North Carolina State Bar Ethics Opinions
Free plain-English summaries of legal ethics opinions issued by the North Carolina State Bar, with full citations and source links on every page.
No North Carolina State Bar opinions match these filters
Try a different search term or clear the filters.
What are a North Carolina lawyer's duties when a debt-collection matter shows signs of a counterfeit-check scam, and what happens if the lawyer disburses trust funds against a fake check?
A lawyer who ignores the red flags of a counterfeit-check scam and disburses against the check violates the duties of competence and diligence, misappropriates other clients' trust funds, must replace…
In back-to-back A-to-B and B-to-C residential closings handled by one North Carolina lawyer, can the lawyer represent both B and C, and can the lawyer use C's funds to fund B's purchase?
Representing both B and C is a Rule 1.7 conflict that is permissible only if B consents to full disclosure to C and Rule 1.7(b) is met, and the lawyer may not use C's funds for B's purchase before the…
What must a North Carolina settlement lawyer do to guard against wire fraud, and is the lawyer responsible when a client wires closing funds to a fraudster?
A lawyer who serves as a settlement agent must educate himself and staff about real estate wire fraud, implement reasonable safeguards, and clearly communicate the risks and safe transfer instructions…
Can a North Carolina lawyer advance a client's share of settlement proceeds before the settlement check clears the lawyer's trust account?
Not while litigation is pending or contemplated; Rule 1.8(e)(1) bars financial assistance to a client in connection with litigation other than court costs and expenses. Once the matter is no longer pe…
Can a North Carolina lawyer accept Bitcoin or other virtual currency as a legal fee, and can the lawyer hold a client's virtual currency in trust?
A lawyer may accept virtual currency as an earned flat fee if the fee is not clearly excessive and the lawyer complies with Rule 1.8(a) (treating it as a business transaction with the client), includi…
When a North Carolina lawyer serves as executor or otherwise handles an estate account, when do the Rule 1.15 trust-accounting rules apply and what reviews are required?
Rule 1.15 governs an estate account to the extent the lawyer controls it. A lawyer with signatory authority must run it as a designated fiduciary account and perform the monthly and quarterly reviews;…
If a client tells a North Carolina lawyer not to pay a medical provider out of settlement funds, may the lawyer disburse those funds to the client instead when the provider has a perfected statutory lien?
No, if the lien is perfected. A perfected statutory medical lien means the client is not currently entitled to the disputed funds, so the lawyer must segregate and retain them, and must pay the provid…
If a third party steals from a North Carolina lawyer's trust account through counterfeit checks, hacking, or a spoofed wire request, must the lawyer replace the stolen client funds?
It depends on whether the lawyer used reasonable care. A lawyer who kept the trust account in substantial compliance with Rule 1.15 and reasonable security measures is not professionally required to r…
If a client tells a North Carolina closing lawyer to stop the deal after the deed is recorded, must the lawyer still disburse the closing funds?
Yes. Once the deed is recorded and title has passed, the closing lawyer must satisfy the seller's conditions on delivery of the deed by disbursing the sale proceeds, even if the buyer-client says stop…
Can one North Carolina lawyer represent both the borrower and the lender in a commercial real estate loan closing?
Usually no. The opinion treats dual representation of borrower and lender in a commercial loan closing as a nonconsentable conflict in most cases, because the deal involves heavy negotiation and large…
Can a North Carolina lawyer disburse against funds credited to the trust account by ACH or EFT before the transfer is final?
Yes. ACH and EFT transfers are designed to make funds available immediately, like wired funds, and the risk of reversal is slight, with notice to the lawyer in time to act. A lawyer who learns of a re…
What do the Rules of Professional Conduct require of North Carolina staff lawyers at a nonprofit public interest law firm run by a nonlawyer executive director?
Staff lawyers at a 501(c)(3) public interest law firm are fully bound by the Rules of Professional Conduct. The arrangement is allowed under N.C. Gen. Stat. 84-5.1 so long as no nonlawyer controls the…
When a North Carolina lawyer collects money from a client to pay a third-party expense like a court reporter, must the money go into the trust account?
Yes. Money a client gives a lawyer to pay a third party in connection with legal services is entrusted property and must be deposited in the trust account, regardless of who is contractually obligated…
Can a North Carolina law firm use online banking to manage its client trust account given the duty to safeguard client funds?
Yes. The opinion concludes a law firm may use online banking to manage a trust account if it can meet the Rule 1.15 fiduciary and recordkeeping requirements, including the Rule 1.15-3(b)(3) records fo…
Can a North Carolina lawyer keep disputed legal fees in the trust account when the client demands return of entrusted estate funds?
No. The opinion concludes that funds entrusted to a lawyer to be safeguarded or managed, and not designated as payment of a fee, may not be held in trust as 'disputed' funds under Rule 1.15-2(g); the …
Can a North Carolina lawyer offer a discounted legal service on a Groupon-style daily-deal website that keeps a percentage of each sale?
Yes. The opinion concludes a lawyer may advertise a discounted service on a 'deal of the day' or group-coupon website, and the percentage the website keeps is the cost of advertising rather than prohi…
Can a North Carolina lawyer join a commercial barter exchange and accept barter dollars for legal work?
Yes, with conditions. The opinion concludes a lawyer may participate in a barter exchange as long as the exchange exercises no influence over the lawyer's professional judgment, the exchange's listing…
Can a real estate lawyer let a title insurer audit the lawyer's trust account, and can the lawyer use an outside reconciliation service?
Yes, within limits. The opinion concludes a lawyer may voluntarily permit a title insurer to audit a trust account used solely for real estate closings, but only for transactions the insurer insured, …
Can a lawyer use a credit card account that splits client payments into trust and operating accounts at deposit?
The opinion concludes a lawyer may use a credit card account that routes unearned fees to the trust account and earned fees to the operating account at deposit, because the funds are separated before …
In North Carolina, which advance legal fees must go into the trust account, and which can a lawyer treat as earned on payment?
The opinion gathers and reconciles the prior fee opinions and sorts advance fees into types: an advance payment (billed against, usually hourly) remains the client's property and must stay in the trus…
When can a lawyer move disputed fees out of the trust account if the client objects but takes no legal action?
The opinion concludes a lawyer holding disputed fees in trust may transfer them to the operating account once a fee-dispute petition is dismissed (or the program closes for impasse) and the lawyer has…
Can a lawyer charge a dormancy fee against a client's unclaimed funds left in the trust account?
Yes, with conditions. The opinion concludes a lawyer may charge a dormancy fee against unclaimed trust funds if the client received prior notice of the fee and gave written consent, the amount is appr…
Can a lawyer disburse settlement funds from the trust account against an insurance check before confirming it has been collected?
Only with reasonable due diligence and a backstop. The opinion concludes that a lawyer may disburse immediately against cash, wired funds, or instruments listed in the Good Funds Settlement Act, but f…
When a North Carolina lawyer charges a 'minimum fee' billed against an hourly rate and then leaves the firm, must the firm refund the unearned portion to the clients?
Yes. The opinion concludes that a minimum fee billed against the lawyer's hourly rate is client money that belongs in the trust account until earned, not a true retainer or flat fee that may be deposi…
When a third party pays a North Carolina lawyer's fee for a client, who owns the unearned funds and what must the lawyer do if the payor demands them back?
It depends on the source and the fee type. The opinion concludes a lawyer generally follows the client's directive for funds belonging to the client and owes no duty to a stranger merely claiming an i…
Can a North Carolina real estate firm hold recording and courier costs in a separate non-trust account and keep the markup if actual costs come in lower?
Only with safeguards. The opinion concludes that funds collected at a closing to pay recording and courier costs remain client funds until disbursed, so a 'Recording Account' holding them must be a tr…
When a lawyer takes a client to a new firm and a fee is later awarded, what does the lawyer owe the former firm, and how must the disputed fee be handled?
The opinion concludes the departed lawyer must honestly notify the former firm of the awarded fee, deposit the mixed fee check intact in trust, may pay herself any undisputed share while keeping the d…
Can a nonlawyer handle a residential real estate closing in North Carolina, and what closing tasks may a nonlawyer perform?
No. The opinion concluded a nonlawyer may not handle a residential real estate closing because most closing functions are the practice of law, though a nonlawyer may perform purely ministerial tasks l…
Does a bank-supplied CD-ROM of digital check images satisfy a North Carolina lawyer's trust-account record-keeping requirement?
The opinion concludes that a CD-ROM containing digital images of the fronts and backs of canceled checks satisfies Rule 1.15-3(a)(2), because the images can be retrieved and printed when needed; it al…
If a personal injury client tells the lawyer to pay her all the settlement money but a medical provider has a letter of protection or an assignment, must the lawyer pay the client?
Only if there is no valid lien or assignment. If the lawyer gave the provider an authorized letter of protection and the client later disputes payment, the lawyer holds the contested portion in trust …
Can a North Carolina lawyer disburse a personal injury settlement from the trust account before the insurance check has actually cleared?
Generally no. The opinion concluded RPC 191 applies to all trust disbursements; a lawyer may disburse against provisional credit only for the limited instrument types in the Good Funds Settlement Act,…
Can a North Carolina lawyer sign a statement acknowledging a finance company's assignment of part of a personal injury client's recovery and agreeing to pay it from the proceeds?
Yes, with conditions. The opinion concluded a lawyer may acknowledge a valid assignment if it does not compromise independent judgment, the acknowledgment preserves the client's instructions where the…
Can a North Carolina lawyer charge a flat fee in advance and call it nonrefundable, keeping it even if the representation ends early?
No fee is truly nonrefundable. The opinion concluded a lawyer may take a flat fee into the operating account if the client agrees it is earned when paid, but must refund any portion that is clearly ex…
If a buyer tells the closing lawyer to stop after the deed is recorded, can the lawyer withhold the seller's funds in North Carolina?
The opinion concluded that once the closing lawyer records the deed and title has passed, the lawyer must satisfy the conditions of the transfer by disbursing the sale proceeds to the seller despite t…
Can a North Carolina closing lawyer who serves as escrow agent agree in advance to represent the buyer if a dispute over the escrow arises?
The opinion concluded that an escrow agreement may provide that, if a dispute arises, the lawyer-escrow agent turns the funds over to a successor escrow agent and then represents the buyer; and a clie…
What must a North Carolina lawyer do to protect trust-account funds from a year 2000 computer failure at the bank?
The opinion concluded that a lawyer's fiduciary duty to safeguard client funds requires exercising due care in selecting a depository bank, including considering how the bank has addressed the year 20…
Can a North Carolina lawyer help a client raise money from the public to pay the client's legal fees?
The opinion concluded a lawyer may participate in soliciting third-party funds to defray a client's legal expenses if Rule 1.8(f) is satisfied; the lawyer must administer the funds honestly, hold any …
What can a North Carolina lawyer holding escrowed closing funds do when the buyer and seller dispute whether the money should be released?
The opinion concluded that a lawyer acting as escrow agent must be impartial to both parties and carry out the escrow terms; if the lawyer cannot determine that the condition for release has been met,…
Can a North Carolina lawyer charge a fee labeled 'nonrefundable,' and where must advance fees and flat fees be deposited?
The opinion concluded a lawyer should not label any fee 'nonrefundable' because any clearly excessive portion must always be refunded; flat fees and true general retainers may go directly to the opera…
Can a North Carolina lawyer accept credit card payments into a trust account when the bank's merchant agreement lets it charge back the account without notice?
The opinion concluded a lawyer may accept credit card payments subject to a chargeback only if other clients' trust funds are protected (by debiting a non-trust account or a dedicated trust account), …
How should a North Carolina lawyer handle fee payments received by electronic transfer or credit card when the bank can deposit them into only one account?
Because the bank cannot split a transfer between earned and unearned fees, all electronic-transfer payments should go into the trust account, with earned fees withdrawn promptly. The lawyer may pass t…
Can a North Carolina closing lawyer disburse immediately from the trust account against a mortgage proceeds check that a private agreement treats as 'certified'?
The committee did not issue a separate ethics holding on the agreement; it referred lawyers to the Good Funds Settlement Act, G.S. 45A-1 et seq., effective October 1, 1996, and to RPC 191 as amended, …
If a lawyer receives a check and cannot tell whether it belongs to a client, a third party, or the firm, can the firm treat it as its own and divide it with the other payee?
Yes. The opinion concluded that the firm may treat such a check as not belonging to a client or third party and share it, but only after a reasonable investigation leaves the firm with a good-faith be…
Can a closing lawyer disburse from the trust account against deposited checks that have only been provisionally credited, before they actually clear?
Yes, but only against the reliable financial instruments the Good Funds Settlement Act specifies, and the lawyer must immediately cover any dishonored item from sources other than other clients' funds…
Can a lawyer's fee agreement direct the clerk of court to send a domestic client's alimony or child support payments to the lawyer to cover unpaid fees?
No. The opinion concluded that directing support payments to the lawyer gives the lawyer a prohibited proprietary interest in the subject of the litigation under Rule 5.3(a); the advance-fee provision…
Can a lawyer treat an advance fee as immediately earned and spend it right away, and is a fixed traffic-case fee that covers fines and costs an improper contingent fee?
The opinion concluded that an advance fee is a deposit that must stay in trust and be refunded if unearned unless the lawyer clearly tells the client it is earned immediately and the client agrees; a …
Can a lawyer let the bank 'link' a trust account and a business account so that credits and service charges offset across both?
The opinion concluded that a linked arrangement creates ethical problems because it makes it impossible to account for each account's interest and charges separately, so trust-account 'credits' could …
What can a lawyer do with a client's uncashed trust-account refund check, and can the lawyer set a fixed criminal-defense fee from the leftover after paying fines and costs?
The opinion concluded that a lawyer may not stop payment on an uncashed refund check and give the money to charity without the client's consent; the lawyer must try to reach the client and, failing th…
When a lawyer sends a settlement check to opposing counsel 'in trust' on the condition that release documents be signed first, is the sending lawyer a client, and what happens if the receiving lawyer breaks the condition?
The opinion concluded that opposing counsel who receives a conditionally delivered settlement check is not the sending lawyer's 'client' under Rule 10.1(b)(4) and owes no accounting. By accepting the …
When a client tells the lawyer to pay all settlement proceeds to her and not the medical providers, must the lawyer follow the client or honor the medical-lien statute?
The opinion concluded that, under RPC 69 and Rule 10.2(e), a lawyer must disburse settlement funds as the client instructs in the absence of a valid lien, and this is so whether the case settles befor…
How long must a lawyer hold a missing client's trust funds before treating them as abandoned and paying them to the state escheat fund?
The opinion concluded that a lawyer must hold a known but unlocatable owner's trust funds and treat them as abandoned, payable to the state treasurer, only after a five-year period in which the princi…
Can North Carolina lawyers in an interstate firm let client funds be deposited in the firm's out-of-state trust account without the client's consent?
No. The opinion concluded that North Carolina lawyers could not allow client funds to be deposited in a trust account maintained outside North Carolina without the client's written direction, because …
At a real estate closing, must the attorney collect all earnest money in certified funds and handle every dollar, and can the buyer's lawyer charge the seller a fee?
The opinion concluded that a closing attorney need not collect earnest money in certified funds and may disburse against provisionally credited funds when virtually certain the deposit will clear and …
Can a closing attorney hand the real estate agent the commission and seller-proceeds checks 'in trust' before recording the documents and depositing the funds?
The opinion concluded that a closing attorney may not deliver trust account checks to a real estate agent, even 'in trust' or conditionally, until the attorney has recorded the closing documents and d…
When a client stops responding, can the lawyer take a fee and pay a doctor's lien out of the client's trust funds without the client's direction?
The opinion concluded that a lawyer may not take a fee from a client's trust balance or pay a doctor's lien out of it without the client's direction. The trust-account rule requires the lawyer to pay …
After a settlement, must a lawyer pay the client's medical providers directly, or follow the client's later instruction to pay the client instead?
The opinion concluded that a lawyer must disburse settlement proceeds as the client directs and so must pay the client directly when instructed, unless a medical provider has perfected a valid physici…
When a builder will not cure punch-list items, can the closing attorney holding the construction escrow disburse the funds to the purchaser alone after notice and a waiting period?
The opinion concluded that a lawyer acting as escrow agent holds the funds in trust for all parties and may not, acting with only one party, disburse them to that party; where the escrow agreement doe…
Can a law firm treat a single all-inclusive fee as earned, deposit it all in its general account, and pay litigation costs from there if the client agreed in writing?
The opinion concluded no: part of an all-inclusive 'fee' that is really intended to cover litigation costs is an entrustment, and the trust-accounting rules require funds received in a fiduciary capac…
Can a law firm require all clients to pay a nonrefundable retainer, and how is a true retainer different from an advance fee deposit for trust-accounting purposes?
The opinion concluded that a lawyer may charge a reasonable nonrefundable retainer as consideration for the exclusive use of the lawyer's services and, because the arrangement is unusual, should expla…
Can a lawyer skip the trust account for a small recording fee by depositing the client's single check for the fee and recording cost into the general account?
The opinion concluded that all funds received as a fiduciary must go into the trust account no matter how small, but a lawyer may avoid an intermediate trust deposit by advancing the recording cost fr…
Browse North Carolina State Bar opinions by topic
Legal ethics opinions from the North Carolina State Bar interpret the rules of professional conduct for working lawyers, in response to inquiries from members and committees. They are not binding like court discipline decisions, but courts and discipline boards treat formal opinions as substantial guidance on how the rules apply. Every opinion above has a plain-English question and short answer, plus a link to the original source on the bar's site.