the “poorer” spouse) has entered a allowance” of $30,000 “off the top” of a entireties. It seems, however, the attorney did nursing home. deceased spouse’s estate.8 In other words, a not get Mrs. Jones to consider the wider ram- It may be sad to see, but some couples are surviving spouse is entitled to this subsis- ifications. The children wanted to know what electing to do exactly what they would have tence-type allowance before any other credi- I could do. My answer: “Not much.” DIED seeing their children do 30 years ago... tors or heirs. This right, too, is waivable in a “living in sin.” n prenuptial agreement. Social Security Benefits Remarriage can affect the Social Security Robert A. (“Bob”) Mason, owner of Mason Powers of Attorney and Health Care benefits a newlywed had been receiving Law, PC, with offices in Asheboro and Advance Directives under a deceased or divorced spouse’s Charlotte, is a board certified specialist in elder Effective January 1, 2018, North account. If you divorce after ten years or law and serves as Chair of the Board of Legal Carolina has a new power of attorney more of marriage, you can collect retirement Specialization. statute.9 Certain prohibitions on gifting, benefits on your former spouse’s Social beneficiary designations, and the like make Security record if you are at least age 62 and Endnotes exceptions for spouses and children. Powers if your former spouse is entitled to or receiv- 1. N.C. Gen. Stat. Ch. 29. of attorney are not “just forms” (although ing benefits. If you remarry before age 60, 2. N.C. Gen. Stat. § 29-14. many tend to treat them as such). In the case however, you generally cannot collect bene- 3. N.C. Gen. Stat. § 52B-4. of a late marriage, powers of attorney and the fits on your former spouse’s record unless 4. Of course, those “inexpensive” wills may turn out to be powers granted (or withheld) in such an your later marriage ends (whether by death, quite expensive. instrument under the new statute should be divorce, or annulment). 5. N.C. Gen. Stat. Ch. 30 Art. 1A. carefully considered. 6. N.C. Gen. Stat. § 30-3.1. The subject of health care decision-mak- Annuities and Survivors Pension 7. Lisa Shidler, “Coby Brooks challenges widow’s bid for Payments elective share of Hooters fortune,” InvestmentNews, ing can cause a bit of squirming for the hap- Aug. 13, 2007, bit.ly/2m4ApIh. pily engaged couple, especially after I explain Your client might be kissing a hefty sur- 8. N.C. Gen. Stat. § 30-15. the “default rules” that apply in the absence of vivor’s pension (corporate or military) good- 9. S.L. 2017-153, codified at N.C. Gen. Stat. Ch. 32C. 10 a valid health care power of attorney. In the bye when he or she kisses a new spouse. 10. N.C. Gen. Stat. §90-21.13(c).

THE NORTH CAROLINA STATE BAR JOURNAL 21 To Build a Courthouse

B Y G. GRAY W ILSON

his story does not have a Photo courtesy of the NorthPhoto courtesy Carolina Judicial Branch happy ending. It is about

much that is wrong with local,

and perhaps state and nation-

Tal, government in this country. It is not really about party affiliation, political ideology, or demographic classifications, although some speculation in these areas might occur. Nor is it about good versus evil. No, this sad tale is about what happens in a democracy when the people elected to represent us lack the tools to do so competently, resulting in misguided agendas that are driven not by greed or malevolence, but by well-intentioned, yet thoughtless, mediocrity and an utter absence of vision.

This is a story of what happens, as unfunded statutory mandate to provide a of the county to administer justice to all. Reinhold Niebuhr observed in Leaves from courthouse for its citizenry. The Hall of Today, Forsyth is the only major urban coun- the Notebook of a Tamed Cynic, because peo- Justice in downtown Winston-Salem was ty that lacks a modern, state-of-the-art court- ple “seem never to realize how many of the designed and constructed in 1975 out of house facility (Guilford County is a special miseries of mankind are due not to malice available operating funds in the Forsyth animal, with two courthouses, but that is but to misdirected zeal and unbalanced County coffers—a slapdash effort that ended another story). All mechanical, plumbing, virtue.” It is what happens when public badly. The fortress-like structure reflects the and electrical structures are crumbling, there office becomes the refuge of lesser men and architectural avant-garde of the time, known is asbestos in the tile flooring, and black women because good and talented (i.e., well as “brutalism” (I am not making this up). mold, cockroaches, and mice are slowly tak- qualified) citizens disdain the baggage of the From the outset, the facility was an eyesore ing over the building. The courthouse has contentious media spotlight and the tedium and a functional disaster, but over time it never been compliant with the federal of mindless, inefficient bureaucracy. became outdated, overburdened, and woe- Americans with Disabilities Act, and eleva- Every county in North Carolina has an fully inadequate to meet the growing needs tors and restrooms are not wheelchair friend-

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ly. A number of services (e.g., Register of expended to eyeball this problem and pro- videos of judicial and other officials pointing Deeds) have been moved to other buildings pose “conceptual” solutions. out the deficiencies of the existing court- to accommodate the security stations added Six years later in 2015, the county began house and the desirable features and options to the first two floors, which nevertheless to make rumblings again, after forty 40, for a new one. We made our pitch around cannot handle the crowds that line the side- about addressing the courthouse dilemma, town and beyond—to civic, nonprofit and walks waiting to gain entry during high-vol- but still only with a renovation of the existing business groups—and almost without excep- ume court days. structure. The Forsyth County Bar tion, everyone we spoke to agreed that it was After 30 years, the county started to con- Association, to its credit, mobilized its mem- time for a new courthouse. The mayor of sider fixing or replacing a structure that had bership to lobby for a new courthouse, which Winston-Salem and the Winston-Salem reached the end of its useful life. But it was was received by some of the county commis- Business Alliance were strong advocates on 2009 before the county commissioned a sioners with utter astonishment at first, then our behalf. Regrettably, the local chamber of “conceptual” study that resulted in a recom- outright contempt from a couple of them. commerce refused to take a stand. The local mendation to renovate the existing court- The suggestion that people who actually bar also enlisted the services of an actual house, with the addition of an adjacent tower used and worked in the courthouse every day courthouse architect, the same one who had to accommodate a few new courtrooms, at a might have some ideas about how to remedy designed the new courthouse for Durham price tag under $100 million. The cost and the disaster at hand was simply incompre- County, which is now a showpiece in this inconvenience of trying to renovate a court- hensible to several of the county representa- state. This architect immediately recognized house while displacing judicial and other tives and administrators. The initial response that the studies undertaken by Forsyth functions to modular buildings was never of a minority of commissioners was to ignore County to date were badly flawed, and that factored in, although the cost alone of such the groups advocating for a new courthouse. space efficiencies and other design aspects temporary relocation efforts would have When attorneys began to attend and moni- could be easily corrected so that a new facility been astronomical, not to mention the atten- tor every open meeting of the commission, would cost little more than a renovation. The dant disruption of judicial and other opera- one representative voiced that he felt intimi- county refused to consider any suggestions in tions. Incredibly, the prospect of a new dated by our presence, which is impressive that regard. courthouse was not even considered. Nor did since all we did was sit there and observe. Eventually, after two years of meetings the county ever seek the advice of an archi- So we took our case to the people. At con- and lobbying efforts, the county suddenly tect or engineer with courthouse expertise. siderable expense, the bar association created abandoned the renovation option, finally Yet hundreds of thousands of dollars were a PowerPoint presentation complete with recognizing that the existing courthouse was

THE NORTH CAROLINA STATE BAR JOURNAL 23 courthouse) to come up with a less expensive with no easy solution, given the obduracy of model. Voila! The county unfurled yet a sec- those commissioners opposed to any sem- ond two-building option that would place a blance of progress. So on August 17, 2017, short courthouse tower on one side of a 42 years later, the county finally voted unan- downtown street, with a second office build- imously to pursue a request for quotation to ing on the other side, joined together by a be submitted to the private sector for bids. bridge at the third or fourth floor level, all at Amazingly, the county then passed a second a projected cost of only $126 million. resolution, on a 5-2 vote, to allot only $120 Hence, the actual difference between the two million for the new courthouse, apparently new options was only $10 million. There to dispel any notion that public funds would was never any real question that either could be wasted on a Taj Mahal. That this new be built with existing county funds or by two-structure facility will constitute an issuance of limited obligation bonds, neither improvement over the existing courthouse is of which would have raised the county’s fixed like saying that a vegemite sandwich is better debt ceiling. than dog food, but it still remains a bitter pill You may be wondering how a courthouse to swallow. All is not lost, however, because a could function with judges chambers, the real courthouse architect may yet design an district attorney, public defender, and the overstreet plaza or other configuration that clerk of court in an office building, with the might turn the proverbial sow’s ear into a silk courtrooms where all the judicial work has to purse. In any event, Forsyth County will not take place in another building across the be the laughing stock of the state, because it street, accessible (without walking outside will reside in good company with many oth- and crossing the street and entering through ers that have similarly promoted expediency security a second time) only through a single over quality and efficiency. It will likely take gerbil tube several stories up. The challenge up to three years at a minimum to finish this of requiring all of the judicial and other new set of buildings. Then the commission- courthouse personnel to expend untold man ers and bureaucrats who authored them will hours every day accessing the courtrooms surely take their bows at a ceremony dedicat- through a bridge to another building appar- ing this edifice, which, as the Agrarian poet ently never occurred to anyone planning this Donald Davidson once observed about the abomination, other than to check with a Parthenon replica in Nashville, Tennessee, national database to compare this concept to will stand as a martyr reared in homage to existing courthouses elsewhere—there were their own ignorance. n 17-151 none. Anyone wondering why no such courthouse configuration is common in this G. Gray Wilson, president-elect of the State or other jurisdictions has apparently pon- Bar, is a partner with the Winston-Salem firm dered the empirical database for such a plan of Nelson Mullins Riley & Scarborough LLP. better than some of the commissioners. So it was no surprise when, the first time the an unfixable toilet. But here the story takes a county sent its posse over to showcase this new turn because of an update of the 2009 new two-building option to the courthouse study in 2016, which now offered two new stakeholders (which we were expressly President’s Message (cont.) options in lieu of a renovation. The first was informed did not include the practicing bar), a nine-story, freestanding courthouse with the senior resident superior court judge recommendations. One benefit of doing so is secure parking and access from the county bravely informed them that if they wanted to that the confidential services offered to our jail through an underground tunnel beneath pursue that option, not to do anything. To members by LAP and its volunteers might be the intervening street. That design, which which the county responded that it would more willingly utilized with less fear of stig- the local bar and courthouse personnel had just renovate the old courthouse. ma. We must all be cognizant of the symp- been pushing for a couple of years, carried a To their lasting credit, the chair of the toms of impairment and be prepared to projected cost of $146 million. Again, a county commissioners and several of his col- become involved when those symptoms are courthouse architect quickly refigured the leagues still voiced their desire for a new free- recognized in a friend or colleague. It is cost at no more than $136 million, but the standing courthouse, not a two-building much more satisfying to help a colleague find county was not interested in any outside nightmare, but they were understandably the right path than to deal with the conse- influence. Despairing of the cost of a new concerned about building one on a 4-3 vote, quences of being too late. n freestanding courthouse, one of the commis- especially when the allegedly cheaper two- sioners utilized the services of a county con- building plan could pass 7-0. But these good John Silverstein is a partner with the struction manager (who has never built a men were saddled with a political dilemma Raleigh firm of Satisky & Silverstein, LLP.

24 SPRING 2018 New Pro Bono Regional Councils Convene

B Y J ARED S. SMITH

“I do pro bono work because I work for a The first of these conversations took place porting access to justice for low income firm where providing public service, includ- in Greensboro in mid-September 2017. The North Carolinians. ing doing pro bono legal work, is embedded Triad Area Pro Bono Legal Council saw repre- Additional area meetings are scheduled in the culture. I do it because the people sentatives from Greensboro and Winston- for 2018, including a Charlotte Pro Bono around me whom I admire do it, and I strive Salem come together to hear former NC Roundtable (an ongoing initiative from to emulate them.” With these words, Julian Supreme Court Justice and Smith Moore the Charlotte Center for Legal Advocacy) Wright, Robinson Bradshaw attorney and Leatherwood Attorney Bob Edmunds share and a Coastal Area Pro Bono Regional co-chair of the NC Equal Access to Justice about the increasing need for pro bono legal Council. Additional firm participation is Commission’s Pro Bono Committee, wel- services, and Afi Johnson-Parris, Ward Black welcome at each of these councils. If you comed firm representatives to the inaugural Law attorney and co-chair of the NC Equal would like your firm to be represented, meeting of the Triangle Area Pro Bono Access to Justice Commission’s Pro Bono please contact [email protected] for Regional Council, one of two newly Committee, describe her personal commit- more information. n launched councils in the state in 2017. ment to pro bono legal service. The group then Hosted by the NC Pro Bono Resource discussed the history of pro bono legal services Jared Smith is a communications specialist Center, these Pro Bono Regional Councils in the area and opportunities for increasing with NC Equal Access to Justice. offer new spaces for private attorneys to attorney volunteerism moving forward. come together to discuss challenges, oppor- The Triangle Area Pro Bono Legal tunities, incentives, and best practices regard- Council came together at the NC State Bar ing pro bono work at the local level. in early November 2017, hearing remarks Equal Access to Justice Act North Carolina has a strong tradition of from Chief Justice Mark Martin on the cur- pro bono legal service provision. In our Rules rent state of access to justice in NC, and (cont.) of Professional Conduct, adopted in 2010, about the role that the private bar can play in attorneys are each encouraged to provide at supporting those efforts. The group dis- attorney volunteer efforts, while substantial, least 50 hours of pro bono legal services each cussed best practices in managing pro bono cannot replace the loss of core funding to year to those unable to pay, without expecta- legal service provision, such as appropriate support North Carolina’s legal aid providers. tion of a fee. Pro Bono Regional Councils conflict checks and limiting the scope of You help bridge the justice gap by volun- provide a venue for firms to share how they services, and shared policies regarding incen- teering as a pro bono attorney, making a are meeting needs in their own backyards, tives encouraging attorney participation. financial contribution, or contacting your and how others may have policies or proce- Both groups also heard about reporting and legislators to voice your support. More infor- dures to share to encourage an increase in recognition efforts for pro bono legal services mation can be found on the NC Equal that good work. Sylvia Novinsky, director of provided in 2017, available at ncprobono.org Access to Justice Commission’s website at the NC Pro Bono Resource Center, high- through March 31, 2018. ncequalaccesstojustice.org. lighted the need for these local conversations: While initial conversations through these Children are usually assured that the “When we say ‘pro bono is local,’ we mean regional councils focus on the current state of “boogey man” isn’t real. But what if your that developing strong, ongoing community pro bono legal service at the local level, and on own dad told you instead that someone was relationships is essential for addressing gaps assessing current challenges, opportunities, coming to get you, and gave you a knife to in access to justice for those around us. These incentives, and structures for attorney volun- protect yourself? n relationships allow us to be responsive as teerism, they will expand into venues for col- additional needs arise, and to tailor our work laboration on new pro bono initiatives to Jennifer Lechner is the executive director of to provide services that are both engaging address unmet legal needs. These councils the North Carolina Equal Access to Justice and meaningful for our attorneys.” will also help to inform statewide efforts sup- Commission.

THE NORTH CAROLINA STATE BAR JOURNAL 25 The Criminal Court System is the Theatre of the Real

B Y J OHN G. GEHRING

ello, I’m Gary1 and I hear that you are

looking for me.” My answer was an

emphatic NO, I was not looking for

him, but that the United States mar- ©iStockphoto.com/KateJoanna shal“H was seeking to arrest him for his failure to appear in court that morning. This was my introduction to Gary, and my introduction to certain aspects of the practice of law which are not taught in law school. I learned that right may sometimes be wrong, that there are always two or more sides to every case, and that humor and laughter, used properly, can help achieve a favorable judgment in many cases.

We walked into federal court that after- directing you to appear this morning?” was interesting. noon, I dressed in a suit and Gary in his bib the next question from the judge. Gary told The indictment accused Gary with the overalls with a dirty red cap affixed firmly to the judge that he only got the letter that production and selling of non-tax paid his head. The first laughter, which was morning (although it was postmarked 25 whiskey, called by many names but most directed at us by those attending court, was days prior). The court accepted Gary’s commonly known as “moonshine.” Upon when the bailiff yelled across the courtroom explanation that he only went to his mail- talking with Gary, my knowledge of the for Gary to remove his cap. Then we were box once a month when the power bill world of private enterprise increased. I face to face with the Honorable Eugene came, and that was when he found the learned that “priming” tobacco was the har- Gordon, United States District Court court letter. This time the laughter from the vesting of the leaves of the plant, that judge. onlookers was with Gary. “homemade” whiskey was much preferred “Where were you at 9 o’clock this morn- A new trial date was set and, before we to the store bought type (at least in our ing when your case was called for trial?” said left the courtroom, Gary said, “It is good to small rural county), and that the distribu- His Honor, to which Gary replied that he see you again, Your Honor.” That statement tion network for the product extended was in the field priming tobacco. told me there was more to my new client many miles northward. “Didn’t you get the letter from this court than met the eye—this case was going to be The producers were proud of their prod-

26 SPRING 2018 uct. Gary was uneducated in the familiar sense of the word, but was wise in the ways of the world; at least his world. My educa- tion, however, would continue throughout the trial. Take Your Legal Career Gary said, “I know that making liquor is against the law, but it is not wrong. My to the Next Level grandfather made liquor, and my father made liquor, and it is not wrong.” Wow, what a statement! Law school, and my law Specialized Training for Attorneys life thus far, had instilled in me the under- standing that the law is the law and that breaking the law is wrong. A new concept showed its face—the law can be wrong (remember miscegenation laws, school dis- crimination laws, etc). New Online Master of Laws (LLM) “It’s all about the money and they (the government) want part of the profits,” said in business law and health law Gary. I had never met a “moonshiner” and a “tax protester” before—Gary was the first. I find it funny that some 40 years later, the Increase your practice area knowledge—to better serve concept of tax protesting has a huge follow- your clients and enhance your career—with advanced ing. training from one of the nation’s top-ranked law schools. After the trial and the presentence phase, we were back in Judge Gordon’s court for Two Concentrations: The new online LLM is offered in two sentencing. After approaching the bench, at concentrations: Business Law and Regulation and Health Care Judge Gordon’s request, he told me that this Law, Policy, and Regulation was the fourth time that my client had Now Online appeared before him on bootlegging : Complete the program in only 15 months with charges, and that an active sentence must be three short residencies; enroll now for classes starting August handed down this time. 2018 “Please rise Mr. Gary. Do you have any- Scholarships: Scholarships and financial aid are available thing to say before sentence is pro- nounced?” asked His Honor. “Yes, Your Honor, it is good to see you again. Since winter is coming on and my firewood sup- ply is low, would you please sentence me to a prison in Florida where I will be warm?” Again the courtroom was full of laughter, and it seemed that everyone was rooting for Gary. Even Judge Gordon was smiling. Learn more at law.emory.edu/llm | Email us at [email protected] Gary was sentenced to Elgin Air Force Base in Florida for a term of one year. And this is where the last part of this case begins, and my knowledge of what happened is based solely on hearsay. I do not know if the Elgin 1. Humor, if of the heartfelt type, will Gary. Air Force Base narrative is true, but I do not make everyone laugh. A laugh usually puts 5. Gary has been dead many years and I think that Gary made this up. most people at ease, even the judge. still miss him. n I was told that the prison administrator, 2. Never make white liquor unless you in his wisdom, decided that Gary had a tal- have a federal and state license. The govern- John Gehring, a former State Bar councilor ent for cooking and assigned him to work in ment must always get a share of your money. and chair of the Publications Committee, is the kitchen. Apparently Gary, pursuant to 3. Never hesitate to make your wishes now semi-retired, which means that he “works his kitchen duties, decided the best use for known; it might mean you get to spend the less and enjoys it more.” the applesauce was to transform it into a winter in Florida. new liquid product. 4. The law is the law, as they say, but does Endnote Gary was back in business! that mean the law is right? “I know that it is 1. The client’s name has been changed. Lessons learned: against the law, but it is not wrong,” says

THE NORTH CAROLINA STATE BAR JOURNAL 27 THE DISCIPLINARY DEPARTMENT

Grievance Committee and DHC Actions

in contempt by the Wake County Superior with his client, did not respond promptly to Disbarments Court for failing to comply with the court’s the Grievance Committee, and did not par- Johnny S. Gaskins of Raleigh surren- order to deliver trust account records to the ticipate in mandatory fee dispute resolution. dered his law license and was disbarred by State Bar. The court enjoined Gurley from The suspension was stayed for two years. The the Wake County Superior Court. Gaskins practicing law until he fully complies with all DHC concluded that Ackerman did not acknowledged that he forged signatures on State Bar requests for information. comply with conditions of the stay relating the back of a settlement check with the to a practice monitor, CLE requirements, intent to defraud the bank, failed to deposit Interim Suspensions communication with the State Bar, and pay- the check into a trust account, and embez- The chair of the DHC entered an interim ment of costs and administrative fees of the zled the proceeds of the check. suspension of the law license of Matthew A. disciplinary action. The DHC lifted the stay Mital M. Patel of Raleigh surrendered his Smith of Raleigh. Smith was convicted in and activated the suspension. After serving law license and was disbarred by the council Wake County of taking indecent liberties six months of the suspension, Ackerman may at the October 2017 meeting. He acknowl- with a child, a felony, in violation of N.C. apply for a stay of the balance. edged that he misappropriated entrusted Gen. Stat. § 14-202.1. In July 2015 the DHC suspended Robert funds totaling at least $3,300. M. Gallant of Charlotte for two years Carlos B. Watson of Charlotte embezzled Reprimands because he did not timely file federal and entrusted funds and violated multiple other John Mansfield of Cary was reprimanded state income tax returns in 2007 through trust accounting rules. He was disbarred by by the Grievance Committee. He did not 2013. The suspension was stayed for two the Disciplinary Hearing Commission. properly safeguard entrusted funds and did years. In October 2017 the DHC concluded not supervise his nonlawyer staff. that Gallant did not comply with conditions Suspensions & Stayed Suspensions of the stay requiring him to execute releases Cowles Liipfert of Winston-Salem will- Transfers to Disability Inactive Status authorizing the IRS and NC Department of fully failed to file state income tax returns The chair of the Grievance Committee Revenue to communicate with the State Bar, and to timely pay state tax obligations for transferred Michael A. Schlosser of timely file tax returns, pay his 2015 tax liabil- 2012, 2013, and 2014. The DHC suspend- Greensboro to disability inactive status. ity, comply with treatment recommenda- ed him for two years. The suspension is tions of an evaluating mental health profes- stayed for two years upon compliance with Reinstatements sional, and fulfill State Bar membership and numerous conditions. Tracey Cline was the elected district CLE requirements. The DHC lifted the stay Darin P. Meece of Durham forged the attorney of Durham County until she was and activated Gallant’s suspension. name of a former client to a corrective deed removed from office pursuant to N.C. Gen. In March 2015 the DHC suspended and notarized his forgery of the signature. Stat. § 7A-66. In June 2015, Cline was sus- David A. Lloyd of Spindale for three years. The DHC concluded that Meece’s conduct pended by the DHC for five years for filing Lloyd violated trust accounting rules and did was dishonest and deceitful but that he acted pleadings containing false and outrageous not report misappropriation of entrusted without a selfish motive. He was suspended statements about a judge and making false funds by his law practice associate. The sus- for one year. representations in court filings in an attempt pension was stayed for three years. The Darnell Parker of Greenville violated to obtain confidential prison visitation DHC concluded that Lloyd did not comply multiple trust accounting rules. The DHC records. After she served two years of the sus- with conditions of the stay requiring him to suspended him for two years. The suspen- pension, Cline was eligible to petition for a fulfill CLE requirements, pay costs and sion is stayed for two years upon compliance stay of the balance upon demonstrating administrative fees of the disciplinary action, with numerous conditions. compliance with enumerated conditions. and engage a CPA to conduct semi-annual The Lincoln County Superior Court sus- Cline did not petition for a stay. She peti- audits of his trust account. The DHC lifted pended Blair M. Pettis of Lincolnton until tioned for reinstatement but did not appear the stay and activated the suspension. further order of the court. The court con- at the hearing on that petition. The DHC In September 2015 the DHC suspended cluded that Pettis did not comply with a denied the petition. Jeffrey D. Smith of Charlotte for two years Consent Interim Order and Recovery for violating trust accounting rules. The sus- Program. Stayed Suspensions Activated pension was stayed for three years. The In January 2016 the DHC suspended DHC concluded that Smith violated multi- Judicial Action Nicholas S. Ackerman of Greensboro for ple conditions of the stay, including condi- Charles R. Gurley of Goldsboro was held one year. Ackerman did not communicate tions requiring him to demonstrate proper

28 SPRING 2018 trust accounting procedures. The DHC federal prosecution of his former employer case and collected and converted to his own imposed additional conditions and extended and was granted immunity. Bresler drafted a use the proceeds of an annuity contract in the length of the stay. false promissory note for the former employ- the amount of $15,287.09, most of which In December 2016 the DHC suspended er, destroyed his own bank records at the belonged to her. An Order of Disbarment Michael S. Williamson of Goldsboro for direction of the former employer, and exag- was issued against Hale on October 14, three years for violating trust accounting gerated to law enforcement the extent of his 2004, and was effective immediately. rules. The suspension was stayed for three attorney/client relationship with the former years. The DHC concluded that Williamson employer. In the Matter of James E. Ferguson III violated several conditions of the stay, Notice is hereby given that James E. including requirements that he submit CPA Notices of Intent to Seek Ferguson III intends to file a petition for audits of his trust account and pay costs and Reinstatement reinstatement before the Disciplinary administrative fees of the disciplinary action. Hearing Commission of the North Carolina The DHC announced that it will lift the stay In the Matter of Theodore G. Hale State Bar. On July 28, 2005, Ferguson and activate the suspension. Notice is hereby given that Theodore G. entered a plea of guilty in US Federal Court Hale of Wilmington intends to file a petition to one count of conspiracy to commit secu- Orders of Reciprocal Discipline for reinstatement before the Disciplinary rities fraud, mail fraud, and wire fraud. This The chair of the Grievance Committee Hearing Commission of The North Carolina conviction provided the substance of a griev- issued an order of reciprocal discipline cen- State Bar. Hale executed an affidavit of ten- ance filed against Ferguson by the Grievance suring Kahiel R. Barlow of Huntsville, der of surrender of license on October 13, Committee of the North Carolina State Bar. Alabama. He was censured by the Board of 2004, and he filed said affidavit in the offices On or about August 23, 2005, Ferguson ten- Professional Responsibility of the Supreme of the State Bar on October 14, 2004. Based dered an Affidavit of Surrender of his license. Court of Tennessee in October 2016 for on the affidavit, the chair found that Hale On October 21, 2005, the tender of the sur- practicing law while he was administratively had misappropriated money from his former render was accepted by the State Bar and suspended. law partner, charged and collected money Ferguson was disbarred. The chair of the Grievance Committee from the parents of a criminal defendant Individuals who wish to note their con- issued an order of reciprocal discipline sus- whom he was appointed to represent with- currence with or opposition to these peti- pending Joel M. Bresler of Lakeland, out telling them that he was obligated to rep- tions should file written notice with the sec- Florida, for 91 days. The Supreme Court of resent their son at State expense due to the retary of the North Carolina State Bar, PO Florida suspended Bresler for 91 days in court appointment, and represented a Box 25908, Raleigh, NC, 27611, before January 2015. Bresler was a witness in the woman in a divorce/equitable distribution May 1, 2018 (60 days after publication). n

THE NORTH CAROLINA STATE BAR JOURNAL 29 TRUST ACCOUNTING

Reconciliations and Reviews

B Y P ETER B OLAC, TRUST A CCOUNT C OMPLIANCE C OUNSEL

The following article is excerpted from the terly—must be signed and dated by a lawyer. and dated by a lawyer, and you are required to North Carolina State Bar’s Trust Account Remember, nonlawyer employees who recon- retain these records and the reconciliation Handbook. The Trust Account Handbook was cile the trust account may not be signatories reports for six years to satisfy the recordkeep- revised in November 2017 and is available on on trust account checks. ing requirement in Rule 1.15‐3(d). the State Bar’s website, ncbar.gov. A reconciliation form is available in You are permitted to retain electronic Appendix B13 of the Trust Account Handbook. copies of all reconciliation reports, as long as Monthly Reconciliation you follow the requirements in Rule Rule 1.15-3(d)(2) requires a very basic Quarterly Reconciliation 1.15‐3(j): monthly reconciliation of each trust account. Rule 1.15‐3(d)(1) states that each quarter (1) the records otherwise comply with You cannot do a reconciliation for a month a report must be prepared that shows all of Rule 1.15‐3, to wit: electronically created until you are sure you have correct balances in the following balances and verifies that they reconciliations and reviews that are not all your client ledgers and in general are identical: printed must be reviewed by the lawyer ledger/checkbook register for the previous (A) the balance that appears in the general and electronically signed using a “digital month. If you have not recently reconciled ledger as of the reporting date; signature” as defined in 21 CFR your books, or if you are worried that they are (B) the total of all subsidiary ledger bal- 11.3(b)(5); wrong, you may want to bring in a bookkeep- ances in the general trust account, deter- (2) printed and electronic copies of the er to straighten them out before you take on mined by listing and totaling the positive records in industry‐standard formats can the monthly and quarterly reconciliations balances in the individual client ledgers be made on demand; and yourself. and the administrative ledger maintained (3) the records are regularly backed up by Once you have correct balances for the for servicing the account, as of the report- an appropriate storage device. previous month, you are ready to reconcile. ing date; and It is fine to hire a bookkeeper or the The steps required for this type of reconcilia- (C) the adjusted bank balance, deter- equivalent, but you are still personally tion are not unlike those necessary to balance mined by adding outstanding deposits responsible for accounting to your clients a personal checking account. and other credits to the ending balance in and to the State Bar for the money in your There are two main steps in reconciling the monthly bank statement and subtract- client trust accounts. Therefore, even if you monthly: ing outstanding checks and other deduc- never intend to do the reconciling, you 1. From the balance shown on the bank tions from the balance in the monthly should understand the process. Even if it is statement for the monthly reporting period, statement. your bookkeeper’s mistake, if you bounce a subtract all outstanding checks. To this Quarterly reconciliations promote accu- client trust account check, you are the one amount, add all deposits that have not cleared rate accounting for client funds by ensuring your client and the State Bar are going to the bank. This is the current bank balance. that the running balances for each client, come to for an explanation. Remember, a 2. Confirm that the current bank balance when totaled, equal the total funds on deposit nonlawyer employee cannot be responsible equals the total balance for the trust account in the trust account. for reconciling the trust account and be a as shown on the lawyer’s records (if using Remember that a three‐way reconciliation trust account signatory. manual accounting, this would include check should be conducted every quarter for every stubs or the account register). client trust account. It is recommended, how- Trust Account Reconciliation Sheet The cut‐off date for the bank statement ever, that three‐way reconciliations be per- The State Bar has created a Trust Account and the trust account balance must be the formed monthly. Reconciliation Sheet for lawyers to use when same or the two balances may not reconcile. When completing the three‐way reconcil- reconciling trust accounts. A copy of this Note that the “Reconciliation Summary” iation, it is a good idea to use an adding sheet can be found in Appendix B13 of the produced by accounting software will typi- machine or other calculator that will produce Trust Account Handbook, and a fillable form is cally satisfy the monthly requirement to rec- a printed record of the calculation you per- available on the State Bar website, ncbar.gov. oncile the current bank balance to the total formed. That way, if your records do not trust account balance (a different software match, you can easily check to see if the rea- Monthly Review report may be necessary for the quarterly son is a mathematical mistake made while Rule 1.15‐3(i)(1) requires lawyers to review reconciliation). performing the reconciliation. All reconciliations—monthly and quar- Quarterly reconciliations must be signed CONTINUED ON PAGE 35

30 SPRING 2018 LEGISLATIVE UPDATE

2017 Legislative Year in Review

B Y P ETER B OLAC, LEGISLATIVE L IAISON

The Legislative Update column is launch- explanation of the UPAA provided by the dispute over the division of the fee between ing in this edition of the Journal at the request NC Bar Association, go to bit.ly/2nCAFy4. the attorneys. of North Carolina attorneys. In late 2017, the Restore Partisan Elections - S.L. 2017-3 NCAOC Omnibus Bill - S.L. 2017-158 North Carolina State Bar conducted a survey provides that elections of superior court and makes numerous changes to law governing asking its members how they would like the district court judges are to be conducted in the administration of the general courts of State Bar to communicate with them, and a partisan manner. The governor’s veto was justice. what content would be of interest. Several overridden. Various Clarifying Changes – Among respondents expressed an interest in being Reduce Court of Appeals to 12 Judges – other changes, S.L. 2017-206 prohibits a informed about legislative issues that affect the S.L. 2017-7 reduces the court of appeals lawyer who serves as a trustee from repre- practice of law and the Bar. from 15 to 12 judges by abolishing the first senting noteholders or borrowers while ini- three seats that become vacant on or after tiating a foreclosure proceeding. The gover- The following list contains new laws and January 1, 2017, prior to expiration of the nor’s veto (unrelated to this section) was bills of interest to the legal profession that incumbent's term. Provides an appeal of overridden. were introduced in or considered by the right directly to the North Carolina Expungement Process Modifications - General Assembly in 2017. The information Supreme Court from orders regarding class S.L. 2017-195 makes modifications to the is provided for informational purposes only, action certification and orders terminating various expunction statutes. is not exhaustive, and does not constitute parental rights or denying a motion or peti- endorsement of or opposition to any partic- tion to terminate parental rights. Permits Bills Eligible for Consideration in the ular item. To find the full text of each law, review by the North Carolina Supreme 2018 “Short Session” search by Session Law at ncleg.net. To find Court before determination by the court of Note: These bills are eligible for considera- the full text of a bill, use the Bill Look-Up appeals when the subject matter is impor- tion in the 2018 short session. Inclusion on this function at ncleg.net/gascripts/BillLookUp/ tant in overseeing the jurisdiction and list does not imply that a bill will be consid- BillLookUp.pl. integrity of the court system. The governor’s ered. veto was overridden. Judicial Redistricting and Investment 2017-2018 Budget Criminal Law Changes – S.L. 2017-176 Act (H717) – Passed House. The bill is cur- Appropriations Act of 2017 – S.L. makes various changes in the law relating to rently under consideration in the Joint 2017-57 motions for appropriate relief under Select Committee on Judicial Reform and Budget Technical Corrections – S.L. Chapter 15A of the General Statutes, and Redistricting. H717 would revise judicial 2017-197 makes clarifying and technical changes to districts as shown in maps provided at Provides funding for the Judicial G.S. 7A-451 regarding the entitlement of an ncleg.net/Sessions/2017/h717maps/h717m Department (P.330), including the funding indigent person to services of counsel. The aps.html. of additional assistant district attorney posi- law makes clarifications to the habitual felon NOTE: The most recent judicial redis- tions and judicial department pay raises statutes, habitual impaired driving statutes, tricting proposal from the Joint Select across the state. The Appropriations Act and habitual breaking and entering statutes. Committee on Judicial Reform and also provided funding for the Juvenile The law also addresses fingerprinting defen- Redistricting can be found on the commit- Justice Reinvestment Act (“Raise the Age”), dants, Citizen’s Warrants, and the Sheriff’s tee’s website: ncleg.net/gascripts/Document and eliminated “Access to Civil Justice” Supplemental Pension Fund. Sites/browseDocSite.asp?nID=376 funding. The governor’s veto of the budget Electoral Freedom Act of 2017 – Among Increase Voter Accountability of Judges was overridden. other electoral changes, S.L. 2017-214 elim- (S698) – An act to amend the constitution inates primary elections for all justices and to create two-year terms of office for all jus- Additional Bills that Became Law judges of the courts in 2018. The governor’s tices and judges. Uniform Power of Attorney Act - S.L. veto was overridden. Forfeiture of Retirement Benefits 2017-153 adopts the North Carolina Workers’ Comp/Disputed Legal Fees – (H160) – Prohibits retirement benefits for Uniform Power of Attorney Act (UPAA), Among other changes, S.L. 2017-124 judges who have been impeached and con- largely replacing existing law governing the requires the Industrial Commission to pro- victed or removed from office. creation, interpretation, and application of vide notice to an injured worker’s current powers of attorney. For a more detailed and previous attorneys of record if there is a CONTINUED ON PAGE 39

THE NORTH CAROLINA STATE BAR JOURNAL 31 LEGAL SPECIALIZATION

Board of Legal Specialization Launches A New Specialty in 2018

B Y D ENISE M ULLEN, ASSISTANT D IRECTOR OF L EGAL S PECIALIZATION

tion in privacy or information security law, and there was not any other wide- ly-recognized, credi- ble certification authority. — Matthew Cordell Q: Describe a typi- Cordell Johnson McGinnis Standley Wall cal client or client situation. The Privacy and Information Security Carolina lawyers with referral options when The situations that our clients face vary Law Specialty Committee of the State Bar the need arises. significantly. Currently we are seeing a fair Board of Legal Specialization is at the cutting The committee members were asked to number of clients with business email com- edge of a rapidly changing legal landscape. share their experience and perspectives on promise (BEC) or “spoofing” issues. Data Committee members (see sidebar) are set to practicing privacy and information security incidents involving the insertion of malware launch the new specialty certification in law, and on how the new certification can into a client’s system to scrape personal data 2018, building upon an existing national cer- benefit lawyers throughout the state. and data incidents involving employee error tificate offered by the International Q: What sets this practice area apart? (such as a lost laptop) are not uncommon. Association of Privacy Professionals (IAPP). Privacy law is a cutting edge area. It is con- But privacy and information security is much IAPP offers a Certified Information Privacy stantly evolving and it impacts almost every more than just cybersecurity and data breach- Professional-US (CIIP/US) training program aspect of our lives. Every time we pick up our es. Clients face privacy issues in dealing with and exam to applicants throughout the smart phone we are implicating some aspect employee and customer personal informa- United States and beyond. The North of privacy law. —F. Marshall Wall tion, monitoring others, recording calls, send- Carolina specialty will utilize the IAPP certifi- Q; Did your interest in privacy law begin in ing documents containing social security cate to qualify applicants for a short exam law school? numbers, conducting background checks and that will focus on state as well as the interpre- My interest actually began with pre-law drug testing, designing legally adequate data tation of federal and international law. school employment in financial services where security plans, and providing adequate notice Rapidly evolving technologies affect many data privacy was engrained in the business to consumers of collection and use of their NC companies, particularly those in special- model. I learned that I really enjoyed helping personal data. GDPR (the EU General Data ized fields like pharmaceuticals and sustain- clients with cutting edge issues in a rapidly able energy. As technology further advances, evolving topic area. —Nathan Standley these companies face big challenges in pro- Q: Have you already attained the IAPP Privacy and Information Security tecting their corporate and employee data. We CIPP/US certification? If so, why did you Specialty Committee have all seen the effects of massive data pursue that? breaches over the last several years. Privacy I became IAPP CIPP/US certified in 2015 Matthew A. Cordell, Chair lawyers handle those unfortunate situations as because I had been actively practicing privacy Elizabeth H. Johnson, Vice Chair well as many other corporate technological and information security law and I hoped that Alicia A. Gilleski and security issues on a daily basis. Lawyers the CIPP/US certification would help Karin M. McGinnis who are able to assist clients in successfully demonstrate to clients and prospective clients Elizabeth E. Spainhour navigating these fast moving business and that I was knowledgeable in the law, in tech- Nathan E. Standley legal waters are in high demand. This new nology, and in customs relevant to privacy and F. Marshall Wall specialty certification will help clients locate information security. At the time, neither the Clark C. Walton qualified counsel, and also provide all North ABA nor any state bar recognized a specializa-

32 SPRING 2018 Protection Regulation, which will be to the table to help the current situation and enforced beginning May 25, 2018) is a prior- help minimize the risk of future incidents. I ity for many companies right now. —Karin also enjoy the challenge of staying on top of McGinnis changes in the law and practicing in an area Q: What’s the most interesting/difficult/chal- where the new legal theories are being devel- lenging information security legal issue you oped and tested, such as legal claims by con- have handled? sumers for data breach violations. It is never The large-scale data security incident boring or routine. —Karin McGinnis responses that I have worked on over the Q: Does a lawyer need to be technologically years have consistently been the most chal- proficient to practice in this specialty area? lenging, because there are so many applicable Not necessarily as there are numerous laws, regulatory bodies, contract and insur- aspects to this practice area that do not ance requirements, law enforcement con- involve technology; however, technology cerns, and reputational risks, all of which prowess is always beneficial. —Nathan must be handled in a very compressed time- Standley frame. —Matthew Cordell Q: How do you keep up with the changes in Q: How has the practice changed in the past technology that affect your clients? five years? I subscribe to a number of blogs and email The biggest challenges in this practice are updates, follow industry leaders on social keeping up with developments and conform- media, and am a member of several technol- ing my advice to the needs of dynamic, fast- ogy associations that send updates about the paced situations. When I started, my firm industry. —F. Marshall Wall had just handed out Blackberries for the first When I come across a technology I don’t time, MySpace was making more news than understand, I set aside some time to dig into Facebook, and there were relatively few priva- the topic and educate myself about it—some- cy laws. The practice changes weekly, not times by simply Googling it and reading for yearly, in terms of new technology, emerging an hour or two. One of the benefits of being security threats, new case law, and new or an in-house lawyer at a large company with amended statutes and regulations. To be suc- hundreds of technology professionals is that I cessful in this practice, you must be willing to can call in one of my (internal) clients who devote substantial time to maintaining has some level of expertise in the technology expertise because, even though the area is and ask them to explain it to me until I’m maturing, it will never be static. On this confident that I understand the terminology, point, having a team of devoted practitioners mechanics, and applications of the technolo- is a significant advantage. gy. —Matthew Cordell Clients’ sophistication and knowledge of Q: How do you envision the NC certifica- the subject matter also has increased signifi- tion affecting your practice or career? cantly in the last five years. What has not Certification should help differentiate changed, and likely will never change, is their those who have knowledge and experience in expectation that our advice will be clear, prac- this area, which is very specialized and tical, responsive, and actionable. In this prac- becoming more so. I am excited to be one of tice, when applicable laws may be out of date those folks. —F. Marshall Wall with technology or must be applied to unan- Q: What would you say to encourage other ticipated situations, a depth and variety of lawyers to become board certified specialists experience is really critical to meet client in this field? needs and expectations, more so now than One of my mentors told me many years five or ten years ago. —Elizabeth H. Johnson ago that in order to be a great lawyer, you Q: What gives you the most satisfaction must love the law. I would say that if you about practicing privacy and information want to be a great privacy and data security security law? lawyer, you need to love both the law and I enjoy helping clients through what can computer technology. —Matthew Cordell be an extremely stressful and difficult time, For more information on specialty certifi- for example when a data breach hits and the cation in Privacy and Information Security client needs quick and clear guidance on how Law visit us online at nclawspecialists.gov/ to proceed. It is satisfying to see clients gain for-lawyers/certification-standards/privacy- more confidence that the situation can be and-information-security-law. Application resolved and that there is a team I can bring deadline: July 2, 2018. n

THE NORTH CAROLINA STATE BAR JOURNAL 33 LAWYER ASSISTANCE PROGRAM

A Kick in the Ass

B Y A NONYMOUS

ou don’t have to live under a bridge to need some help. Sadly,

some people have to lose enough to qualify to live under a

bridge before they ask for help. That does not have to be you.

I’ve been a lawyer for a decade and a half, though I am some- timesY reminded that I’ve been on this earth a lot longer. For better or worse, becoming a lawyer and practicing as a lawyer taught me some bad habits that affected my ability to for lawyers to seek out the “causation” of our issues and possibly assign “blame.” If we procrastinate getting help for ourselves, it may make healthy decisions. well stem from the fact that we self-impose unrealistic expectations on ourselves. We can’t make mistakes, we can’t admit weaknesses, and When I was a kid, it seemed pretty natural thought of someone they know who obviously we simply don’t have the time to deal with issues to ask for help when I needed it. Admittedly, I needs help. Possibly, that person is the reader, outside of our practices. There is just not was a stubborn kid, and quite often you would but probably not. We think of the person who enough time for “us.” Does that ring true? hear me say, “No, no, I got it.” Of course, most is in obvious pain or obvious dysfunction—the Whether we like it or not, ignoring our of the time I had no problem asking someone lawyer who has “started to lose it.” But every personal issues won’t make them go away. “bigger” than me to help me out. That’s what lawyer currently riding the “lost it” bus stood Typically, they just get worse. What starts out adults are for, right? in the line for that bus for a long time, as a temporary coping mechanism can quickly I’m not entirely sure when I stopped procrastinating about getting some help. become a deep-seated instinct or addiction. If thinking I could ask for help. Maybe it was in Let’s face it, most lawyers are we do not take the time to address our issues law school where competition made the procrastinators. We have too much to do so we now, it is quite likely our problems will rise up perception of weakness something worth make daily triage decisions. Triage is healthy, and strike back without asking our permission avoiding. Maybe it was in the practice of law but when we get to the point that our triage to do so. where my clients looked to me to be strong and criteria is based upon our fear, then we are not Early in my career I encountered a perfect completely self-sufficient. Maybe it was in trial, making healthy decisions, especially if our fear storm of bad news. My employer, without where saying, “I don’t know” did not seem like is not based in facts but in emotions. What do notice, dissolved the law practice and I found an option. Whatever it was and however it I mean by that? Missing a looming statute of myself without a job or financial resources. happened, I stopped asking for help. limitations is a fact-based fear. Avoiding There were problems with my parents and A wise friend once pointed out to me that speaking to a client because we have not family. My law school loans were oppressive and refusing to ask for help was the height of completed promised work is a fact and an I had no real savings. I was in a panic and yet I arrogance and ego. When I responded that my emotion-based fear. Not talking to anyone is a found myself having trouble making decisions. lack of asking for help might actually stem fear born from emotions and internal conflict. Auto-pilot had kicked in, but I was flying an from low self-esteem or fear of being perceived It is not healthy. empty airplane with no flight plan, no as weak, he flatly said, “Isn’t worrying about I’m not a big fan of the word “blame,” but destination in sight, and low fuel. what other people think the height of recognize that at the heart of many lawyers’ Essentially, I froze with indecision because selfishness and ego?” Touché my friend, touché. practices is assigning responsibility for harms all of the personal choices I had to make seemed By this point, most readers may have and seeking redress for those harms. It is natural too overwhelming for me. For example, I was

34 SPRING 2018 not answering my phone. I could not bring while. I really did not want to take them. Not myself to talk to people. I’d return their calls but my style, I would have said. My doctor said, “If Trust Accounting (cont.) sometimes it would take days. Opening the I told you you were a diabetic and needed mail became torture. I felt like every letter insulin, would you tell me it’s ‘not your style’?” would hold bad news. I had to force myself to Touché doctor, touché. check images and bank statements for all get the mail open. When there was no bad The antidepressants kicked in after a few trust accounts and fiduciary accounts on a news, I started thinking that bad news was just weeks. I didn’t feel elated. I didn’t have a smile monthly basis. This review requirement can- going to arrive the next day. I would write a on my face all the time. In fact, I hardly felt all not be delegated, so lawyers must make sure letter three times, unable to decide on the that “up.” But what I did notice was that to look at bank statements and correspon- content. I would excruciate over legal pleadings, decisions that had seemed overwhelming to me ding check images each month. Lawyers certain that I had forgotten some “magic word,” a few weeks earlier suddenly became less “life must certify monthly that they have reviewed my case would be thrown out, and I would get or death” for me. I started sleeping better and these documents. sued by my client and be humiliated. I was able to wake up and actually look forward The reason for a monthly review of check Everything felt urgent, yet somehow I was to the day. images is so that the lawyer might see a check immobile. Of course, I didn’t sit completely still, I had been wrong about the antidepressants. made out to an improper payee such as an but “reorganizing my sock drawer”(my term for I had thought they would “boost” my mood. employee. If the lawyer never reviews can- any seemingly helpful task that is not addressing But what I came to realize was that depression celled check images, then the lawyer may not the real problem) was not providing much had been hampering me, adding a lot of know if someone has been stealing funds forward momentum. unnecessary weight to my backpack of real life from the trust account by voiding legitimate Had you known all of these things and issues. Once the medication became effective, checks and writing checks to themselves for asked me how I was doing, I would have told the extra “rocks” of depression were taken out the same amount. you, “I’m fine. I got it.” of my backpack and I could march forward, I was fortunate that while I was perfectly stronger and better. Antidepressants and Quarterly Review willing to BS myself into thinking that things therapy did not change who I was; they simply Rule 1.15‐3(j)(2) requires lawyers to were “ok,” some people I loved were not willing returned me to what I could be. review a random sample of representative to let me. They told me, “You are depressed. I’m still on my journey of being me. Each transactions completed during the quarter You need to talk to someone.” day holds new challenges, but I have a firm to verify that the disbursements were prop- In that pivotal moment in my life, I was foundation upon which I can act. My career erly made. The transactions reviewed must willing to try something new. Not only has been incredibly fulfilling since I came out involve multiple disbursements unless no something new, but something that scared me of that dark place so many years ago. such transactions are processed through the and certainly threatened my idea of who I was. I count myself as very lucky that I got help account, in which case a single disburse- Therapy was an amazing and positive early. Other than a few irritated clients, there ment is considered a transaction for the experience. I wholeheartedly recommend it to were no long-term negative consequences to purpose of this paragraph. A sample of anyone. I learned that my “immobility” was a my career because of my depression. I don’t three representative transactions satisfies result of moderate depression brought on by know if I would have sought help on my own. this requirement, but a larger sample may some difficult circumstances. Not a big I needed a kick in the ass. I’m just glad it came be advisable. surprise. I also learned that I had a lot of coping before I started losing people and things I held To perform a proper quarterly review, mechanisms from my life before law and my dear. I never had to live under that bridge, and the lawyer must select the random transac- formative years that were not serving me well I don’t regret that for a moment. tions and conduct the review herself. This anymore. These coping mechanisms were Not everyone has someone who will reach review requirement cannot be delegated to deeply ingrained because they were originally out and encourage them to talk or get help. If a nonlawyer. developed as survival mechanisms. I learned you don’t have that person and you can identify The lawyer must examine each transac- that those survival mechanisms were not only with any of the feelings in this article, please tion’s source documents (settlement state- not helpful to me anymore, they were hurtful consider this your kick in the ass. It is done ment, closing document, etc.), client ledger, and counterproductive. The good news was with kindness and love because you deserve to and cancelled checks to ensure that the that I didn’t need them anymore. Therapy live a fulfilling life. It can get better. n amount and payee for each check was cor- helped me let go of those outdated instincts rect and that the check actually cleared the and substitute healthy instincts. The North Carolina Lawyer Assistance account. If I had been left on my own, I’m sure I Program is a confidential program of assistance for After conducting the review on at least would have survived that difficult time in my all North Carolina lawyers, judges, and law three transactions, the lawyer must sign a life, but I also know I would not have improved students, which helps address problems of stress, report indicating that the review was com- my inner-life. I would have simply “managed.” depression, alcoholism, addiction, or other pleted and attach the supporting documents Managing is not a really good life plan. And for problems that may impair a lawyer’s ability to to the report. me, long-term “managing” always resulted in practice. If you would like more information, go to The State Bar has developed a form to bad side effects when my outmoded survival nclap.org or call: Cathy Killian (western areas of help lawyers complete this process, available instincts kicked in. the state) at 704-910-2310, or Nicole Ellington in Appendix B14 of the Trust Account My doctor prescribed antidepressants for a (for eastern areas of the state) at 919-719-9267. Handbook or online at ncbar.gov. n

THE NORTH CAROLINA STATE BAR JOURNAL 35 PATHWAYS TO WELLBEING

Welcome to Our Newest Column Focused on Lawyer Wellbeing

B Y L AURA M AHR

athways to Wellbeing is launching this year

at the request of North Carolina attorneys.

This column is the first of its kind to be

published in the Journal. In late 2017, the

PNorth Carolina State Bar conducted a survey asking its members

how they would like the State Bar to communicate with them, and what content would be of interest. Numerous lawyers who responded

to the survey shared that they would like to read articles about how to manage the stress of working in the legal profession, how to better

deal with difficult situations, and how to achieve a better work/life balance.

I was delighted when Jennifer Duncan, the The stressors of legal practice are nothing Similarly distressing findings were reported Journal’s editor, invited me to write an ongo- new—we are well aware of the demands about law school student wellbeing in an arti- ing column on attorney wellbeing. As a inherent in litigation, the challenges of dealing cle published in 2016 in the Journal of Legal resilience coach and a burnout prevention with clients and difficult cases, the pressures of Education (bit.ly/2DBlf3H). consultant and trainer at Conscious Legal being a new lawyer, the responsibility of pre- In response to these eye-opening reports, Minds LLC, I work across the state and siding over a courtroom, the burdens associat- the ABA’s National Task Force on Lawyer around the country educating lawyers about ed with running a law firm, and the concerns Well-Being published “The Path to Lawyer wellbeing. I hear first-hand from attorneys about prospering financially, to name a few. Well-Being: Practical Recommendations for and judges about the impact that the stresses The impact of lawyers’ professional stress, Positive Change” in August 2017 of law have on their physical, emotional, men- however, is just recently being evaluated. In (bit.ly/2i0KGW0), authored by a broad tal, and spiritual wellbeing. In this column, I 2016 the Journal of Addiction Medicine pub- range of stakeholders, including peer review am eager to share the practical tips and appli- lished a landmark study (bit.ly/2GhpjI9) con- by North Carolina State Bar Lawyer cable tools I teach in trainings and utilize with ducted by the ABA Commission on Lawyer Assistance Program Director Robynn my private clients. My hope is that the sugges- Assistance Programs and the Betty Hazelden Moraites. Even if you are not a lawyer well- tions offered in this column support individ- Ford Foundation. The study found that ness aficionado, this 73-page report is a must- ual lawyers and judges in upgrading their per- lawyers have significantly elevated levels of read; it is chock-full of constructive and feasi- sonal wellbeing, and add momentum to the mental health distress including anxiety, ble recommendations that numerous stake- wellness efforts of law firms and professional depression, and chronic stress, as well as com- holders—including legal employers and bar organizations statewide, creating a ripple effect paratively higher rates of alcohol use disorders associations—can take to promote wellbeing that results in a more resilient Bar. than other professions, including physicians. in our profession. The authors focus on five

36 SPRING 2018 main themes: (1) identifying stakeholders ples of attorney stressors, and offer resilience- 3. Notice which ones you feel the most and the role each of us can play in reducing building tips and mindfulness and neuro- inspired to do. the level of toxicity in our profession, (2) science-based tools that can be used to allevi- 4. Circle your top five. eliminating the stigma associated with help- ate stress and foster greater wellbeing. 5. Calendar them (yes, right now!); invite seeking behaviors, (3) emphasizing that well- For example: Adley and Blaine have both along someone you’d like to connect with, if being is an indispensable part of a lawyer’s been feeling overwhelmed as they juggle client appropriate. duty of competence, (4) educating lawyers, case work, run their small firm, and take time 6. Enjoy doing each of your five small judges, and law students on lawyer wellbeing for themselves. Adley skims this article, tosses things. issues, and (5) taking small, incremental steps it in the recycling, and goes back to work. Note: While the impact of doing one small to change how law is practiced and how Blaine reads this article and takes a moment to thing (or applying any mindfulness tip or tool) lawyers are regulated to instill greater wellbe- write down a definition of wellbeing that res- may not feel entirely effectual in a highly stressful ing in the profession. onates, then makes a list of five small things moment, over time each small step creates a Even before the publication of the ABA that cultivate wellbeing. Blaine then puts each cumulatively larger ripple in our lives toward Task Force’s report, the North Carolina State of the five things on the calendar for the week greater satisfaction and wellbeing, and may also Bar demonstrated leadership in issues related and sends an invite to either a colleague, extend into the lives of our friends, families, and to lawyer wellbeing. The State Bar’s Lawyer friend, or family member to join in for each. colleagues. Assistance Program (LAP) is well-respected One of the things Blaine calendars is a walk The timely concurrence of North nationally for the depth and breadth of the with Luca. When Luca and Blaine are walk- Carolina lawyers saying “we need help” when services provided, its robust volunteer net- ing, Luca suggests an app that Blaine can use research statistics are saying “you need help,” work, its support group offerings around the to fax and scan documents on a smartphone, and the ABA Task Force is saying, “please get state, and for the scope of CLE topics offered which will save Blaine time and money. Blaine help,” bodes well for the wellbeing trajectory related to wellbeing. The State Bar lead the leaves the walk feeling happy to have connect- of our state’s lawyers. It inspires me that so way in creating awareness about lawyer men- ed with Luca, invigorated from physical exer- many North Carolina lawyers requested to tal health when years ago it adopted a Rule cise, more relaxed having left the office for an read articles about how to better cope with requiring a mental health CLE credit hour hour, and inspired by the efficiency the new stress and how to improve work/life balance. every three years. Recognizing the important app will offer. Blaine goes back to the office, What if North Carolina lawyers could lead and emerging field of lawyer wellness, the cheerfully greets the law office support staff, the way toward new pathways to wellbeing State Bar CLE Board approved the first six- and is relaxed and clear-headed in afternoon for colleagues in this state and across the week Mindfulness for Building Resilience to meetings with clients. When Blaine checks in nation? It is my hope that this column ignites Stress CLE course last March; I was honored with Adley at the end of the day, Adley is conversations among attorneys, law schools, to create and teach this course for the 28th exhausted and frustrated, saying nothing got law firms, judicial districts, legal bars, within Judicial District. The article about the course accomplished all day. the courts—and among lawyers and their published in the Journal (bit.ly/2rEas3z) Try it for yourself: What does the term families and friends—about the topic of sparked interest in law firms, judicial districts, “wellbeing” mean to you? lawyer wellbeing. I aspire for the tips and and bar practice groups across the state. Since Does this definition of “lawyer wellbeing” tools that I share to make a difference in your then, Conscious Legal Minds and LAP have that the ABA Task Force uses in its report res- life. Take what inspires and motivates you to partnered to bring similar mindfulness CLEs onate with you: “a continuous process where- live the life you want to live. Put the rest in to other judicial districts around the state. In by lawyers seek to thrive in each of the follow- the recycling. But most importantly, put one addition, LAP’s quarterly Sidebar newsletter ing areas: emotional health, occupational foot in front of the other on your personal launched a new column I author entitled pursuits, creative or intellectual endeavors, pathway to wellbeing. n “Mindful Moments” this past summer sense of spirituality or greater purpose in life, (bit.ly/2FhvmLB). The inception of physical health, and social connections with Laura Mahr is a NC lawyer and the founder “Pathways to Wellbeing” in the Bar’s others”? If there’s a definition that would land of Conscious Legal Minds LLC, providing mind- Journal—and soon a page on the Bar’s web- more than this one, take a moment now to fulness-based coaching, training, and consulting site where attorneys can easily access each write down a more meaningful definition. for attorneys and law offices nationwide. Laura’s quarter’s “Pathways to Wellbeing” column Then read the definition slowly, imagining cutting edge work to build resilience to burnout, (look for it in the “For Lawyers” section)—is upgrading your own wellbeing as you think stress, and vicarious trauma in the practice of law yet another concrete way the State Bar is pro- about the definition. Note: Neuroscience is informed by 11 years of practice as a civil sex- moting lawyer wellbeing, in alignment with research shows that our brains retain informa- ual assault attorney, two decades of experience as the ABA Task Force’s recommendation to tion that is personally meaningful. Using a def- an educator and professional trainer, and 25 emphasize wellbeing and eliminate the stigma inition of wellbeing that is meaningful to you years as a student and teacher of mindfulness and associated with help-seeking. will make information on the subject more yoga, and a love of neuroscience. She is an advi- This column will take the recommenda- engaging for you. sory member of the newly formed 28th Judicial tions of the ABA Task Force one step further Now try this: Five Small Things District’s Wellness Committee and a provider on and address specific things that we, as individ- 1. Make a list of five to ten small things the North Carolina Bar Association BarCARES uals, can do during the workday to cultivate you can do to cultivate wellbeing this week. panel. Find out more about her work at con- our own wellbeing. I will share real-life exam- 2. Read your list aloud a few times. sciouslegalminds.com.

THE NORTH CAROLINA STATE BAR JOURNAL 37 IOLTA UPDATE

Despite Stagnant Income, IOLTA Awards $2.9 Million in Grants

Income State Funds All 2017 IOLTA income from participat- In addition to its own funds, NC ing banks that hold IOLTA accounts will not IOLTA administers the state funding for be received and entered until the end of legal aid on behalf of the NC State Bar. January. Participant income through During 2016-2017, $1.65 million in gen- November 2017 was up by 2% compared to eral legal services funding under the Access the same period in 2016. With the recent to Civil Justice Act and nearly $1 million in and anticipated increases in the target range domestic violence funding under the for the federal funds rate, we eagerly await Domestic Violence Victim Assistance Act interest rate increases and associated increases was distributed. An additional $100,000 in income. was distributed for veterans’ legal services.

Grants Grantee Spotlight: Custody Advocacy Over the last nine years, IOLTA has con- Program sistently relied on cy pres and other court Council for Children’s Rights (CFCR) awards to support grantmaking during the stands up for every child’s right to be safe, economic downturn. Further, available grant healthy, and well-educated. Located in funds have been buoyed by reserve funds in Charlotte, CFCR seeks to improve the lives five grant cycles since 2009. In 2018 the of children in Mecklenburg County ages 0- IOLTA trustees will continue to make use of 18. CFCR was formed in 2006 upon the monies from the Bank of America settlement merger of the Council for Children (found- This team works together to investigate the received in 2015 and 2016 to support regular ed in 1979) and the Children’s Law Center facts of the case and make recommendations IOLTA grants. (founded in 1987). The unified agency to the court. At the November 30 grantmaking meet- offers a comprehensive array of legal and Last year the CAP team represented 273 ing, the IOLTA trustees approved 2018 advocacy services. children in high conflict custody cases. 36% IOLTA grant awards. Regular 2018 IOLTA Conflict within the home is one of the top of contested cases settled outside of trial. In grants totaled nearly $1.65 million: predictors of a child’s emotional wellbeing. cases that went to trial, recommendations of $1,272,875 to support providers of direct Challenging, contentious custody battles can the CAP team were either fully or partially civil legal services, $279,930 to volunteer potentially have a long-term adverse impact accepted by the court in 93% of cases. In lawyer programs, and $97,185 to projects to for the children who are caught in the mid- addition to custody placement and visita- improve the administration of justice. An dle. CFCR’s Custody Advocacy Program tion recommendations, the CAP team may additional grant of $1,251,500 was made to (CAP), supported by a grant from NC recommend court-ordered assessments and the Home Defense Project Collaborative to IOLTA, seeks to protect the best interests of therapy for children, parents, or both, rules support foreclosure prevention legal services children in custody disputes. pertaining to parental communication and provided by six organizations across the state. CAP is appointed by Mecklenburg access to records, and instructions related to This grant was made with funds from the County Family Court judges to represent chil- education. national Bank of America settlement. dren whose parents are engaged in a highly The Custody Advocacy Program engages As year-end income allows, the IOLTA contested custody case. Family Court judges both volunteer attorneys and lay advocates in trustees also committed to begin replenish- assess and label cases as “high conflict” where their cases. Lay advocates interview clients ing the reserve fund which is now at a low of parental alienation, substance abuse, physical and witnesses, conduct home visits, and $250,000 after many years of decreasing and emotional abuse, mental health issues, gather information. Volunteer attorneys con- IOLTA revenues. Established in 1996, the incarcerated parties, improper living condi- duct settlement conferences, attend deposi- reserve fund has allowed for a more gradual tions, and/or parental neglect are involved. tions, draft motions, and prepare for and decrease in grant funding during the eco- Each case that CAP handles is assigned to take cases to trial if necessary. Last year CAP nomic downturn than would have been pos- a team that includes a staff attorney, a volun- trained more than 40 new volunteer attor- sible otherwise. teer attorney, and a lay custody advocate. neys and advocates adding to its ranks of

38 SPRING 2018 more than 300 volunteers. In the same year, the volunteer attorneys contributed 1,960 hours on custody cases, time valued at more Legislative Update (cont.) into a bill that is eligible for consideration dur- than $300,000. ing the short session. Here are a few stories of the children who GA Appoint for District Court S605 – Attorney Options/ IOLTA Funds have a voice in court as a result of the advoca- Vacancies (H240) – Shifts the authority to S633 – Reduce Annual State Bar Fees cy of their CAP teams: fill district court vacancies from the gover- S250 – Judicial Standards Commission • Siblings Ellie and Trey were caught in nor to the General Assembly. S617 – Eliminate Emergency Recall Judges the middle of a custody dispute. The chil- GA Appoint for Special Superior Court (Addressed in Budget) dren lived with their mother from birth, Judges (H241) – Shifts the authority to S636 – Increase Judicial Pay 20% although custody was never formally deter- appoint special superior court judges from S433 – Limit who may advertise/Adoption mined. Last year Ellie alleged abuse by her the governor to the General Assembly. Laws mother’s husband, resulting in a temporary Vacancies/NC Sup Ct/ Ct of App/ S457 – Amend Deferred Prosecution custody placement with her father. The CAP Superior Ct/DAs (H335) – Clarifies the Statute team was appointed to represent the chil- manner in which vacancies are filled for S613 – Attorney’s Fees and Costs/State dren. After several months of investigation, Supreme Court justices, judges of the court Prevails the allegations did not add up. Ellie later of appeals and superior court, and district H126 – Conduct and Discipline for Mag- admitted to her team that their father had attorneys. istrates encouraged them to tell the court that they Amend who can serve on a three judge H674 – Independent Redistricting Com- wanted to live with him, and she actually panel (H677) – Provides that district court mission wanted to go back to her mother’s home. judges may be appointed to serve on three- H675 – Clerk of Court notifies AOC if Ellie and Trey again live primarily with their judge panels for actions challenging the court ends early mother, but their custody order includes validity of acts of the General Assembly. H676 – Special Superior Court Judge As- generous visitation with their father. Landlord/Tenant – Alias & Pluries signments • Allison and Daisy, ages 7 and 5, lived Summary Ejectment (H706) H122 – Discovery Not Disseminated to with their mother until a few years ago. Their Amend Arson Law (H325) Defendant mother struggles with a mental health issue H124 - Courts Commission Study Judicial and poor relationship choices. She called their Bills Introduced but that Did Not Districts father to take the children after a series of Pass Either Body (“Did Not Cross H129 – NC LEAF Funds dangerous incidents in her home. The chil- Over”) H645 – Legal Services Rendered for Non- dren moved to live with their father in Texas Note: These bills are not eligible for consid- profits and were thriving in his care. Their mother eration in the 2018 short session; however, the H918 – Post Crime on Social Media/ En- later filed for custody in NC and both parents substance of any of these bills could be inserted hanced Sentence n prepared for a court battle. CAP was appoint- ed and learned that, as much as the mother loved her daughters, she left her mental health condition untreated. CAP also learned about the care the children were receiving with their dad in a safer, more stable house- hold. Prior to trial, CAP recommended that the father maintain custody with visitation for the mother and they were able to negoti- ate a settlement to avoid trial. Don’t Miss Important • Alex was 11 when his parents divorced. He wanted to be with his mother, but was left State Bar Communications with his father who would become angry and hit Alex. The roof of the home leaked, cock- Log on to ncbar.gov to make sure roaches were everywhere, and the trash piled up. CAP got involved and emergency cus- we have your email address. tody was granted to Alex’s mother. His father fought to get visitation. The CAP team sought an evaluation for the father who was determined to have ADHD. After months of continued monitoring, the father decided to move home with his family and start over. The court saw a difference in him and he was awarded visitation. n

THE NORTH CAROLINA STATE BAR JOURNAL 39 LEGAL ETHICS

Risk Management and Disaster Planning: Tips for Making Survival of Your Law Practice More Likely

B Y S AMANTHA C RUFF

The news images are shocking. Whether might have more availability options upon present themselves. it is tornado damage in the Midwest or short term notice. flooding after a hurricane in eastern North Once available staff members come Evaluating the Disaster Response Carolina, disasters can strike at any time together, hold a debriefing meeting. The Once things have settled down, review and can come in many different forms. purpose is to give staff a clear picture of the the disaster response to determine the effec- Hurricanes come with advanced warning state of affairs for the firm. This will prevent tiveness of your strategy. Were there situa- allowing time to prepare; other disasters some watercooler gossip and help establish tions you overlooked? Did certain strategies happen so quickly they are over before you the operational procedures should there be prove ineffective and other methods have to have time to think. No matter what type of differences due to changes in circumstances. be used? disaster you face, careful planning can make Teamwork and communication should be When going over the disaster response, surviving more likely. prominent topics. be sure to give praise for the things that went Proper leadership makes surviving a dis- Part of regrouping is helping staff recov- according to plan and were executed proper- aster easier. Avoiding or reducing the sever- er from the disaster. Some will cope better ly. Letting the team know they did their part ity of disasters begins with assessing the than others. For large scale events, consider to keep the ball rolling boosts office morale. risks associated with location, and office offering therapy sessions to alleviate post- Having an office luncheon to celebrate sur- procedures. Once risks are assessed, the dis- traumatic stress disorder. Regardless of size, viving the disaster is another option. Have aster recovery plan can be developed so that be aware that any major event can cause an open discussion with employees about processes for minimizing damage and some personality types great distress and what may have gone astray during imple- recovering afterwards can be established. affect their work habits. mentation of the disaster plan. Determine if Client communication should also be a anyone felt unsure of their instructions or if Tips for Recovery top priority at this stage. Make every something was unclear to them. This is also After the dust has settled, it’s time to get attempt possible to contact your clients as the time to find out if part of the procedure to work putting the pieces back together. soon as you have reestablished operations to seemed to be problematic and could have This is the time when the emergency leader let them know you are available. If they been done better. takes charge and puts your plan into action. have been affected by the disaster, this is one Review the suggested improvements to Having the channels of communication less worry they have to deal with. If the dis- your disaster plan. Include anything you’ve pre-planned and direction for how things aster was not widespread, such as a fire in noted that should be added or changed. should be handled helps prevent mass panic your building, they will be relieved that Make the necessary changes as soon as pos- because certain steps will be taken to reor- their cases have not been thrown off track sible. Make any other needed changes to ganize the office. by events. your disaster recovery kit. If another event should come your way, you’ll be even better Regrouping Returning to Normalcy prepared the next time around. n The basic starting point is assembling Although it will seem impossible when your staff to begin working again as quickly disaster strikes, a well prepared firm will The preceeding is an excerpt from Disaster as possible. Establish a phone tree to con- eventually return to normal operations. Planning and Recovery, a handout from tact employees. If it is necessary to operate Files will be recreated from the electronic North Carolina Lawyers Mutual that can be from another location due to building dam- documents stored in computers. Your cal- viewed online at bit.ly/2Fvyxj2. This handout age, your disaster plan leader will make the endar will once again require a map to nav- contains information about how to develop a arrangements and pass along the informa- igate for the untrained eye. Normalcy, how- plan and recover from disaster, and includes a tion. To speed up the process of choosing ever, may not equal the same as it was disaster recovery checklist and additional help- alternate operating locations, select a few before. Changes in surroundings may ful resources. options before disaster strikes and keep the require changes in procedures. Necessity Samantha Cruff is the marketing commu- information with your disaster kit. may present a better way of doing things. nications coordinator for Lawyers Mutual. She Emergency locations can be outside the Avoid the “this is the way it has always been can be reached at samantha@lawyersmutual- box, such as a townhouse complex that done” mentality if reasonable alternatives nc.com or 800-662-8843.

40 SPRING 2018 PROPOSED OPINIONS

Committee Publishes Proposed Opinion on Participation in Online Directories and Rating Systems

Council Actions Opinion #2: No ethics opinions were adopted by the Yes. A lawyer may pay the reasonable State Bar Council this quarter. costs of advertisements. Rule 7.2(b). Public Information

Ethics Committee Actions Inquiry #3: The Ethics Committee’s meetings are At its meeting on January 25, 2018, the May a lawyer provide profile information public, and materials submitted for con- Ethics Committee voted to return proposed to a website that will use the information to sideration are generally NOT held in 2017 Formal Ethics Opinion 6, rate the lawyer in an online lawyer rating sys- confidence. Persons submitting requests Participation in Platform for Finding and tem? for advice are cautioned that inquiries Employing a Lawyer, to a subcommittee for should not disclose client confidences or further study. Proposed 2016 Formal Ethics Opinion #3: sensitive information that is not neces- Opinion 1, Contesting Opposing Counsel’s Yes, if the information provided by the sary to the resolution of the ethical ques- Fee Request to Industrial Commission, con- lawyer is truthful and not misleading. Rule tions presented. tinues to be tabled pending the conclusion of 7.1(a). In addition, no money may be paid appellate action in a case that is relevant to by the lawyer for a rating and, before volun- the proposed opinion. Four new proposed tarily providing information to a rating sys- opinions were approved for publication and tem, the lawyer must determine that the rat- with the services or fees of other lawyers may appear below. ing system uses objective standards that are be misleading if presented with such speci- verifiable and would be recognized by a rea- ficity as would lead a reasonable person to Proposed 2018 Formal Ethics sonable lawyer as establishing a legitimate conclude that the comparison can be sub- Opinion 1 basis for evaluating the lawyer’s services. See, stantiated.” Participation in Website Directories e.g., 2003 FEO 3 and 2007 FEO 14. In this instance, the website is describing and Rating Systems that Include all of the lawyers who participate in the Third Party Reviews Inquiry #4: directory in these superlative terms without January 25, 2018 If a lawyer participates in a website direc- specifically referencing any one lawyer. It is Proposed opinion explains when a lawyer tory, is the lawyer professionally responsible reasonable to conclude that online con- may participate in an online rating system, and for claims on the website about participating sumers understand that the use of such a lawyer’s professional responsibility for the con- lawyers such as statements that the partici- superlatives is a subjective characterization tent posted on a profile on a website directory. pating lawyers are “top rated,” “excellent,” or made for advertising purposes. Moreover, the “the best”? superlatives are not presented with such Inquiry #1: specificity as to lead a reasonable consumer May a lawyer “claim her profile” or set up Opinion #4: to conclude that the comparison can be fac- a profile on a website directory or business The lawyer is professionally responsible tually substantiated. Therefore, a participat- listing service such as Google’s My Business, for statements or claims made specifically ing lawyer is not professionally responsible LinkedIn, or Avvo and provide information about the lawyer or the lawyer’s services and for such claims or characterizations by the for inclusion in the profile? may not participate in any communication website and is not prohibited from participa- specifically about the lawyer that is false or tion on this basis alone. To the extent RPC Opinion #1: misleading in violation of Rule 7.1. 135 (1992) is inconsistent with this opinion, Yes, if the information provided by the Pursuant to Rule 7.1(a)(3), a communi- it is overruled. lawyer and as presented in the profile is cation is false or misleading if it “compares truthful and not misleading. Rule 7.1(a). the lawyer’s services with other lawyers’ serv- Inquiry #5: ices, unless the comparison can be factually A website directory that permits lawyers Inquiry #2: substantiated.” Further explanation of this to “claim their profiles” also allows con- May a lawyer pay to be included in a web- prohibition is set out in comment [3] to Rule sumers—usually present and former site directory of lawyers? 7.1, which states that “[a]n unsubstantiated clients—to post “reviews” of a lawyer on the comparison of the lawyer’s services or fees lawyer’s profile page. May a lawyer ask pres-

THE NORTH CAROLINA STATE BAR JOURNAL 41 ent or former clients to post reviews on her encourage, or assist in the posting of fake, communications that create unjustified profile page? false, or misleading reviews. Rule 8.4(c). expectations or that compare a lawyer’s serv- ices with the services of other lawyers unless Opinion #5: Inquiry #6: the comparison can be factually substantiat- Yes, as long as there is no quid pro quo, When a client is pleased with the lawyer ed. Is a lawyer required to monitor the con- and the lawyer does nothing more than ask and her services, the client’s posted review on tent of third party reviews on a website pro- the client to post an honest review of her the lawyer’s profile or webpage may contain file or listing that the lawyer has claimed and abilities and services. Rule 7.2(b) (a lawyer hyperbolic accolades such as the lawyer was to seek the removal of any review that does shall not give anything of value to a person “the best,” “awesome,” “the smartest,” “the not meet this standard? for recommending the lawyer’s services). toughest,” etc. Rule 7.1(a)(2) and (3) pro- Under no circumstances may a lawyer solicit, hibit a lawyer from engaging in misleading Opinion #6: Most users of the Internet understand that reviews by third parties generally con- tain statements of opinion, not fact. To the In Memoriam John Alexander MacKethan III extent that a third party review is a statement Raleigh, NC of opinion about the lawyer or her services, the lawyer is not professionally responsible Robert Lars Andersen Bobby Gray Martin for the statement and does not have to dis- Charlotte, NC Winston-Salem, NC claim the review or take action to have the Kenneth Furman Antley Glenn M. Mattei review removed or redacted from the lawyer’s Atlanta, GA Lutherville, MD profile or webpage. If a review contains a Maurice Alvin Cawn Henri Ronald Mazzoli material misstatement of objective fact, how- Greensboro, NC Greensboro, NC ever, the lawyer must take action to have the review removed or edited to delete the mis- Barbara Ann Davis James Radcliffe Melvin statement, or to post a disclaimer. For exam- Asheville, NC Elizabethtown, NC ple, the lawyer must take action to remove, Michael James Denny Wendell Clay Moseley redact, or disclaim a review that falsely states Charlotte, NC Roanoke Rapids, NC that the lawyer obtained a million dollar set- tlement for the reviewer. Farris Allen Duncan Josiah S. Murray III Goldsboro, NC Durham, NC Inquiry #7: Geoffrey E. Gledhill Rebecca Ann Phillips Lawyer A, at the urging of a marketing Hillsborough, NC Greensboro, NC firm, initially claimed her website profile or set up business pages on a number of web- John Brent Godwin Walter Rand III sites like Facebook. However, she tired of Selma, NC Garner, NC posting to the profiles and pages, and soon Marvin Kenneth Gray Jeffrey Neil Robinson ceased to visit the majority of them altogeth- Charlotte, NC Waxhaw, NC er. Most of the profiles and website pages allow for third party reviews that Lawyer A Randolph James Hill Robert Worthington Spearman no longer reads. Raleigh, NC Chapel Hill, NC Is Lawyer A responsible for the content of Robert Layne Hillman William Lindsey Stafford Jr. the reviews posted on these website profiles Raleigh, NC Salisbury, NC and pages? Barbara Dale Hollingsworth Daniel Wayne Sweat Opinion #7: Harrisburg, NC Greenville, NC No, a lawyer is professionally responsible Charles Edward Hubbard Rufus F. Walker Jr. only for third-party content about the lawyer Roxboro, NC Hickory, NC of which the lawyer is aware or reasonably Bynum M. Hunter Charles M. Williamson should be aware. The lawyer is not required Greensboro, NC Greenville, NC to monitor online profiles or pages if the lawyer does not visit the website, post to that Michael David Lea Arnold Terry Wood website, or otherwise actively participate in Thomasville, NC Greensboro, NC the website. If a lawyer has abandoned a pro- Robert Dobbins Lewis James Fredrick Wood III file or webpage and the lawyer is unaware of Asheville, NC Charlotte, NC the content of the reviews posted on the pro- file or webpage, the lawyer has no profession- al responsibility relative to that content.

42 SPRING 2018 However, if the lawyer becomes aware, or photo, whether it appears on the lawyer’s entered in lateral and lower courts? reasonably should be aware, that material profile page or in a search result, the word misstatements of fact are included in reviews “Pro” appears. On search results, a sidebar Opinion: posted on her profile or webpage, the lawyer states that “Pro” indicates that information is Rule 3.3, Candor Toward the Tribunal, is professionally responsible and must take “verified.” May a lawyer subscribe to this sets forth the duties of lawyers as officers of action to have the offensive content removed service? the court “to avoid conduct that undermines or an explanatory disclaimer posted. the integrity of the adjudicative process.” Opinion #10: Rule 3.3, cmt. [2]. Preserving the integrity of Inquiry #8: Yes, if the information on the profile page the adjudicative process is consistent with the A lawyer determines that third-party gen- continues to be truthful and not misleading. principle of stare decisis. erated content on her profile on an online To avoid misleading users, if only selected As an officer of the court, a lawyer has a directory contains material misstatements of reviews can be read by a user, there must be duty to assist the tribunal in fulfilling its duty fact and that she is professionally responsible an explanation that the lawyer has selected to apply the law fairly and properly. for seeking to remove or disclaim the mis- the best reviews to promote. If there is an Therefore, a lawyer must not allow the tribu- statements. When she asks the website to implication that the selected reviews are the nal to be misled by false statements of law remove the content or post an explanatory only reviews that the lawyer has received or, and “must recognize the existence of perti- disclaimer, the website refuses to do so. What if the lawyer has received unfavorable reviews nent legal authorities.” Rule 3.3, cmt. [4]. As should the lawyer do? and the profile page falsely implies that the explained in Rule 3.3, cmt. [4], the “under- “promoted reviews” are typical, there must lying concept is that legal argument is a dis- Opinion #8: be an explanation. cussion seeking to determine the legal prem- The lawyer must withdraw from partici- If it is clear from the context that the ises properly applicable to the case.” pation in the website and seek to have the “Pro” designation appears under the The comments to Rule 3.3 reference lawyer’s profile or page on the website lawyer’s photo because the lawyer has pur- “pertinent legal authorities” and “legal prem- removed. chased the premium service, the placement ises properly applicable” to the case. These of this word under the lawyer’s photo is not phrases indicate that the lawyer’s duty is to Inquiry #9: misleading. If it is not clear from the con- disclose to the tribunal legal authority that is Is a lawyer required to seek the removal of text, use of the designation implies that controlling as to that tribunal. Controlling negative reviews that the lawyer perceives to lawyers in the directory who have not pur- legal authority may be statutory or prior be false or misleading? chased the service are not “Pros.” This is a judicial precedent. comparison of the lawyer’s services with the Therefore, pursuant to Rule 3.3(a)(2), a Opinion #9: services of other lawyers that cannot be fac- lawyer has a duty to disclose to a tribunal Because there is no risk of creating unjus- tually substantiated. An explanation posted considering a matter legal authority that is tified expectations, there is no duty to correct by the participating lawyer or by the web- controlling as to the tribunal if the authority or seek removal of a negative review posted site is required. is directly adverse to the position of the on a lawyer’s profile or website page. lawyer’s client, is known to the lawyer, and is Nevertheless, the lawyer may seek removal of Proposed 2018 Formal Ethics not disclosed by opposing counsel. The negative reviews to protect the lawyer’s repu- Opinion 2 lawyer’s knowledge of the adverse authority tation. Lawyers are cautioned to avoid dis- Duty to Disclose Adverse Legal may be inferred from the circumstances. See closing confidential client information when Authority Rule 1.0(g). responding to a negative review. See Rule January 25, 2018 1.6(a). Proposed opinion rules that a lawyer has a Proposed 2018 Formal Ethics duty to disclose to a tribunal adverse legal Opinion 3 Inquiry #10: authority that is controlling as to that tribunal Use of Suspended Lawyer’s Name in For a monthly fee, a website offers a pre- if the legal authority is known to the lawyer and Law Firm Name mium service called “Pro” that is promoted is not disclosed by opposing counsel. January 25, 2018 as enabling a lawyer to “upgrade” the lawyer’s Proposed opinion rules that it is false and profile on the website. This service provides Inquiry: misleading for the name of a lawyer who is the following benefits according to the web- Rule 3.3(a)(2) provides that a lawyer shall under an active disciplinary suspension to site: no competitive ads will be shown on the not knowingly “fail to disclose to the tribunal remain in the firm name. lawyer’s profile page; the lawyer’s contact legal authority in the controlling jurisdiction information is shown in a search result; the known to the lawyer to be directly adverse to Inquiry #1: lawyer can see who is contacting her by the position of the client and not disclosed Lawyer is a named partner in a law firm. phone, email, or on her website; the lawyer by opposing counsel.” Pursuant to an order issued by the can select the best reviews and promote them Is the duty of disclosure set out in Rule Disciplinary Hearing Commission, Lawyer is at the top of the profile page; and the lawyer 3.3(a)(2) limited to appellate court decisions actively suspended from the practice of law. can write her own headline at the top of her in the relevant jurisdiction, or is a lawyer also Must Lawyer’s name be removed from the profile. In addition, under the lawyer’s required to inform the tribunal of rulings law firm name during the suspension period?

THE NORTH CAROLINA STATE BAR JOURNAL 43 Opinion #1: Rule 7.1, and does not violate other State kerage company as a payment option for legal Yes. Bar rules. fees so long as the lawyer is satisfied that the Pursuant to Rule 7.5, a law firm “shall not Should the suspension become active financial arrangements offered by the compa- use a firm name, letterhead, or other profes- and Lawyer is no longer permitted to prac- ny are legal, the lawyer receives no considera- sional designation” that is false or misleading. tice law, Lawyer’s name must be removed tion from the company, and the lawyer does A firm name is misleading if it contains a from the firm name, firm signage, letter- not recommend one payment option over material misrepresentation of fact or omits a head, all forms of advertisement, and the another. fact necessary to make the firm name consid- firm website. See Opinion #1. ered as a whole not materially misleading. Inquiry: Rule 7.1(a). Inquiry #3: Lawyer would like to associate with a The inclusion of the suspended lawyer’s Lawyer is administratively suspended for financial brokerage company (Company) name in the firm name materially misrepre- failure to pay State Bar membership dues that would assist clients in obtaining legal sents the lawyer’s status with the law firm. and/or failure to satisfy the continuing legal fee financing. Company is not a lending The presence of the suspended lawyer’s name education (CLE) requirements of State Bar institution. Company would act as a bro- suggests to the public that the lawyer is membership. Must Lawyer’s name be ker to find lenders willing to finance the authorized to practice law with the firm. removed from the firm name? client’s legal fees. Company charges Lawyer A suspended lawyer may not be associat- an initial setup fee of $1,500 and a month- ed with her former firm during the suspen- Opinion #3: ly fee of $99 for maintaining the payment sion period. The Discipline and Disability of Yes, if the administrative suspension con- webpage and administration. Lawyer also Attorneys Rules of the State Bar require a tinues for more than 45 days. pays a merchant fee of 4.99 % on the suspended lawyer to withdraw from all Whenever a member of the North amount of the financed legal fee. The loan pending matters before the effective date of Carolina State Bar fails to fulfill an adminis- brokerage service would be explained to the suspension. 27 N.C. Admin. Code 1B, trative obligation of membership in the clients as a "payment option" along with Rule .0128(b). Moreover, Rule 5.5(g) pro- State Bar, the member is subject to adminis- any other options such as credit card, hibits a lawyer from employing a suspended trative suspension. 27 N.C. Admin. Code check, cash, etc. lawyer as a law clerk or legal assistant if that 1D, Rule .0903. However, unlike a discipli- Company provides a loan application for individual was associated with the law firm nary suspension, administrative suspensions clients who wish to pursue a loan for legal at any time on or after the date of the mis- can be cured within a relatively short period fees. Approved clients receive offers from conduct that resulted in suspension. See also of time. See 27 N.C. Admin. Code 1D, competing banks, and are free to pick the Rule 5.5(b) (a lawyer who is not admitted to Rule .0904(f) (reinstatement by Secretary of offer that works best for them, or to decline practice law in North Carolina is not per- the State Bar). As noted in the Scope sec- all offers. If the client accepts an offer, the mitted to “hold out to the public or other- tion, the Rules of Professional Conduct are loan amount is paid from a third-party wise represent that the lawyer is admitted to rules of reason. Rule 0.2, Scope. It would be lender directly to the client. The client pays practice law in this jurisdiction”). impractical and expensive for a firm to the fees to Lawyer in accordance with the fee It is false and misleading for a suspend- remove a lawyer’s name from the firm name, agreement. ed lawyer to be held out as authorized to firm signage, letterhead, all forms of adver- The company maintains that the pro- practice law during a period of active sus- tisement, and the firm website if the admin- gram helps lawyers get paid and also pension. Therefore, from the effective istrative suspension is of limited duration. removes the cost barrier for clients who are date of the active disciplinary suspension Therefore, provided Lawyer is reinstated to seeking legal representation. until the active suspension ends, the sus- active status within a reasonable period of May Lawyer associate with Company pended lawyer’s name must be removed time, it is not a violation of Rule 7.1 or Rule under the proposed arrangement? from the firm name, firm signage, letter- 7.5 for Lawyer’s name to remain in the firm head, all forms of advertisement, and the name, firm signage, letterhead, all forms of Opinion: firm website. advertisement, and the firm website. It is Yes, under certain circumstances. Many presumed that a reasonable period of time, law firms currently accept credit card pay- Inquiry #2: for the purposes of seeking and obtaining ments for legal fees or offer in-house pay- Does the answer to Inquiry #1 change if reinstatement from administrative suspen- ment plans. In 2000 FEO 4, the Ethics Lawyer is under a stayed disciplinary sus- sion, is 45 days or less. Committee concluded that a lawyer may pension? refer a client in need of money for living Proposed 2018 Formal Ethics expenses to a finance company if the lawyer Opinion #2: Opinion 4 is satisfied that the company's financing Yes. If Lawyer’s disciplinary suspension is Offering Clients On-site Access to arrangement is legal, the lawyer receives no stayed, she is permitted to practice law. Financial Brokerage Company for consideration from the financing company Therefore, inclusion of Lawyer’s name in the Legal Fee Financing for making the referral, and, in the lawyer's firm name, firm signage, letterhead, all January 25, 2018 opinion, the referral is in the best interest of forms of advertisement, and the firm web- Proposed opinion rules that a lawyer may site is not false or misleading in violation of offer clients on-site access to a financial bro- CONTINUED ON PAGE 50

44 SPRING 2018 RULE AMENDMENTS

Amendments Approved by the Supreme Court

On November 8, 2017, and December complete text see the Summer 2017 edition 7, 2017, the North Carolina Supreme of the Journal, or visit the State Bar web- Court approved the following amend- site.) Highlights ments. Amendment to The Plan for · The CLE Board proposes the addi- Amendments to the Rules Governing Certification of Paralegals tion of an hour of technology train- Admission to the Practice of Law 27 N.C.A.C. 1G, The Plan for ing to the annual CLE requirements. The comprehensive rewrite by the Certification of Paralegals · Proposed amendments to Rule of Board of Law Examiners of the Rules A new rule creates a retired status for Professional Conduct 5.4, which Governing the Admission to the Practice of certified paralegals subject to certain condi- would add an additional exemption Law includes amendments expressly adopt- tions. (For the complete text see the Spring to the prohibition on fee-splitting, ing the Uniform Bar Examination as the 2017 edition of the Journal, or visit the continues to be studied by the Ethics official bar examination for general appli- State Bar website.) Committee. cants to the North Carolina bar. (For the

Amendments Pending Supreme Court Approval

At its meetings on October 27, 2017, and regular meetings of the State Bar Council. Proposed Amendments to the Rules January 26, 2018, the North Carolina State They also clarify the manner and method and Regulations Governing the Bar Council voted to adopt the following for calling a special meeting of the council, Continuing Legal Education Program rule amendments for transmission to the including allowing notice to be given by 27 N.C.A.C. 1D, Section .1500, Rules North Carolina Supreme Court for approval. email or other electronic means. The pro- Governing the Administration of the (For the complete text of the proposed rule posed amendments allow members to par- Continuing Legal Education Program; and amendments, see the Fall 2017 and Winter ticipate in special meetings by audio or Section .1600, Regulations Governing the 2017 editions of the Journal, except as specif- video conferencing or other electronic Administration of the Continuing Legal ically noted, or visit the State Bar website.) method, and give the president authority to Education Program allow attendance at regular meetings by The proposed amendments replace the Proposed Amendments to the Rules audio or video conferencing on a discre- designation “accredited sponsor,” a designa- on Meetings of the North Carolina tionary basis. tion that is potentially misleading as to the State Bar extent to which such sponsors are vetted by 27 N.C.A.C. 1A, Section .0500, Proposed Amendments to the Rule the Board of Continuing Legal Education, Meetings of the North Carolina State Bar on Standing Committees of the with the designation “registered sponsor” and The proposed amendments revamp the Council reconcile the requirements for designation as a manner and method of giving notice of the 27 N.C.A.C. 1A, Section .0700, registered CLE sponsor with current practice. annual meeting of the State Bar. The pro- Standing Committees of the Council posed amendments also clarify the manner The proposed amendments eliminate the Proposed Amendments to the Rules and method for calling a special meeting of Technology and Social Media Committee for the Specialization Program the State Bar. and establish the Communications Com- 27 N.C.A.C. 1D, Section .1700, The Plan mittee as a standing committee of the State of Legal Specialization; and Section .2300, Proposed Amendments to the Rules Bar Council. The proposed amendments Certification Standards for the Estate on Meetings of the State Bar also eliminate a provision in the rule defin- Planning and Probate Law Specialty Council ing the authority of the Administrative A number of amendments are proposed to 27 N.C.A.C. 1A, Section .0600, Committee relative to a “Publications The Plan of Legal Specialization. Proposed Meetings of the Council Board.” The State Bar’s publications will amendments to the rule on mandatory revoca- The proposed amendments revamp the function under the auspices of the Com- tion and suspension of certification due to pro- manner and method for giving notice of munications Committee going forward. fessional discipline will provide for the auto-

THE NORTH CAROLINA STATE BAR JOURNAL 45 matic revocation of specialty certification if any for Certification of Paralegals Proposed amendments to Rule 1.15, part of a disciplinary suspension is active; if the The proposed amendments to the Plan Safekeeping Property, and its subparts specify entire disciplinary suspension is stayed, certifi- for Certification of Paralegals allow appli- that certain restrictions on the authority to cation is suspended and shall not be reinstated cants for paralegal certification who hold sign trust account checks also apply to the ini- until the completion of the entire stayed disci- national certifications from qualified nation- tiation of electronic transfers from trust plinary suspension. For specialty certification to al paralegal organizations (including the accounts. The proposed amendments define be reinstated, the specialist must apply for and CLA/CP certification from the National “electronic transfer” and make clear that satisfy all requirements for recertification. Association of Paralegals and the PACE- lawyers are permitted to sign trust account Proposed amendments to the rule on areas Registered Paralegal Certification from the checks using a “digital signature” as defined in of practice add specialties recently approved by National Federation of Paralegal the Code of Federal Regulations. Further pro- the Supreme Court to the list of recognized Associations) to sit for the certification exam posed amendments to Rule 1.15 reduce the specialties and correct an oversight in the list although the applicants have not satisfied the number of quarterly reviews of fiduciary relative to the criminal law specialty. educational requirement for certification. accounts that must be performed by lawyers Proposed amendments to the standards for The proposed amendments also delete a pro- who manage more than ten fiduciary accounts the estate planning and probate law specialty vision that allowed alternative qualifications on the assumption that the accounts are man- allow service as a trust officer, gift planning for certification during the first two years of aged in the same manner and reviews of a ran- officer, or other employment that’s outside pri- the program. Another proposed amendment dom sample of the accounts is sufficient to vate practice to satisfy the substantial involve- requires certain qualified paralegal studies facilitate the early detection of internal theft ment standard for recertification, provided the programs to include the equivalent of one and correction of errors. specialist’s work duties are primarily in the area semester’s credit in legal ethics. A proposed comprehensive revision of of estate planning or trust administration. Rule 3.5, Impartiality and Decorum of the Proposed Amendments to the Rules of Tribunal, improves the clarity of the rule Proposed Amendments to the Plan for Professional Conduct overall and provides better guidance on the Certification of Paralegals 27 N.C.A.C. 2, The Rules of Professional prohibition on ex parte communications 27 N.C.A.C. 1G, Section .0100, The Plan Conduct with a judge.

Proposed Amendments

At its meeting on January 26, 2018, the Unless the member was exempt from such prior to filing the petition. For each 12- council voted to publish the following pro- requirements pursuant to Rule .1517 of hour increment, 6 hours may be taken posed amendments to the governing rules of this subchapter or is subject to the require- online and 2 hours must be earned by the State Bar for comment from the members ments in paragraph (c)(5) of this rule, the attending courses in the areas of profes- of the Bar: member must satisfy the minimum con- sional responsibility and/or professional- tinuing legal education requirements, as set ism. If during the period of inactivity the Proposed Amendments to the forth in Rule .1518 of this subchapter, for member complied with mandatory CLE Requirements for Reinstatement from the calendar year immediately preceding requirements of another state where the Inactive Status and Administrative the calendar year in which the member member is licensed, those CLE credit Suspension was transferred to inactive status (the “sub- hours may be applied to the requirements 27 N.C.A.C. 1D, Section .0900, ject year”) if such transfer occurred on or under this provision without regard to Procedures for Administrative Committee after July 1 of the subject year, including whether they were taken during the 2 years The proposed amendments require a any deficit from a prior calendar year that prior to filing the petition. lawyer petitioning for reinstatement to com- was carried forward and recorded in the (5) Bar Exam Requirement If Inactive 7 or plete the mandatory CLE hours for the year in member’s CLE record for the subject year. More Years ... which the lawyer went inactive or was admin- (3) Character and Fitness to Practice ... (d) Service of Reinstatement Petition ... istratively suspended if inactive or suspended (4) Additional CLE Requirements. status was granted on or after July 1. If more than 1 year has elapsed between .0904 Reinstatement from Suspension the date of the entry of the order transfer- (a) Compliance Within 30 Days of Service .0902 Reinstatement from Inactive Status ring the member to inactive status and the of Suspension Order... (a) Eligibility to Apply for Reinstatement ... date that the petition is filed, the member (d) Requirements for Reinstatement (c) Requirements for Reinstatement must complete 12 hours of approved CLE (1) Completion of Petition... (1) Completion of Petition ... for each year that the member was inactive (2) CLE Requirements for Calendar Years (2) CLE Requirements for Calendar Year up to a maximum of 7 years. The CLE Before Suspended Before Inactive hours must be completed within 2 years Unless the member was exempt from such

46 SPRING 2018 requirements pursuant to Rule .1517 of such as CLE “course” or “activity.” this subchapter or is subject to the require- ments in paragraph (d)(4) of this rule, the .1501, Scope, Purpose, and Definitions Comments member must satisfy the minimum con- (a) ... tinuing legal education (CLE) require- (c) Definitions: The State Bar welcomes your com- ments, as set forth in Rule .1518 of this (1) ... ments regarding proposed amendments subchapter, for the calendar year immedi- (17) “Technology training” shall mean a to the rules. Please send your written ately preceding the year in which the program, or a segment of a program, comments to L. Thomas Lunsford II, member was suspended (the “subject devoted to education on information The North Carolina State Bar, PO Box year”) if such transfer occurred on or after technology (IT) or cybersecurity (see 25908, Raleigh, NC 27611. July 1 of the subject year, including any N.C. Gen. Stat. §143B-1320(a)(11), or deficit from a prior year that was carried successor statutory provision, for a defini- forward and recorded in the member’s tion of “information technology”), CLE record for the subject year. The mem- including education on an information The Process ber shall also sign and file any delinquent technology product, device, platform, CLE annual report form. application, or other tool, process, or Proposed amendments to the Rules (3) Additional CLE Requirements methodology. To be eligible for CLE of the North Carolina State Bar are pub- If more than 1 year has elapsed between accreditation as a technology training lished for comment in the Journal. They the effective date of the suspension order program, the program must satisfy the are considered for adoption by the coun- and the date upon which the reinstatement accreditation standards in Rule .1519 of cil at the succeeding quarterly meeting. petition is filed, the member must com- this subchapter: specifically, the primary If adopted, they are submitted to the plete 12 hours of approved CLE for each objective of the program must be to North Carolina Supreme Court for year that the member was suspended up to increase the participant’s professional approval. Unless otherwise noted, pro- a maximum of 7 years. The CLE must be competence and proficiency as a lawyer. posed additions to rules are printed in completed within 2 years prior to filing the Such programs include, but are not limit- bold and underlined; deletions are petition. For each 12-hour increment, 6 ed to, education on the following: a) an interlined. hours may be taken online and 2 hours IT tool, process, or methodology must be earned by attending courses in the designed to perform tasks that are specific areas of professional responsibility and/or or uniquely suited to the practice of law; .1501(c)(17) of this subchapter, and fur- professionalism. If during the period of b) using a generic IT tool process or ther explained in Rule .1602(e) of this suspension the member complied with methodology to increase the efficiency of subchapter; and mandatory CLE requirements of another performing tasks necessary to the practice (3) (2) effective January 1, 2002, at least state where the member is licensed, those of law; c) the investigation, collection, once every three calendar years, each mem- CLE credit hours may be applied to the and introduction of social media evi- ber shall complete an hour of continuing requirements under this provision without dence; d) e-discovery; e) electronic filing legal education instruction on substance regard to whether they were taken during of legal documents; f) digital forensics for abuse and debilitating mental conditions the 2 years prior to filing the petition. legal investigation or litigation; and g) as defined in Rule .1602 (a). This hour (4) Bar Exam Requirement If Suspended 7 practice management software. See Rule shall be credited to the annual 12-hour or More Years... .1602 of this subchapter for additional requirement but shall be in addition to the (e) Procedure for Review of Reinstatement information on accreditation of technolo- annual professional responsibility/profes- Petition ... gy training programs. sionalism requirement. To satisfy the (18) (17) ... requirement, a member must attend an Proposed Amendments to the Annual accredited program on substance abuse CLE Requirements .1518, Continuing Legal Education and debilitating mental conditions that is 27 N.C.A.C. 1D, Section .1500, Rules (a) Annual Requirement. Each active at least one hour long. Governing the Administration of the member subject to these rules shall complete (b) Carryover ... Continuing Legal Education Program; and 12 hours of approved continuing legal educa- Section .1600, Regulations Governing the tion during each calendar year beginning .1602, Course Content Requirements Administration of the Continuing Legal January 1, 1988, as provided by these rules (a) ... Education Program and the regulations adopted thereunder. (c) Law Practice Management Courses Pro- The proposed amendments provide a defi- Of the 12 hours: grams - A CLE accredited course program on nition of “technology training” and add one (1) at least 2 hours shall be devoted to the law practice management must satisfy the ac- credit hour in technology training to the annu- areas of professional responsibility or pro- creditation standards set forth in Rule .1519 al CLE requirements. If adopted, the require- fessionalism or any combination thereof; of this subchapter with the primary objective ment will go into effect in 2019. To improve and of increasing the participant’s professional com- consistency, proposed amendments also substi- (2) at least 1 hour shall be devoted to petence and proficiency as a lawyer. The subject tute the word “program” for other descriptors technology training as defined in Rule matter presented in an accredited course pro-

THE NORTH CAROLINA STATE BAR JOURNAL 47 gram on law practice management shall bear a legal writing; oral argument; courtroom pres- of the an IT solution tool, process, or direct relationship to either substantive legal entation; and legal research. A course program methodology unless the course is solely issues in managing a law practice or a lawyer’s that provides general instruction in non-legal about using the IT solution tool, process, or professional responsibilities, including avoid- skills shall NOT be accredited. The following methodology to perform tasks necessary or ance of conflicts of interest, protecting confi- are illustrative, non-exclusive examples of sub- uniquely suited to the practice of law and dential client information, supervising subor- ject matter that will NOT receive CLE credit: information about purchase arrangements is dinate lawyers and nonlawyers, fee learning to use software for an application that not included in the accredited segment of the arrangements, managing a trust account, ethical is not specific to the practice of law (e.g. word program. A sponsor may not accept compen- legal advertising, and malpractice avoidance. processing); learning to use office equipment sation from a manufacturer, distributor, bro- The following are illustrative, non-exclusive ex- (except as permitted by paragraph (e) of this ker, or merchandiser of an IT solution tool, amples of subject matter that may earn CLE rule); public speaking; speed reading; efficien- process, or methodology in return for pre- credit: employment law relating to lawyers and cy training; personal money management or senting a CLE program about the an IT solu- law practice; business law relating to the for- investing; career building; marketing; and tion tool, process, or methodology. mation and operation of a law firm; calendars, general office management techniques. Presenters may include representatives of a dockets and tickler systems; conflict screening (e) Technology Training Courses manufacturer, distributor, broker, or mer- and avoidance systems; law office disaster plan- Programs – A course on a specific informa- chandiser of the IT solution but they may not ning; handling of client files; communicating tion technology product, device, platform, be the only presenters at the course and they with clients; and trust accounting. If appropri- application, or other technology solution (IT may not determine the content of the course. ate, a law practice management course program solution) may be accredited for CLE if the (f) ... may qualify for professional responsibility course satisfies the accreditation standards in (ethics) CLE credit. The following are illustra- Rule .1519 of this subchapter; specifically, the Proposed Amendments to the Rules tive, non-exclusive examples of subject matter primary objective of the course must be to Governing the Administration of the that will NOT receive CLE credit: marketing; increase the participant’s professional compe- Continuing Legal Education Program networking/rainmaking; client cultivation; in- tence and proficiency as a lawyer. The follow- 27 N.C.A.C. 1D, Section .1500, Rules creasing productivity; developing a business ing are illustrative, non-exclusive examples of Governing the Administration of the plan; improving the profitability of a law prac- courses that may earn CLE credit: electronic Continuing Legal Education Program tice; selling a law practice; and purchasing office discovery software for litigation; document Proposed amendments to Rule .1522 will equipment (including computer and account- automation/assembly software; document specify that members may file their annual ing systems). management software; practice management report forms online and will allow the State (d) Skills and Training Courses Programs - software; digital forensics for litigation; and Bar to email notice to the membership that A course program that teaches a skill specific digital security. A course program on the the forms have been posted to members’ to the practice of law may be accredited for selection of an IT solution information tech- online records in lieu of mailing the forms. CLE if it satisfies the accreditation standards nology (IT) product, device, platform, appli- set forth in Rule .1519 of this subchapter with cation, web-based technology, or other tech- .1522 Annual Report and Compliance the primary objective of increasing the partic- nology tool, process, or methodology, or the Period ipant’s professional competence and proficien- use of an IT solution tool, process, or (a) Annual Written Report. Commencing cy as a lawyer. The following are illustrative, methodology to enhance a lawyer’s proficien- in 1989, each active member of the North non-exclusive examples cy as a lawyer or to improve law office man- Carolina State Bar shall provide an annual of subject matter that agement may be accredited as technology written report to the North Carolina State Bar may earn CLE credit: training if the requirements of paragraphs (c) in such form as the board shall prescribe by and (d) of this rule are satisfied. A course pro- regulation concerning compliance with the gram that provides general instruction on an continuing legal education program for the IT solution tool, process, or methodology preceding year or declaring an exemption Lawyer’s but does not include instruction on the prac- under Rule .1517 of this subchapter. The tical application of the IT solution tool, annual report form shall be corrected, if nec- Handbook process, or methodology to the practice of essary, signed by the member, and promptly law shall not be accredited. The following are returned to the State Bar via mail or online fil- Preorder illustrative, non-exclusive examples of subject ing. Upon receipt via mail or online filing of matter that will NOT receive CLE credit: a signed annual report form, appropriate You can order a generic education on how to use a tablet com- adjustments shall be made to the member’s hard copy by submitting an order puter, laptop computer, or smart phone; train- continuing legal education record with the form (found on the State Bar’s website ing courses on Microsoft Office, Excel, Access, State Bar... at bit.ly/2ejzJwD) by March 21, 2018. Word, Adobe, etc., programs; and instruction (b) Compliance Period ... The digital version will still be available in the use of a particular desktop or mobile (c) Report. Prior to January 31 of each for download and is free of charge. operating system. No credit will be given to a year, the prescribed report form concerning course program that is sponsored by a manu- compliance with the continuing legal educa- facturer, distributor, broker, or merchandiser tion program for the preceding year shall be

48 SPRING 2018 available on the State Bar’s CLE website and who shall serve as hereinafter designated... (2) possess the legal educational qualifica- a notice of its posting shall be mailed or (c) (d) ... tions as prescribed in Section .0700 of this emailed to all active members of the North Chapter; Carolina State Bar. .0122 Right To Review And Appeal To (3) be at least eighteen (18) years of age; (d) Late Filing Penalty ... Council (4) have filed formal application as a gen- (a) Lapsed Certification ... eral applicant in accordance with Section Proposed Amendments to Rules for (c) Failure of Written Examination. .0400 of this Chapter; the Paralegal Certification Program Within 30 days of the mailing of the notice (5) pass the written bar examination pre- 27 N.C.A.C. 1G, Section .0100, The Plan from the board’s executive director that an scribed in Section .0900 of this Chapter, pro- for Certification of Paralegals individual has failed the written examination, vided that an applicant who has failed to Proposed amendments to The Plan for the individual may review his or her examina- achieve licensure for any reason within three Certification of Paralegals allow an additional tion upon the condition that the individual years after the date of the written bar examina- one-year term for service as the chair of the will not take the examination again until such tion in which the applicant received a passing certification committee and establish a vice time as the entire content of the examination score will be required to take and pass the chair position for the committee. In addition, has been replaced. Review of the examination examination again before being admitted as a proposed amendments to Rule .0122 elimi- shall be at the office of the board at a time des- general applicant; nate the rights of an applicant to review a ignated by the executive director. The individ- (6) have taken and passed the Multistate failed examination and to request a review by ual shall be allowed not more than three hours Professional Responsibility Examination with- the board of a failed examination. for such review and shall not remove the in the twenty-four (24) month period next examination from the board’s office or make preceding the beginning day of the written bar .0118 Certification Committee photocopies of any part of the examination. examination which applicant passes as pre- (a) The board shall establish a separate cer- (1) Request for Review by the Board. scribed above, or shall take and pass the tification committee. The certification com- Within 30 days of individual’s review of his Multistate Professional Responsibility mittee shall be composed of seven members or her examination, the individual may Examination within the twelve (12) month appointed by the board, one of whom shall be request review by the board pursuant to period thereafter; the time limits are tolled for designated annually by the chairperson of the the procedures set forth in paragraph (c) of a period not exceeding four (4) years for any board as chairperson of the certification com- this rule. The request should set out in applicant who is a service member as defined mittee. At least two members of the commit- detail the area or areas which, in the opin- in the Service Members Civil Relief Act, 50 tee shall be lawyers, licensed and currently in ion of the individual, have been incorrectly U.S.C. Appx. § 511, while engaged in active good standing to practice law in this state, and graded. Supporting information may be service as defined in 10 U.S.C. § 101, and two members of the committee shall be certi- filed to substantiate the individual’s claim. who provides a letter or other communication fied paralegals. The remaining members of the from the service member’s commanding offi- committee shall be either lawyers, licensed Proposed Amendments to the Rules cer stating that the service member’s current and currently in good standing to practice law Governing the Admission to the military duty prevents attendance for the in this state, or certified paralegals. The para- Practice of Law in North Carolina examination, stating that military leave is not legals appointed to the inaugural committee NC Board of Law Examiners, Section authorized for the service member at the time shall be exempt from the certification require- .0500, Requirements for Applicants of the letter, and stating when the service ment during their initial term but each such The Board of Law Examiners has pro- member would be authorized military leave to member shall be eligible, during the shorter of posed an amendment to its rules that would take the examination. such initial term or the alternative qualifica- provide a time period within which a general (7) if the applicant is or has been a licensed tion period, for certification by the board applicant would be required to successfully attorney, be in good standing in each state, ter- upon the board’s determination that the com- complete the state-specific component of the ritory of the United Sates, or the District of mittee member meets the requirements for Uniform Bar Examination. See sidebar for Columbia, in which the applicant is or has certification in [now repealed] Rule .0119(b). further explanation. been licensed to practice law and not under [Note that proposed amendments to Rule any charges of misconduct while the applica- .0119 now pending the approval of the .0501 Requirements for General tion is ending before the Board. Supreme Court delete paragraph (b).] Applicants (a) For purposes of this rule, an applicant is (b) The chair of the Board of Paralegal As a prerequisite to being licensed by the “in good standing” in a jurisdiction if: Certification shall appoint one member of Board to practice law in the State of North (i) the applicant is an active member of the committee to serve for a one-year term as Carolina, a general applicant shall: the bar of the jurisdiction and the juris- chair of the committee and one member of (1) possess the qualifications of character diction issues a certificate attesting to the the committee to serve for a one-year term as and general fitness requisite for an attorney applicant’s good standing therein; or vice chair of the committee. The chair and and counselor-at-law, and be of good moral (ii) the applicant was formerly a member vice chair may be reappointed to multiple character and entitled to the high regard and of the jurisdiction and the jurisdiction terms in these positions. confidence of the public and have satisfied the certifies the applicant was in good stand- (b) (c) Members shall hold office for three requirements of Section .0600 of this Chapter ing at the time that the applicant ceased years, except those members initially appointed at the time the license is issued; to be a member; and

THE NORTH CAROLINA STATE BAR JOURNAL 49 proposed new comment to Rule 1.15, Safekeeping Property, was published. The new NCBLE Proposed Amendment to Rule .0501 of the Rules Governing comment would explain the due diligence Admission to the Practice of Law in North Carolina - Executive Summary required if a lawyer uses an intermediary (such Proposed revisions to §.0501(8) of the Rules Governing Admission to the Practice as a bank, credit card processor, or litigation of Law in North Carolina were approved by the Board of Law Examiners at its October funding entity) to collect a fee. Also published 2017 meeting. Correcting an omission in the recent Rules revision, the proposed for comment in the Fall Journal were pro- change specifies a time frame for General Applicants to successfully complete the new posed amendments to Rule 5.4, Professional “State-Specific Component,” which was added as a licensure requirement in the recent- Independence of Lawyer. These proposed ly approved revision to the Rules adopting the Uniform Bar Exam. (“General amendments add an exception to the prohibi- Applicants” are those applicants who seek admission to practice in North Carolina by tion on fee-sharing that allows a lawyer to pay taking the bar exam here, rather than by comity or by transferring a UBE score a portion of a legal fee to a credit card proces- obtained in another jurisdiction.) sor, group advertising provider, or online plat- The State-Specific Component is a course of online instruction covering specific form for hiring a lawyer if the business rela- areas of North Carolina law which differ from the “general” law tested on the UBE. It tionship will not interfere with the lawyer’s addresses the likelihood that applicants will not have studied North Carolina-specific professional judgment. At the October 26, law in preparing to take the UBE. Applicants will view six separate training modules, 2017, meeting of the Executive Committee of dealing with six distinct areas of North Carolina law. At the end of each module, they the council, it was determined that both pro- will have to answer—correctly—several “hurdle” questions, designed to confirm that posed rule amendments should be returned to the applicant paid attention to the content they were exposed to. For the State-Specific the Ethics Committee for further study. The Component to serve its intended function of helping prepare applicants to practice in Ethics Committee continues to study the pro- North Carolina, it is important that the course content be reasonably fresh in the appli- posed rule amendments. n cant’s mind at the time of licensure. To accomplish this, the board adopted the same procedure used in the existing licensing requirement for General Applicants regarding the Multistate Professional Responsibility Exam (MPRE). General Applicants have been required to pass the MPRE within the 24 months preceding their passage of the North Carolina bar exam Proposed Opinions (cont.) or within 12 months thereafter. The 24-month period accommodates the possibility that, while applicants will likely have taken the MPRE before sitting for our bar exam, the client. The lawyer may not allow his own they may not pass our exam on their first try. The 12-month period gives someone who financial interests to interfere with his duty has passed our bar exam, but not yet taken and passed the MPRE, a reasonable oppor- to act in the best interests of his client. Rule tunity after passing our bar exam to pass the MPRE. The proposed amendment would 1.7(a) (concurrent conflict exists if represen- similarly require General Applicants to successfully complete the State-Specific tation of client is materially limited by per- Component within 24 months before passing the UBE in our jurisdiction, or within sonal interest of lawyer). For example, in 12 months thereafter. The proposed new language tracks the language in §.0501 (6) 2006 FEO 2, the Ethics Committee con- regarding the MPRE. cluded that a lawyer may not refer a client to a company that pays a cash lump sum to a client in exchange for the client’s interest in a structured settlement merely as a means of (b) if the jurisdiction in which the applicant while engaged in active service as defined in paying the lawyer for his legal services. is inactive or was formerly a member will 10 U.S.C. § 101, and who provides a letter A lawyer does not put his own financial not certify the applicant’s good standing or other communication from the service interests ahead of those of his client by pro- solely because of the non-payment of dues, member’s commanding officer stating that viding payment options to a client who the Board, in its discretion, may waive such the service member’s current military duty requires financial assistance in paying the certification from that jurisdiction. prevents the service member from completing lawyer’s legal fees. However, given the (8) have successfully completed the State- the State-Specific Component within the 24 lawyer’s self interest in being paid in full for Specific Component, consisting of the course month period next preceding the beginning his services, the lawyer may not recommend in North Carolina law prescribed by the day of the written bar examination which one payment option over another. Board., within the twenty-four (24) month applicant passes as prescribed above, or within Therefore, Lawyer may offer clients on-site period next preceding the beginning day of the 12 month period thereafter. access to Company as a payment option for the written bar examination which applicant Lawyer’s legal fees—along with any other passes as prescribed above, or within the Proposed Amendments to the Rules of potential payment options—so long as twelve (12) month period thereafter; the time Professional Conduct Retained by Lawyer is satisfied that the financial arrange- limits are tolled for a period not exceeding Ethics Committee for Further Study ments offered by Company are legal, Lawyer four (4) years for any applicant who is a serv- 27 N.C.A.C. 2, The Rules of Professional receives no consideration from Company, ice member as defined in the Service Mem- Conduct and Lawyer does not recommend one pay- bers Civil Relief Act, 50 U.S.C. Appx. § 511, In the Fall 2017 edition of the Journal, a ment option over another. n

50 SPRING 2018 BAR UPDATES

Client Security Fund Reimburses Victims

At its January 25, 2018, meeting, the North quoted fee. Because the client was indicted in The client paid Cabe’s $1,500 fee plus $175 in Carolina State Bar Client Security Fund Board federal court on the firearm felony, the state costs. Cabe failed to provide any meaningful of Trustees approved payments of $308,795.48 dropped the state charges against him. Bray legal services and failed to file anything on the to 16 applicants who suffered financial losses provided no meaningful services on the state client’s behalf. The board previously reimbursed due to the misconduct of North Carolina charges that were dropped or the federal charge one other Cabe client a total of $275. lawyers. prior to being placed on disability inactive status. 10. An award of $1,000 to a former client The payments authorized were: 4. An award of $25,500 to a former client of Michael S. Eldredge formerly of Lexington. 1. An award of $840 to a former client of of Dee W. Bray Jr. The board determined that The board determined that Eldredge was re- Gary M. Ballance of Warrenton. The board Bray was retained to represent a client charged tained to represent a client in a custody/do- determined that Ballance was retained in 2012 with murder and other serious felonies. The mestic violence matter and later also retained to dispose of several outstanding 2009 traffic client’s brother made payments towards Bray’s to handle the client’s traffic citation. Eldredge tickets in several counties for a client. Ballance quoted fee. Bray failed to provide any mean- provided no meaningful legal services for the handled some of the cases in 2012 and at- ingful legal services for the client prior to being client prior to being disbarred. Eldredge was tempted to refer the client to attorneys in the placed on disability inactive status. disbarred August 17, 2017. The board previ- other counties for the others. The client sought 5. An award of $17,500 to a former client ously reimbursed three other Eldredge clients Ballance’s help with handling the remaining of Dee W. Bray Jr. The board determined that a total of $69,090. tickets in 2015. The client paid Ballance for Bray was retained to defend a client charged 11. An award of $5,000 to a former client those services in 2016 after his disbarment. with serious felonies. The client made payment of Michael S. Eldredge. The board determined Ballance failed to provide, and could not pro- towards the quoted fee. Bray was placed on dis- that Eldredge was retained to represent a client’s vide, any valuable legal services for the fee paid. ability inactive status without providing any son’s estate in recovering damages for his fatal Ballance was disbarred on November 13, 2015. meaningful legal services on the client’s behalf. injuries sustained in an accident. Eldredge re- The board previously reimbursed 13 other Bal- 6. An award of $4,500 to a former client of ceived a settlement check from the insurance lance clients a total of $19,806. Dee W. Bray Jr. The board determined that company, forged the client’s signature as per- 2. An award of $46,500 to an applicant Bray was retained to defend a client charged sonal representative on the check, and deposited who suffered a loss because of Dee W. Bray Jr. with first degree murder and another felony. the funds into his trust account. Eldredge failed of Fayetteville. The board determined that Bray The client’s family made payments towards to pay any of the funds to the estate. Due to was retained to represent the applicant’s son Bray’s quoted fee. Bray failed to provide any misappropriation, Eldredge’s trust account bal- who was charged with first degree murder and meaningful legal services for the client prior to ance is insufficient to cover his client obligations. other serious felonies. The applicant made pay- being placed on disability inactive status. 12. An award of $100,000 to an applicant ments towards the quoted $45,000 flat fee, 7. An award of $10,000 to a former client who suffered a loss caused by H. Trade Elkins knowing the fee would go up to $70,000 if the of Dee W. Bray Jr. The board determined that of Hendersonville. The board determined that charge became a capital crime. When the DA Bray was retained to represent a client on serious the applicant filed a partition proceeding advised Bray that the murder charge would be criminal charges. The client paid the entire fee against her brother to sell property they inher- a capital case, Bray demanded full payment of quoted. Bray was placed on disability inactive ited. The parties agreed to sell the property at the non-capital fee plus payments on the capital status prior to performing any meaningful legal public auction and Elkins was the appointed fee. The client paid Bray $46,500. Bray was services on the client’s behalf. commissioner. The applicant’s brother was the placed on disability inactive status by the senior 8. An award of $1,550 to a former client of highest bidder and paid his half of the sale resident judge prior to performing any mean- Dee W. Bray Jr. The board determined that price plus half of the expenses of the sale to ingful legal services for the applicant’s son. Bray Bray was retained to represent a client on drug Elkins. Elkins failed to distribute to the appli- was placed on disability inactive status on Feb- felonies. The client made payments towards cant her share of the sale proceeds. Due to ruary 2, 2017. The board previously reimbursed the $7,500 quoted fee. Bray failed to provide misappropriation, Elkins’ trust account balance ten other applicants a total of $53,600. any meaningful services for the client prior to was insufficient to pay all his client obligations. 3. An award of $6,400 to a former client of being placed on disability inactive status. 13. An award of $65,271.60 to an applicant Dee W. Bray Jr. The board determined that 9. An award of $1,675 to former client of who suffered a loss caused by H. Trade Elkins. Bray was retained to represent a client on a Paige C. Cabe of Sanford. The board deter- The board determined that the applicant and firearm felony charge, a misdemeanor offense, mined that Cabe was retained to represent a his sister sold property they inherited at public a DWI, a DWLR, and other related charges. client in obtaining full custody of her grandson The client made payments towards the $8,500 and in obtaining a passport for her grandson. CONTINUED ON PAGE 52

THE NORTH CAROLINA STATE BAR JOURNAL 51 BAR UPDATES

John B. McMillan Distinguished Service Award

Judge Gary Lynn Locklear as a whole make him a most worthy recipient Judge Gary Lynn Locklear was presented of the Johns B. McMillan Distinguished Serv- Client Security Fund (cont.) with the John B. McMillan Distinguished ice Award. Service Award at the Annual Buck Harris Din- auction in a partition proceeding. Elkins was ner on December 8, 2017. The award was Joseph G. Maddrey the appointed commissioner. The applicant presented by North Carolina State Bar Presi- Attorney Joseph G. Maddrey received the was the highest bidder and paid his half of the dent John Silverstein. John B. McMillan Distinguished Service sale price plus half of the expenses of the sale Judge Locklear received his undergraduate Award on Thursday December 7, 2017, at the to Elkins. After taking his commissioner fee, degree from the University of North Carolina Pennrose Country Club in Reidsville, NC. Elkins failed to distribute the remaining sale at Pembroke and his master’s in business and The award was presented by North Carolina proceeds as shown on the final report of the economics from Appalachian State University. State Bar President John Silverstein. sale. Elkins gambled away the sale proceeds. He graduated from UNC Law School in 1979. Mr. Maddrey graduated from Wake Forest The court entered an order disgorging Elkins’ Upon graduation, Judge Locklear returned University in 1964 with a degree in history commission. The applicant’s reimbursement to Robeson County and worked for the Dis- and political science. He received his JD from will be distributed to the recipients listed in trict Attorney’s Office for three years. He left Wake Forest Law School in 1967. His legal the report of sale and the order of disgorgement. the DA's Office and worked in private practice career was put on hold while he served in the 14. An award of $20,233.88 to a former for six years before becoming a district court United States Army in Vietnam. Upon client of Johnny S. Gaskins of Raleigh. The judge in 1988. During his tenure on the dis- returning to North Carolina in 1969, Mr. board determined that Gaskins was retained trict court bench he served as chief district Maddrey joined the Secretary of State’s Office to handle a client’s personal injury claim. Gask- court judge for five years. In 2002 he was ap- under Thad Eure. He later moved to Eden, ins settled the client’s matter without his knowl- pointed to the superior court bench and re- NC, to begin his private practice, and ulti- edge or consent, forged his client’s signature mained there until he retired in 2009. mately became a certified specialist in the area on the settlement check, and embezzled the Judge Locklear has served as the chief justice of residential real property. funds. Gaskins pled guilty to forgery and em- of the Lumbee Tribe, and he currently serves as Mr. Maddrey has devoted many hours of bezzlement and was ordered to pay criminal the town attorney for the town of Pembroke. service to the North Carolina State Bar. He restitution. Gaskins was disbarred on December Especially noteworthy among Judge Lock- served as the State Bar councilor for Judicial 2, 2017. Steps will be taken to ensure that the lear’s accomplishments during his professional District 17A for five terms. He also served as a client’s restitution will be redirected to the life is the implementation of and emphasis member of the State Bar’s Disciplinary Client Security Fund. placed upon Law Day and Law Day activities Hearing Commission for six years. Mr. 15. An award of $1,500 to a former client for the Robeson County Bar. Since 2000 the Maddrey also serves on numerous boards in of Christopher E. Greene of Charlotte. The Robeson Bar, under the leadership and guid- his community and generously donates his board determined that Greene was retained ance of Judge Locklear, has performed service legal services to Habitat for Humanity, the to handle a client’s immigration matter. Before projects each and every Law Day. As a part of Eden Chamber of Commerce, and many the client could finish making payments to- the Law Day activities, Judge Locklear enlisted churches and nonprofits. wards the retainer and provide the necessary the assistance of the local probation and parole Mr. Maddrey has contributed greatly to his information to get a deportation waiver, office, the sheriff’s department, the police de- country, his colleagues, his profession, and his Greene surrendered his law license. Greene partment, and the local state highway patrol community. He is a most deserving recipient was disbarred on February 11, 2017. The in order to send a message that the judicial sys- of the John B. McMillan Distinguished board previously reimbursed five other Greene tem and all the law enforcement agencies deeply Service Award. clients a total of $12,810. care about the welfare of those in the commu- 16. An award of $1,325.00 to a former nity. Judge Locklear’s visionary leadership Nominations Sought client of Christopher E. Greene. The board greatly improved the working relationship Members of the Bar are encouraged to determined that Greene was retained to get a among all of these entities that are vital to the nominate colleagues who have demonstrated client a new visa before hers expired. The client judicial system, and greatly enhanced race re- outstanding service to the profession. The paid Greene’s fee plus the visa application filing lations in the Robeson County community. nomination form is available on the State Bar’s fee. Greene failed to file the application or Judge Locklear’s contributions to the local website, ncbar.gov. Please direct questions to provide any meaningful legal services for the bar, the legal profession, and the community Suzanne Lever, [email protected]. n fee paid. n

52 SPRING 2018 BAR UPDATES

Law School Briefs

Campbell University School of Law Duke Law School Elon University School of Law Campbell Law student advocates take The Duke Endowment establishes distin- Chief Justice Mark Martin addresses moot court regional title—A trio of guished dean’s chair at Duke Law—A $5 graduates at first Elon Law December grad- Campbell Law student advocates collected million grant from The Duke Endowment uation—Elon Law marked a milestone the championship title at the National has established a named chair for the dean’s when it graduated the Class of December Moot Court Competition Fourth Circuit position at Duke Law School. The first 2017, the first 111 students to complete a Regional. Chris Moore, Morgan Pierce, and James B. Duke and Benjamin N. Duke new curriculum that emphasizes practical Ellen Williams won in the finals, punching Dean of the School of Law is David F. Levi, training in a seven-trimester, 2.5-year pro- their ticket to the national finals in New who has served as Duke Law’s dean and a gram. The commencement on December York City in late January. The team also professor of law since 2007. Levi plans to 16, 2017, was the first time a North received the award for best brief. step down as dean on June 30 and the uni- Carolina Supreme Court chief justice Campbell Law professors named to versity is conducting a search for his succes- addressed an Elon Law graduating class, Business NC Legal Elite—Assistant Clinical sor, who will subsequently occupy the which was notable in another regard: Nearly Professor Allegra Collins and Practitioner in endowed chair. The chair honors Duke a quarter of graduates were African- Residence Matt Sawchak have been named University Founder James B. Duke, whose American and, when combined with others to Business North Carolina’s 2018 Legal indenture created The Duke Endowment, in the class who identify as racial minorities, Elite. The annual list is composed from a and his brother, Benjamin N. Duke, the pri- represent the most diverse class in the histo- poll of North Carolina attorneys. Collins mary benefactor of the university and its ry of the school. and Sawchak were both honored in the predecessor, Trinity College. Elon Law Review symposium explores Appellate category. Duke announces new summer institute many roles of mediation—More than 90 Campbell Law admissions dean named in The Hague—Duke Law School is part- people registered in October for an Elon to SAPLA Board—Assistant Dean of nering with Leiden University in the Law Review symposium that provided an Admissions Dexter Smith has been appoint- Netherlands on a new four-week residential update on recent case law and advisory ed to the Southern Association of Pre-Law summer program in The Hague, a center of opinions in mediation and arbitration. Advisors Board of Directors. Smith, who international law and home to the With a theme of “Alternative Dispute will serve a two-year term, will stand as one International Criminal Court, the Resolution,” the 2017 symposium offered of four law school representatives on the Permanent Court of Arbitration, and the cutting-edge discussions on mediator ethics board. international organization that regulates and standards across all areas and practices Campbell Law registrar named to chemical weapons. The Duke-Leiden of law. It also featured insights into the way AACRAO committee—Registrar Dr. Institute in Global and Transnational Law clients make decisions and how a greater Connie Shipman has been elected to serve will run from June 17 to July 17 at Leiden’s understanding of that process can be bene- on a committee within the American campus in The Hague, with students living ficial to attorneys. Association of Collegiate Registrars & in hotel-style accommodations nearby. The Elon Law scholar elected to American Admissions Officers. Shipman will stand as program, featuring courses on such matters Law Institute—An Elon Law professor with vice chair elect on the 2018-19 nominations as trade, criminal law, and human rights, is a distinguished history of First Amendment and elections committee. open to applicants from any country who scholarship has been elected to a highly Campbell Law Review hosted spring have completed at least one year of legal selective national organization that supports symposium on February 2—Campbell Law education, including JD students from US legal research with the potential of reshap- Review hosted its spring symposium on law schools, prospective LLM students with ing the practice of law. Enrique Armijo, February 2, ten years after the Supreme prior law degrees from foreign institutions, associate dean for academic affairs and an Court’s landmark but controversial decision and working lawyers, and is required for associate professor of law, formally joined in District of Columbia v. Heller, which rec- students pursuing Duke’s dual JD/LLM in the The American Law Institute following ognized that the Second Amendment pro- international and comparative law. Curtis an October vote by its governing council. tects an individual’s right to keep and bear Bradley, the William Van Alstyne Professor Armijo is the fourth Elon Law faculty mem- arms for self-defense. “Heller After Ten of Law and Professor of Public Policy ber elected to the ALI, a list that includes Years” will examine a wide range of issues Studies and co-director of Duke Law’s Dean Luke Bierman, Associate Dean Steve facing the lower courts since Heller. Center for International and Comparative Friedland, and Professor Henry Gabriel. Law, directs the institute.

THE NORTH CAROLINA STATE BAR JOURNAL 53 North Carolina Central School of Edward L. Timberlake Jr., trademark and the ABA Arbitration Competition by Law copyright lawyer, Forrest Firm, PC. The Holderness’ newest team, the Arbitration On October 18, 2017, North Carolina moderator was: Marcus Shields, assistant Team, composed of Blake Benson 2L, Sheri Central University School of Law’s public defender for the state of North Dickson 2L, Nicolas Eason 2L, and Rebecca (NCCU) Intellectual Property Law Carolina. Floyd 2L. Institute (IPLI) launched the Post Grant Other session topics included: cryptocur- Carolina Law’s competitive squads were Pro Bono Project. The project purpose is to rency and cybersecurity; inventorship and coached and advised by more than four provide minority law students with immer- patent requirements for science and technol- dozen faculty members, practicing attorneys, sive, hands-on training in prosecuting post ogy; trademarks and branding for business and fellow students. grant matters. This first-of-its-kind pro- owners; start-ups in the trenches: funding gram was created to encourage true innova- and commercializing your business; mone- Wake Forest School of Law tion, support a more diverse bar, and pro- tizing your copyright: music and art licens- Wake Forest School of Law has vide minority law students with valuable ing; and patents, innovation & entrepre- announced it will accept the Graduate skills that have broad applicability for neurship. The conference included a variety Record Exam (GRE), the most widely used today’s employers. of cutting edge artist, and performances graduate school exam, as an alternative to the Experienced post-grant practitioners from talented entertainers. LSAT for its JD admissions process begin- from Fish, Jones Day, and SAS shared their ning Fall 2018. in-depth experience with NCCU law stu- University of North Carolina School It is the first and only law school in the dents and provided direct training in post- of Law Carolinas to accept the LSAT. grant proceedings before the Patent Trial Earn CLE credit at The ABCs of Banking The decision to accept the GRE as an and Appeals Board (PTAB) during the Law, Charlotte, March 21; The Banking additional valid and reliable admission test in “Post-Grant Clinic and Practice” course. Institute, Charlotte, March 22-23; and J. the JD admissions process follows Wake Members of NCCU’s Board of Trustees and Nelson Young Tax Institute, Chapel Hill, Forest School of Law’s role as one of the first alumni supporters were present. April 26-27. Visit law.unc.edu/cle. three law schools in the nation—along with On November 4, 2017, The Intellectual Students succeed in moot court team com- the University of Arizona James E. Rogers Property Law Institute hosted a mini-con- petitions—With the end of the Fall 2017 College of Law and the University of ference for lawyers, professionals, entrepre- competition season, UNC School of Law’s Hawaii’s Richardson Law School—to have neurs, inventors, students, artists, and writ- Holderness Moot Court continued to repre- started a validation study of the GRE test in ers. The workshop featured seminars on all sent the school with the same types of success collaboration with Educational Testing things intellectual property. The Copyright that it marked in the Fall of 2016: Service (ETS). The Wake Forest School of Law for Artists, Writers, Musicians, & • Finalist Award and Second Place Law study revealed that GRE scores were Performers lecturers provided a detailed Overall at the 10th annual National Latino predictive of first-year law school grades, explanation of the parameters of copyright Law Student Association Moot Court which correlate to students’ overall success in law, including the rights of a copyright, Competition by the Hispanic Latino/Latina law school. length of protection, types of copyrightable Law School Association Appellate Advocacy The next generation of physician assis- works, and infringement. Lecturers provid- Team, composed of Taylor Festa 3L and tants (PAs) now have the ability to earn a ed a detailed explanation of the parameters Martin Hodgins 3L. competitive edge through a new partner- of copyright law, including the rights of a • Sweet Sixteen Appearance at Emory ship—the first of its kind in the US—estab- copyright, length of protection, types of University's National Civil Rights and Civil lished by Wake Forest University’s School of copyrightable works, and infringement. The Liberties Moot Court Competition by one Law online master of studies in law (MSL) presenters were: Shaunette Stokes, manag- of Holderness’ Julius Chambers Civil Rights program and School of Medicine Physician ing martner, Stokes Law Group; and Appellate Advocacy Teams, composed of Assistant (PA) Program. Austin Braxton 3L, Matthew Taylor 3L and The new cross-disciplinary initiative is Alexandra Snow 3L. designed to develop PA leaders who are pre- Thank You to Our • Final Four Appearance and 3rd Place pared to transform the delivery of healthcare Overall at the William & Mary Negotiations while navigating a complex legal market- Meeting Sponsors Competition by one of Holderness’ 2L place. Negotiation Teams, composed of Braxton The Emerging Leaders Program in Law Thank you to these companies for Reyna 2L and Jasmine Plott 2L. (ELP-Law) graduates will earn a master of sponsoring the State Bar’s • Elite Eight Appearance at the NYCBA studies in law (MSL) and master of medical Quarterly Meeting. National Moot Court Regional Competition science (MMS) in physician assistant studies. Lawyers Mutual Liability at the Fourth Circuit Court of Appeals by The 36-month sequential degree pro- Insurance Company one of Holderness’ National Appellate gram begins accepting applications in April Advocacy Teams, composed of Rachel Rice 2018; accepted ELP-Law students begin Old Republic National Title 3L, Rachel VanCamp 3L and Peter Kelly 3L. their first year in May 2019 with online MSL Insurance Company • First Place in Preliminary Rounds, Final coursework, moving to their PA studies in Four Appearance and 4th Place Overall at May 2020. n

54 SPRING 2018

The North Carolina State Bar PO Box 25908 Raleigh, NC 27611

Spring 2018