The NC State Bar v. Ely
810 S.E.2d 346, 257 N.C. App. 651 (2018)
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Rule of Law:
An attorney, even if administratively suspended, violates professional conduct rules by holding themselves out as able to practice law, making misleading communications, soliciting clients for pecuniary gain, and misrepresenting the licensure status of others. Such misconduct, especially when intentional and unacknowledged, warrants significant disciplinary sanctions like license suspension, particularly when there is a risk of significant potential harm to the public.
Facts:
- On September 10, 1993, Dawn E. Ely was admitted to the State Bar as an attorney licensed to practice law in North Carolina.
- In 2005, Ely formed Palladium Legal Services, LLC (Palladium), a limited liability company registered in Georgia, which offered temporary or full-time in-house legal counsel for businesses, and she served as its president and a 'Chief Legal Officer' (CLO).
- In January 2008, Ely sent a proposed employment contract to Henry Abelman, a North Carolina attorney whose license was inactive, in an effort to hire him as a CLO for Palladium, but Abelman did not sign the contract or agree to become an employee.
- On June 10, 2011, Ely was administratively suspended by the North Carolina State Bar for noncompliance with continuing legal education and dues requirements.
- On July 1, 2011, Ely was also suspended from practicing law in Georgia due to her failure to pay mandatory membership dues.
- Despite her administrative suspensions, Ely remained president of Palladium, and her biographical information, including her previous legal experience, remained on Palladium’s website, which listed her as a CLO.
- Ely updated Palladium’s website to list Henry Abelman’s biographical information and picture on the 'Meet our CLOs' webpage, despite him not agreeing to become a CLO and having an inactive license.
- In August and September 2012, mass-marketing emails were sent at Ely’s direction, targeting small business owners in North Carolina and informing them of Palladium’s legal services, with Ely signing her name as 'Dawn Ely, Esq.'
- Tony Maupin, a North Carolina business owner, was one of the recipients of these mass-marketing emails and subsequently filed a grievance against Ely with the State Bar.
Procedural Posture:
- On September 6, 2012, the Authorized Practice Committee of the State Bar sent Ely a letter informing her that she may be engaged in the unauthorized practice of law in North Carolina.
- On February 2, 2015, the committee followed up with a Letter of Caution, informing Ely that there was probable cause to believe her activities violated unauthorized practice of law statutes.
- On July 30, 2015, the Grievance Committee of the North Carolina State Bar issued a Notice of Admonition to Ely.
- On September 9, 2015, Ely informed the State Bar that she rejected the allegations contained in the Admonition.
- On January 4, 2016, the State Bar filed a complaint with the Disciplinary Hearing Commission (DHC) alleging violations of Rules 5.5(b)(2), 7.1(a), 7.3(a), and 8.4(c) of the North Carolina Rules of Professional Conduct.
- On July 15, 2016, a hearing on the State Bar’s complaint was held before a panel of the DHC.
- On August 24, 2016, the DHC issued an Order of Discipline suspending Ely’s license to practice law in North Carolina for five years.
- Ely, as the defendant-appellant, filed a timely notice of appeal to the Court of Appeals of North Carolina.
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Issue:
Does an administratively suspended attorney violate the North Carolina Rules of Professional Conduct by holding herself out as able to provide legal services, making misleading communications, soliciting professional employment for pecuniary gain, and misrepresenting the licensure status of others, thereby warranting a five-year suspension of her law license?
Opinions:
Majority - Davis, Judge
Yes, an administratively suspended attorney violates professional conduct rules by holding herself out as practicing law, making misleading communications, soliciting clients for pecuniary gain, and misrepresenting the licensure status of others, thus warranting a five-year suspension of her law license. The DHC’s findings of fact were supported by clear, cogent, and convincing evidence under the whole record test. Ely held herself out as able to provide legal services by being listed as a CLO on Palladium's website without indicating her suspension, emailing a link to the website, and using 'Esq.' in her signature line, which she herself testified was 'an identifier that I am a lawyer.' The court referenced other jurisdictions where using 'Esquire' by an unlicensed person constitutes unauthorized practice of law. Furthermore, she misrepresented Henry Abelman as an active CLO despite his inactive license and lack of any employment contract with Palladium. These actions constituted violations of North Carolina Rules of Professional Conduct 5.5(b)(2) (holding out as admitted to practice when not), 7.1(a) (false or misleading communications about lawyer/services), 7.3(a) (soliciting professional employment for pecuniary gain via electronic contact), and 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation). The DHC properly applied the dispositional factors, finding Ely intended to commit acts causing foreseeable harm, engaged in dishonesty, committed multiple offenses, and refused to acknowledge her wrongful conduct. The DHC's decision for a five-year suspension was supported by findings linking her multiple instances of misconduct to the potential for significant harm to the public (e.g., divided loyalties, fee splitting, inadequate representation, lack of understanding, erosion of public confidence) and a determination that a lesser sanction would be inadequate to protect the public and would send the wrong message to the bar and the public.
Concurring - Dillon, Judge
Concurring.
Concurring - Inman, Judge
Concurring.
Analysis:
This case reinforces the strict interpretation of professional conduct rules regarding unauthorized practice of law and misleading communications, even for administratively suspended attorneys. It clarifies that merely maintaining a professional appearance, such as using the 'Esq.' designation or listing oneself as a 'Chief Legal Officer' on a company website without disclosure of suspension, constitutes 'holding out' and misrepresentation. The court's distinction from N.C. State Bar v. Talford emphasizes that severe sanctions like suspension are justified when the DHC clearly articulates findings demonstrating a risk of significant potential harm to the public, multiple instances of misconduct, and a refusal to acknowledge wrongdoing, providing essential guidance for future disciplinary proceedings.
