News
State Bar Ethics Committee Report: July 2026
Below are the most pressing items addressed at the latest Ethics Committee meeting of the State Bar. I am including a link to the proposed amendments and opinions. As a reminder, the Bar has revamped its website. The links below take you to the lists of proposed rule changes and opinions. If you click on a particular proposal, there is a form you can fill out to comment directly as to each proposal. In addition, as always, comments may be sent to comments@ncbar.gov. Notably, the proposals show in a different format in the State Bar Journal than they do on the website. The Journal goes through each proposed amendment in one document, whereas the website presents each section separately. The substance should be the same, but personal preference may dictate how one wishes to review the proposals.
Feedback is open until Oct. 5, 2026.
Proposed Amendments to the Rules of Professional Conduct:
27 N.C.A.C. 02, Rule 1.14, Client with Decision-Making Limitations: The proposal essentially replaces current RPC 1.14 with the Model Rule 1.14, including adding multiple additional Comments to the Rule. The proposed Rule and Comments are lengthy, and I recommend reviewing them in full to determine how they may affect your practice. Throughout the proposal, there is an emphasis that an attorney should look to maintain a normal attorney-client relationship to the extent possible, that any limitations of the client do not reduce the lawyer’s obligations to the client, and that the lawyer’s duty is ultimately to the client as opposed to third parties that may be involved. Some of the comments address specific practice areas that may be affected and also provide guidance as to specific circumstances that may arise.
Proposed Amendments to the Governing Rules:
1B.0114: Proceedings Before the Disciplinary Hearing Commission: General Rules Applicable to All Proceedings: Makes contact information on file with the Bar for pro se defendants presumptively valid for notice.
1B.0115: Proceedings Before the Disciplinary Hearing Commission: Pleadings and Prehearing Procedure: Allows service of motions and pre-trial orders by email.
1B.0116: Proceedings Before the Disciplinary Hearing Commission: Formal Hearing: Allows service of final orders by email and mail.
1B.0135: Noncompliance Suspension: Allows service of petitions and orders by email and mail to the addresses of record with the Bar, or the addresses of record with the court, if different from those on record with the Bar.
1D.0902: Reinstatement from Inactive Status: Modifies the requirement to make up CLE hours for time inactive from “calendar year” to “reporting period.”
1D.1520: Requirements for Program Approval: Clarifies that on-demand programs valid for three years require submission of a new program application after the expiration of the initial three-year term.
1E.0316: Revocation of Registration: Addresses procedures related to pre-paid legal services plans, including service requirements (to email and mail addresses on file with the Bar) and the authority of the Authorized Practice Committee to instruct the secretary of the Bar to serve a notice to show cause why a plan’s registration should not be revoked.
Proposed Ethics Opinions:
Proposed 2025 Formal Ethics Opinion 3, Client Consent to Annual Rate Increase: This proposal was discussed in two prior Ethics Updates, as it has been returned to subcommittee on two separate occasions. The proposed opinion now addresses seven (7) separate inquiries related to attorneys increasing their rates during the course of representation. An attorney may not unilaterally increase rates without communicating the same to the client “before or within a reasonable time after commencing the representation.” See Rule 1.5(b). The inclusion of a provision in the fee agreement allowing unlimited unilateral rate increases without additional notice to the client does not satisfy this obligation. Accordingly, a lawyer cannot immediately withdraw based upon a client’s refusal to pay unilateral rate increases without sufficient notice. The lawyer could avoid this problem by providing the client with reasonable advance notice – such as thirty days’ notice – prior to the rate increase becoming effective. If the client is sufficiently informed and does not object, the lawyer may infer consent. Similarly, the lawyer could avoid these difficulties by drafting a fee agreement which limits the amount and timing of rate increases (such as no more than a set percentage increase and not more often than annually), because this would satisfy the communication requirement of Rule 1.5(a). Although additional advance notice is not required, it would still be best practice. Notably, if (a) a client requested the inclusion of a provision allowing periodic rate increases at an unspecified amount, or (b) the client consenting to such a provision is a sophisticated consumer of legal services with experience with legal engagement and/or a prior relationship with the attorney, these facts would be relevant considerations in determining whether the provision is permissible. Throughout the proposed opinion, it is also noted that any rate increases are subject to the prohibition on clearly excessive fees.
Proposed 2026 Formal Ethics Opinion 1, Closing Attorney’s Referral to Law Partner’s Title Insurance Agency: This proposal was also discussed in a prior Ethics Update, as it was also referred back to subcommittee. Attorney A and Attorney B are law partners in a law firm that performs real estate closings. Attorney B also has a financial interest in Title Company. Neither Attorney A nor Attorney B may refer real estate clients to Title Company and issue an opinion on title to Title Company, as this would create a conflict of interest under Rule 1.7. The proposed opinion reaffirms prior opinions on similar issues, including that a lawyer may not certify title as closing attorney to a title company in which attorney has a financial interest, and that the same prohibition applies if the attorney’s spouse holds the interest in the title company. Notably, this is not a waivable conflict. The prohibition does not change if Attorney A is an associate rather than a partner in the law firm. In fact, Attorney A’s subordinate status to Attorney B would create an even greater conflict. This opinion is limited to title insurance and does not reach other ancillary services companies in which an attorney owns an interest.
Proposed Authorized Practice Advisory Opinion 2026-1, This inquiry originated from the Office of Administrative Hearings (OAH), which holds due process hearings under the Individuals with Disabilities Education Improvement Act of 2004 (IDEA). Nonlawyers with specialized knowledge or training have been allowed to assist parents of disabled children in these hearings. The proposed opinion concludes that OAH hearings are quasi-judicial hearings before administrative law judges that are governed by the Rules of Evidence and the Rules of Civil Procedure. “The representation of a party in IDEA due process hearings is therefore the practice of law.” The proposed opinion goes on to issue a non-exclusive list of actions that would constitute the unauthorized practice of law by a nonlawyer special education advocate, including filing pleadings, presenting arguments, questioning witnesses, offering documentary evidence, making objections, providing legal advice in a hearing, explaining or recommending courses of action as to legal rights or obligations, representing a party in mediation, etc.
