A recent decision from North Carolina highlights the complications faced by disciplinary authorities in dealing with the ever-increasing number of attorneys working “remotely” in other jurisdictions.

A New York licensed attorney living in North Carolina was nearly disbarred until the North Carolina appellate court reversed the disbarment orders of the North Carolina Discipline Hearing Commission (“DHC”). And it all started from the lawyer having insufficient funds in his North Carolina registered IOLTA account.

The story seems straightforward until licensure considerations come into play to complicate everything. The attorney was being investigated by the North Carolina State Bar (“NC State Bar”) for having insufficient funds in his IOLTA account. The lawyer was not licensed in North Carolina (never was). While he did not practice in North Carolina state courts, he conducted his federal immigration practice out of Charlotte, serving North Carolina clients.

After he was sent a Letter of Admonition by the NY Attorney Grievance Committee because of the IOLTA issues, he eventually stopped responding to communications from the NC State Bar. The NC State Bar subsequently filed a complaint against the attorney with the DHC alleging the attorney had failed to respond to its grievance and asking the DHC to discipline the attorney under N.C. Gen. Stat. § 84-28 (“84-28”), which subjects any attorney licensed to practice law in NC to the disciplinary authority of the NC State Bar Council. After issuing default orders, the DHC issued an order disbarring the attorney—requiring him to wind down any portion of his North Carolina practice not authorized by federal law before federal courts.

Not going down without a fight

The attorney argued that he could not be disbarred by the DHC because North Carolina lacked the authority to discipline someone who was not a member of the NC State Bar.  The DHC ruled that the attorney was subject to the disciplinary authority of the NC State Bar pursuant to the 84-28 statute and Rule 8.5(a) of the Rules of Professional Conduct because he was a licensed attorney practicing in North Carolina.

The attorney appealed that order, as well as the Order of Disbarment.  He argued that the North Carolina statute only grants the NC State Bar jurisdiction to discipline attorneys who are admitted in North Carolina. And, because he was never granted a North Carolina bar license, the NC State Bar lacked jurisdiction over him. The NC State Bar again asserted that it did have disciplinary authority under the statute, arguing that it covers all licensed lawyers who are practicing in North Carolina, regardless of whether they are barred in North Carolina.  It also argued that it had disciplinary authority under Rule 8.5(a), which specifically subjects out-of-state attorneys to discipline in North Carolina should they render, or even offer to render, legal services in North Carolina.

Untangling the Web

The first part of the Court’s analysis focused on technical readings of applicable statutes, where it concluded that the specifics supported the attorney’s claim that they only permitted jurisdiction against attorneys licensed by North Carolina.

Turning to Rule 8.5(a), the court reasoned that the State Bar’s basis for authority is rooted in its interpretation of “rendering or offering to render legal services in North Carolina.” The State Bar had argued that, despite the lawyer only practicing in federal immigration court, because he had a North Carolina office and provided legal services to clients who reside in North Carolina, under Rule 8.5(b), he had rendered legal services “in North Carolina”.

Rejecting this argument, the court distinguished between the lawyer being physically located in North Carolina and the “subject matter or purpose of his work or the court he appears in.” The court pointed to N.C. Gen. Stat. § 84-2.1(a) finding that it does not define the practice of law by physical location, but instead by the “specific legal services performed for the purpose of advising a client or preparing documents or representing a client before a particular tribunal.” As a result, the court held that a lawyer’s physical location where he holds client consultations, prepares documents and appears is not what counts when determining that a lawyer is practicing in the state under Rule 8.5(a).

The court found that simply because someone is living or has an office in North Carolina does not confer jurisdiction upon the NC State Bar under Rule 8.5 when that person is only practicing before federal court. Ultimately, the court determined the DHC only had disciplinary jurisdiction over attorneys licensed to practice law in North Carolina, meaning it lacked jurisdiction over the lawyer living and practicing in North Carolina, but licensed in New York.

What’s Next?

The opinion turns on the fact that the attorney only appeared before federal immigration court in North Carolina and that, notwithstanding all his other contacts with North Carolina, it is simply not enough to subject him to discipline under the Rules of Professional Conduct, at least not under Rule 8.5.

This decision is obviously peculiar to its facts, to North Carolina and its current statutory scheme.  Other courts (which may also have different statutory schemes) may come to different conclusions.  But the decisions highlights how some states may be “behind the times” in ensuring that they are currently equipped to deal with the increasing transience of our practice.