NCSB Journal Spring 2026

ETHICS COMMITTEE UPDATE

Ethics Committee Seeks Feedback on Three Proposed Formal Ethics Opinions

Council Actions At its meeting on January 23, 2026, the State Bar Council adopted a proposed amendment to Rule 1.10 of the North Carolina Rules of Professional Conduct. The proposed amendment would permit the North Carolina Department of Justice and public defender offices to resolve certain imputed conflicts of interest by timely screen ing the disqualified lawyer and providing written notice as described in the Rules. The proposed amendment will be sent to the Supreme Court for approval. The council did not adopt any new formal ethics opinions this quarter. Ethics Committee Actions At its meeting on January 22, 2026, the Ethics Committee considered a total of seven inquiries, including the proposed amendment to Rule 1.10 referenced above. Three inquiries were sent to subcom mittee for further study, including an inquiry concerning permissible administrative expense fees, an inquiry addressing attorney obliga tions in response to a data breach, and an in quiry exploring attorneys’ obligation to provide clients with electronic copies of documents. The committee also published three proposed formal ethics opinions for comment, including a revised version of Proposed 2025 FEO 3, Client Consent to Annual Rate Increase, which was previously published in 2025. The pro posed opinions are found below. The Ethics Committee welcomes comments on the pro posed formal ethics opinions. Comments may be submitted by email to comments@ ncbar.gov. Proposed 2025 Formal Ethics Opinion 3 Client Consent to Annual Rate Increase January 22, 2026 Proposed opinion clarifies when and how a lawyer may increase the billing rate for services

during the representation.

Rules, Procedure, Comments

Inquiry #1: Client seeks to retain Lawyer for represen tation in a domestic case. Lawyer presents Client with a fee agreement outlining, among other things, the scope of the representation and the hourly billing rate Lawyer’s firm will charge Client for legal services during the rep resentation that are provided by Lawyer, other lawyers at the firm, and support staff. Lawyer’s fee agreement also contains a clause that states the following: The billing rate may change during the course of the representation. At least once each calendar year, the billing rates of all firm employees are reviewed and may be increased. Client will be notified on the client’s billing statement when these billing rate changes occur. Client and Lawyer signed the fee agree ment, and Lawyer’s representation of Client began. Over the next year, Client received billing statements from the law firm charging Client the hourly rates stated in the fee agreement. Client timely paid each bill. One year into the representation, Client received a bill for the law firm’s services. The bill contained a 20% increase in the billing rate for the vari ous firm employees that worked on Client’s case. Client received no advance notice of the increase before it was imposed. Client con tacted Lawyer and objected to the imposed increase. Lawyer informed Client that Client had the right to terminate the representation if the rate was unacceptable to Client. Lawyer also explained that Client agreed to the potential increase in billing rates in the fee agreement, and that Client would still be responsible for the bill if Client terminated the representation because the services had already been provided. Desiring to not start over with a new lawyer, Client accepted the rate increase and paid the bill.

One year later, law firm increased the hourly billing rates again and imposed the increase on Client’s latest billing statement without notice to Client. Client again object ed to the increase; Lawyer again noted that Client agreed to the potential increase in the original fee agreement and suggested Client terminate the representation if the rate was Public Information Ethics Committee’s meetings are public, and materials submitted for consideration are generally NOT held in confidence. Persons submitting requests for advice are cautioned that inquiries should not dis close client confidences or sensitive infor mation that is not necessary to the resolu tion of the ethical questions presented. All opinions of the Ethics Committee are predicated upon the North Car olina Rules of Professional Conduct. Any interested person or group may submit a written comment—including comments in support of or against the proposed opinion—or request to be heard concerning a proposed opinion. The Ethics Committee welcomes and encourages the submission of com ments, and all comments are consid ered by the committee at its next quar terly meeting. Any comment or request should be directed to the Ethics Com mittee at comments@ncbar.gov no later than April 6, 2026.

SPRING 2026

40