The NC State Bar v. Ely , 257 N.C. App. 651 ( 2018 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA17-546
Filed: 6 February 2018
Wake County, No. 16 DHC 1
THE NORTH CAROLINA STATE BAR, Plaintiff,
v.
DAWN E. ELY, ATTORNEY, Defendant.
Appeal by defendant from order entered 24 August 2016 by the Disciplinary
Hearing Commission of the North Carolina State Bar. Heard in the Court of Appeals
17 October 2017.
The North Carolina State Bar, by Deputy Counsel David R. Johnson and
Counsel Katherine Jean, for plaintiff-appellee.
Crawford & Crawford, PLLC, by Robert O. Crawford III, for defendant-
appellant.
DAVIS, Judge.
Dawn E. Ely appeals from an order of discipline entered by the Disciplinary
Hearing Commission (the “DHC”) of the North Carolina State Bar suspending her
law license for a period of five years after determining that she had committed a
number of violations of the North Carolina Rules of Professional Conduct. After a
thorough review of the record and applicable law, we affirm.
Factual and Procedural Background
N.C. STATE BAR V. ELY
Opinion of the Court
On 10 September 1993, Ely was admitted to the State Bar as an attorney
licensed to practice law in North Carolina. In October 2006, she also became a
licensed attorney in Georgia.
In 2005, Ely formed a business called Palladium Legal Services, LLC
(“Palladium”), a limited liability company registered in Georgia. Palladium offers
temporary or full-time in-house legal counsel for small to mid-sized businesses. In
order to obtain its services, clients must first pay a fee to Palladium and are then
matched with one of the company’s attorneys, who are called “Chief Legal Officers”
(“CLOs”). These CLOs receive from Palladium a portion of the fee paid to the
company by the client. The CLOs do not receive any compensation directly from the
client. For several years, Ely served as the president of Palladium and as one of its
CLOs. She is also the sole member of the limited liability company.
On 10 June 2011, Ely was administratively suspended by the State Bar from
the practice of law in North Carolina for noncompliance with continuing legal
education and dues requirements. On 1 July 2011, she was also suspended from
practicing law in Georgia due to her failure to pay mandatory membership dues.
Despite these administrative suspensions, Palladium continued to operate,
and Ely remained in her position as president. Her biographical information —
including her previous legal experience — remained on Palladium’s website on a
webpage titled “Meet our CLOs.”
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In January 2008, Ely sent on behalf of Palladium a proposed employment
contract to Henry Abelman, a North Carolina attorney whose license was inactive.
Abelman did not sign the contract and never formally agreed to become a CLO. Ely
nevertheless updated Palladium’s website to list Abelman’s biographical information
and display his picture on the “Meet our CLOs” webpage.
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
the legal services offered by Palladium. One of the recipients of these emails was
Tony Maupin, a North Carolina business owner, who received both an initial email
and a follow-up email. At the bottom of the emails to Maupin, Ely signed her name
as “Dawn Ely, Esq.” Maupin subsequently filed a grievance against Ely with the
State Bar regarding the emails.
On 6 September 2012, the Authorized Practice Committee of the State Bar sent
Ely a letter informing her that she was “engaged in activities that may constitute the
unauthorized practice of law in North Carolina.” The record does not indicate that
Ely ever responded to the letter. On 2 February 2015, the committee followed up on
its 6 September 2012 letter with a Letter of Caution, informing her that the
committee had “probable cause to believe that . . . [her] activities . . . violate[d] the
unauthorized practice of law statutes.” Once again, the record is devoid of any
response from Ely.
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On 30 July 2015, the Grievance Committee of the North Carolina State Bar
issued a Notice of Admonition to Ely. Ely informed the State Bar on 9 September
2015 that she was “reject[ing] the allegations contained in th[e] Admonition.”
On 4 January 2016, the State Bar filed a complaint with the 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 based on Ely’s (1) actions in holding herself out as a licensed
attorney despite her administrative suspension; (2) continued operation of Palladium
despite her administrative suspension; (3) solicitation of professional employment for
pecuniary gain via electronic communications; and (4) actions in holding Abelman out
as an attorney offering legal services on behalf of Palladium.
A hearing on the State Bar’s complaint was held on 15 July 2016 before a panel
of the DHC. On 24 August 2016, the DHC issued an Order of Discipline suspending
Ely’s license to practice law in North Carolina for five years. Ely filed a timely notice
of appeal.
Analysis
On appeal, Ely challenges several of the DHC’s findings of fact and conclusions
of law made in connection with both the adjudicatory and dispositional phases of the
hearing as well as the DHC’s ultimate decision to suspend her law license. We first
set out the standard of review applicable to orders of discipline from the DHC.
Second, we address Ely’s arguments as to the sufficiency of the DHC’s findings of fact
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and conclusions of law in the adjudicatory phase. Third, we assess her contentions
as to the findings and conclusions with regard to the dispositional phase. Finally, we
consider Ely’s challenge to the severity of her ultimate punishment.
I. Standard of Review
Pursuant to N.C. Gen. Stat. § 84-28, the DHC has the power to discipline any
attorney admitted to practice law in the State of North Carolina upon determining
that she has violated the North Carolina Rules of Professional Conduct. N.C. Gen.
Stat. § 84-28(b)(2) (2017). A party may appeal to this Court from a final order of the
DHC. N.C. Gen. Stat. § 84-28(h).
Disciplinary proceedings of the DHC are divided into two phases: At the
“adjudicatory phase,” the question is whether “the defendant commit[ed] the offense
or misconduct[.]” N.C. State Bar v. Talford, 356 N.C. 626, 634, 576 S.E.2d 305, 311
(2003). At the “dispositional phase,” the issue concerns “[w]hat is the appropriate
sanction for committing the offense or misconduct?” Id.
In reviewing an order of discipline by the DHC, we apply the whole record test.
This test
requires the reviewing court to determine if the DHC’s
findings of fact are supported by substantial evidence in
view of the whole record, and whether such findings of fact
support its conclusions of law[.] Such supporting evidence
is substantial if a reasonable person might accept it as
adequate backing for a conclusion. The whole-record test
also mandates that the reviewing court must take into
account any contradictory evidence or evidence from which
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conflicting inferences may be drawn. Moreover, in order to
satisfy the evidentiary requirements of the whole-record
test in an attorney disciplinary action, the evidence used
by the DHC to support its findings and conclusions must
rise to the standard of clear, cogent, and convincing.
Ultimately, the reviewing court must apply all the
aforementioned factors in order to determine whether the
decision of the lower body, e.g., the DHC, has a rational
basis in the evidence.
Id. at 632, 576 S.E.2d at 309-10 (internal citations, quotation marks, and brackets
omitted).
In applying this test, we employ a three-pronged inquiry: “(1) Is there adequate
evidence to support the order’s expressed finding(s) of fact? (2) Do the order’s
expressed finding(s) of fact adequately support the order’s subsequent conclusion(s)
of law? and (3) Do the expressed findings and/or conclusions adequately support the
lower body’s ultimate decision?” N.C. State Bar v. Sossomon, 197 N.C. App. 261, 275,
676 S.E.2d 910, 920 (2009) (citation omitted). “This three-step process must be
applied separately to each disciplinary phase[.]” Id. (citation omitted).
II. Adjudicatory Phase
A. Challenged Findings of Fact
Ely first argues that the evidence at the hearing was inadequate to support
several findings of fact made by the DHC in the adjudicatory phase. The DHC’s
findings of fact stated as follows:
1. Defendant, Dawn E. Ely (“Defendant”), was
admitted to the North Carolina State Bar on September 10,
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1993; and is, and was at all times referred to herein, an
attorney at law licensed to practice in North Carolina,
subject to the laws of the State of North Carolina, the Rules
and Regulations of the State Bar, and the Rules of
Professional Conduct.
2. Defendant was administratively suspended by
the North Carolina State Bar on June 10, 2011 for failure
to comply with Continuing Legal Education requirements.
3. As of July 15, 2016, Defendant was still
administratively suspended in North Carolina.
4. Defendant is also a licensed attorney in Georgia
but has been administratively suspended since July 1,
2011 due to her failure to pay mandatory bar dues.
5. As of July 15, 2016, Defendant was still
administratively suspended in Georgia.
6. Defendant operates a business registered in
Georgia called Palladium Legal Services, LLC (“PLS”) that
functions under the trade name Palladium Chief Legal
Officers (“PCLO”).
7. Neither PLS nor PCLO is authorized to provide
legal services in North Carolina.
8. Defendant describes herself as the “President
and Founder” of PCLO.
9. Defendant advertises the services of PCLO via
email solicitations and a website, www.palladiumclos.com.
10. According to the PCLO website and Defendant’s
email solicitations, PCLO offers to provide various
businesses with legal services through a number of lawyers
on the PCLO staff, including Defendant.
11. According to the PCLO website and Defendant’s
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email solicitations, Defendant holds herself out to
residents of North Carolina and Georgia as able to provide
them with legal services through PCLO despite not being
actively licensed in either state.
12. Defendant offers the services of PCLO to
businesses and individuals in various states, including
those in North Carolina and Georgia.
13. Defendant describes the legal services PCLO
offers as “in-house” legal counsel services provided by
“Chief Legal Officers.”
14. Defendant offers to provide the legal services of
attorneys under contract with PCLO to other businesses on
a temporary or as needed basis.
15. To obtain the services of these attorneys, clients
must retain and pay PCLO which will then instruct one of
its attorneys to provide legal services to the client upon
payment from PCLO.
16. PCLO attorneys are employees of PCLO and not
the companies they serve.
17. Defendant makes all hiring and firing decisions
regarding the attorneys who work for PCLO.
18. PCLO attorneys are not paid directly by the
businesses they serve, but rather are paid by PCLO.
19. Defendant has sent solicitation emails to
potential clients in North Carolina and other states
representing that PCLO could provide them with legal
services and advice.
20. In August and September of 2012, Defendant
sent emails to Tony Maupin, a North Carolina resident and
the owner of a North Carolina company, soliciting his
business by offering to provide him with legal services
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through PCLO attorneys, including Defendant.
21. In Defendant’s emails to Tony Maupin, she used
the designation “Esq.” after her name despite not being
actively licensed to practice law in any state at the time.
22. The designation “Esq.,” an abbreviation for
“Esquire,” has historically been used in the United States
to indicate to others that someone is an attorney licensed
to practice law. Defendant was using the designation
“Esq.” for this purpose.
23. In or around January 2008, Defendant sent a
proposed employment contract to Henry Abelman
(“Abelman”), a North Carolina licensed attorney who
moved to inactive status in 1998, in an effort to hire him as
an attorney employee of PCLO.
24. The contract Defendant sent to Abelman notes
in one provision that Abelman “agrees to perform legal
counsel services on behalf of Company [PCLO] to third
party companies retaining Company[.]”
25. Abelman did not agree to the provisions in the
contract and did not agree to become an employee of
Defendant’s company.
26. Defendant nonetheless held out on her website
that Abelman was an employee of PCLO and was able to
provide legal services to North Carolina residents on behalf
of the company.
27. The contract Defendant had clients of Palladium
sign indicated in numerous places that Palladium was
providing legal services to the clients:
a. “This Attorney Engagement & Consulting
Agreement for Services (“Agreement”) is made and
entered into effective as of the ___ day of ___, 2015,
by and between Palladium Legal Services, a Georgia
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LLC d/b/a Palladium Chief Legal Officers
(“Palladium” or “Company”) with offices at 2625
Piedmont Rd., NE, Suite 56-117, Atlanta GA 30324
and _______________, a ________________ company
with its principal offices located at _______________
(“Client”).”
b. “Client hereby engages Company [Palladium], to
provide in-house legal services for the term and
compensation described herein. Company agrees to
assign an appropriate Paladium [sic] Attorney, who
at the time of execution of this Agreement shall be
______________ (“Attorney”) to perform the services
specified in the “Description of Services” (the
“Services’’) attached to this Agreement as Exhibit A
and incorporated herein by reference.”
c. “Company [Palladium] warrants that it shall
perform the Services utilizing at least the degree of
skill and care exercised by diligent and prudent
professionals performing similar services in
accordance with best industry practices.”
Although Ely challenges Finding Nos. 11, 22, and 26, the remainder of the
above-quoted findings are unchallenged. Thus, these unchallenged findings are
binding on appeal. Koufman v. Koufman, 330 N.C. 93, 97, 408 S.E.2d 729, 731 (1991)
(“Where no exception is taken to a finding of fact by the trial court, the finding is
presumed to be supported by competent evidence and is binding on appeal.”). We
address each challenged finding of fact below.
1. Finding of Fact No. 11
Finding No. 11 states as follows:
11. According to the PCLO website and Defendant’s
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email solicitations, Defendant holds herself out to
residents of North Carolina and Georgia as able to provide
them with legal services through PCLO despite not being
actively licensed in either state.
Ely argues that she “did not provide legal services to anyone after being
administratively suspended in North Carolina and Georgia and had not practiced law
for several years before the suspensions.” Moreover, she asserts that “[n]owhere on
the website did she affirmatively state that she was actively licensed to practice law
in North Carolina or that she was available to be a chief legal officer for any
company.”
During the adjudicatory phase of the 15 July 2016 hearing, the State Bar
offered as evidence excerpts from Palladium’s website. On the website’s “Meet our
CLOs” webpage, Ely was prominently listed as a CLO who could serve a client’s legal
needs. The webpage referenced Ely’s previous legal experience (including her
background serving as in-house counsel) and did not contain any statement or
suggestion that she was not currently licensed to practice law in North Carolina.
The State Bar also provided evidence of the email correspondence between Ely
and Maupin. In her email to Maupin, Ely stated that she wanted to discuss legal
matters with him if he had time to speak to her. In this email, she made direct
reference to Palladium’s website by including a hyperlink to the “Meet our CLOs”
webpage. Thus, had Maupin — or any other potential North Carolina client receiving
this email — clicked onto this webpage link, he would have been under the false
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impression that Ely was licensed to provide legal services to clients in North Carolina.
Thus, the DHC’s finding that Ely falsely held herself out as being able to provide legal
services was supported by clear, cogent, and convincing evidence.
2. Finding of Fact No. 22
Finding No. 22 states as follows:
22. The designation “Esq.,” an abbreviation for
“Esquire,” has historically been used in the United States
to indicate to others that someone is an attorney licensed
to practice law. Defendant was using the designation
“Esq.” for this purpose.
Ely argues that Finding No. 22 was unsupported by evidence regarding her
purpose in using the abbreviation “Esq.” and the historical meaning of that term. The
State Bar introduced evidence of Ely’s first email to Maupin, which stated as follows:
Hi Tony,
Business executives complain about the high cost of legal
services and the frustrating inaccessibility to legal
expertise that can often compromise their business goals.
In a quick 10 minute call I’d like to learn your areas of
concern and explain how Palladium CLOs can provide you
with answers and solutions – we are willing to provide you
with information and see where we can help.
Palladium Chief Legal Officers solve these problems by
providing access to a cost-effective, part-time, in-house
legal counsel who delivers extraordinary value to your
company: Highly-experienced CLOs who understand
business needs and have worked in your industry. Our fees
are cost-effective with flat rates with zero infrastructure
costs (vs. employee or hourly consultant model). Our
service options are based on your legal needs and for less
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than your current legal fees, more work will get done, with
the same level of expertise.
Tony, are there 10 minutes in the upcoming weeks that I
can call you to discuss these matters?
Regards,
Dawn Ely, Esq.
President & Founder1
During Ely’s cross-examination at the adjudicatory phase of the hearing, the
following exchange occurred:
[COUNSEL FOR STATE BAR:] And you indicate
here at the bottom of both emails, you have your name and
then you have “Esquire.”
[ELY:] Uh-huh (yes).
[COUNSEL FOR STATE BAR:] Why is that?
[ELY:] Well, because I have always, since I passed
the bar, used that E-s-q as an identifier that I am a lawyer.
[COUNSEL FOR STATE BAR:] So it identifies that
you are an attorney.
[ELY:] It identifies that I’m an attorney, but my role
with the company is not as a chief legal officer, it is
identified there in my signature block as president and
founder.
[COUNSEL FOR STATE BAR:] But you included
the esquire to identify to Mr. Maupin that you are an
attorney.
1 As noted above, the email contained a hyperlink that allowed the recipient to access
Palladium’s website.
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[ELY:] An attorney that, frankly, because I am an
attorney, I do understand all of these issues, I understand
the needs, I understand the type of person that would be
the right person for a particular role.
[COUNSEL FOR STATE BAR:] So you’re indicating
to him that your experience, which is also he [sic] could find
on your website, and the legal services that you have
provided to others in the past, which he could also find on
your website, really adds some validity to Palladium.
[ELY:] I think it clarifies what my background and
knowledge base is.
[COUNSEL FOR STATE BAR:] To what end?
[ELY:] To the fact that I have been there, I know
what some of these issues are in terms of what a business
needs, where a business can sometimes falter. I’ve had
people, when they have a call with me, ask me, “Are you an
attorney yourself?” and I say yes.
I’ve also have [sic] companies ask me if I can be their
chief legal officer, and I say no.
[COUNSEL FOR STATE BAR:] But you do say that
you are an attorney.
[ELY:] Well, yes.
(Emphasis added.)
She also stated the following in her testimony:
[ELY:] Yeah. I want to make sure you understand
the process. I, along with my business development
drafter, drafted these emails. My business development
director actually identified potential companies that fit the
profile of company and executive that we have found
typically is in the market for needing some part-time chief
legal officer services. So I did not personally identify Tony
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Maupin, and the email was sent from my business
development director, but the content of the email I
approved.
....
. . . I was wanting to clarify because it is being shown
as being sent from me, but I do not hit the “Send” button,
but I approved of the process for identifying target
companies and executives that fit the profile of small/mid-
size business that is large enough to potentially need
somebody on an in-house basis, and so these emails go out
to people from my business development director.
. . . I take responsibility for them, but if your
question is did I identify Tony Maupin, no, I didn’t, but I
identified the profile that he fits of the small/mid-size
business size and senior executive that may have an
interest in a part-time general counsel.
The DHC concluded — and we agree — that the clear implication from Ely’s
inclusion of the abbreviation “Esq.” following her signature in the emails to Maupin,
the hyperlink to Palladium’s website, and her testimony on this subject at the hearing
is that she intended to convey to recipients of the email that she was able to provide
legal services as an attorney.2 Moreover, while our courts have not previously had
occasion to address this issue, courts in a number of other jurisdictions have
determined that the use of the title “Esquire” by one not licensed to practice law
constitutes the unauthorized practice of law. See, e.g., Fla. Bar v. Lister, 662 So. 2d
1241, 1241-42 (Fla. 1995) (respondent engaged in unlicensed practice of law where he
2 Moreover, Ely’s testimony supports the proposition that although she did not personally send
the email to Maupin, she approved the content of the email and authorized it to be sent.
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described himself as “Esquire” on correspondence and identified himself as an
attorney in a phone conversation); In re Contempt of Mittower, 693 N.E.2d 555, 558
(Ind. 1998) (respondent engaged in unauthorized practice of law where he labeled
himself “esquire,” “general counsel,” or “attorney-in-fact” on business cards,
letterhead, and other documents available to general public); Disciplinary Counsel v.
Brown, 121 Ohio St. 3d 423, 431, 905 N.E.2d 163, 171 (2009) (“. . . [R]espondent’s use
of the term ‘Esq.’ induced clients to believe that he was a lawyer, a misunderstanding
that he was aware of and failed to correct.”); In re V.I. Bar Ass’n Comm. on the
Unauthorized Practice of Law, 59 V.I. 701, 733 (2013) (“We hold that Campbell’s
general use of ‘Esquire,’ ‘Esq.,’ and ‘Attorney’ in emails and other correspondence,
even when not issued in conjunction with a specific legal matter, constitutes hold[ing]
oneself out as rendering any service which constitutes the unauthorized practice of
law.” (citations, quotation marks, and brackets omitted)).
3. Finding of Fact No. 26
Finding No. 26 states as follows:
26. Defendant nonetheless held out on her website
that Abelman was an employee of PCLO and was able to
provide legal services to North Carolina residents on behalf
of the company.
Ely challenges the evidentiary support for Finding No. 26, contending that
“[n]o representation was made on the website as to [Abelman’s] licensure status in
North Carolina or any other state.” She also asserts that the mere presence of
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Abelman’s name and biographical information on Palladium’s website did not amount
to holding him out as an attorney who was able to provide legal services on behalf of
the company.
During the DHC hearing, the State Bar introduced evidence that (1) Abelman
never signed an employment contract with Palladium; and (2) Abelman’s license to
practice law in North Carolina was inactive. Ely nevertheless listed him as a CLO
whose credentials could be viewed on Palladium’s website.
Furthermore, the email Ely sent Maupin — a North Carolina business owner
— included a hyperlink to Palladium’s website where Abelman’s information was
displayed. Thus, any visitor to the website would rationally conclude that Abelman
was, in fact, a CLO of Palladium and thus capable of providing legal services to
Palladium’s clients. Moreover, a potential North Carolina client viewing the website
would likewise assume that Abelman was authorized to provide legal services in
North Carolina.
B. Challenged Conclusions of Law
We turn next to Ely’s argument that the DHC improperly concluded that she
violated Rules 5.5(b)(2), 7.1(a), 7.3(a), and 8.4(c) of the North Carolina Rules of
Professional Conduct. We address in turn her arguments as to each of these rules.
1. Rule 5.5(b)(2)
Rule 5.5(b)(2) states as follows:
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(b) A lawyer who is not admitted to practice in this
jurisdiction shall not:
....
(2) hold out to the public or otherwise represent that
the lawyer is admitted to practice law in this
jurisdiction.
N.C. R. Prof. Cond. 5.5(b)(2).
The DHC’s findings demonstrate that Ely violated Rule 5.5(b)(2) by (1)
identifying herself as a CLO on Palladium’s website; (2) providing her background as
an attorney on the website with no indication of the current status of her license; and
(3) emailing Maupin a link to the website and using the title “Esq.” in the signature
line of her email to him. By committing these acts, Ely held herself out as a lawyer
who was admitted to practice law in North Carolina in violation of Rule 5.5(b)(2).
2. Rule 7.1(a)
Rule 7.1(a) states, in pertinent part, as follows:
(a) A lawyer shall not make a false or misleading
communication about the lawyer or the lawyer’s services.
A communication is false or misleading if it:
(1) contains a material misrepresentation of fact or
law, or omits a fact necessary to make the statement
considered as a whole not materially misleading;
N.C. R. Prof. Cond. 7.1(a).
As previously stated, the DHC found that Ely (1) falsely implied she could
serve as an attorney on behalf of Palladium; (2) listed herself as a CLO on Palladium’s
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website; and (3) held herself out as an attorney to Maupin by emailing him a link to
the website and using the title “Esq.” in the signature line of her email. By taking
these actions, Ely violated Rule 7.1(a).
Moreover, Ely violated Rule 7.1(a) by holding Palladium out as a company that
could provide legal services and advice to Maupin when, in fact, at least two of the
sixteen attorneys advertised on the website as CLOs (Ely and Abelman) were not
licensed to practice law in North Carolina. Because the website’s reference to both
Ely and Abelman was misleading, she violated Rule 7.1(a) in this respect as well.
3. Rule 7.3(a)
Rule 7.3(a) states as follows:
(a) A lawyer shall not by in-person, live telephone, or real-
time electronic contact solicit professional employment
from a potential client when a significant motive for the
lawyer’s doing so is the lawyer’s pecuniary gain, unless the
person contacted:
(1) is a lawyer; or
(2) has a family, close personal, or prior professional
relationship with the lawyer.
N.C. R. Prof. Cond. 7.3(a).
The DHC’s findings demonstrate that Ely violated the prohibition against
soliciting professional employment via electronic contact as contained in Rule 7.3(a).
She emailed Maupin for the express purpose of promoting Palladium’s legal services,
and therefore, increasing her opportunity to obtain pecuniary gain.
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4. Rule 8.4(c)
Rule 8.4(c) states as follows:
It is professional misconduct for a lawyer to:
....
(c) engage in conduct involving dishonesty, fraud,
deceit or misrepresentation that reflects adversely
on the lawyer’s fitness as a lawyer[.]
N.C. R. Prof. Cond. 8.4(c).
The DHC’s findings likewise support the conclusion that Ely violated Rule
8.4(c). She falsely represented on Palladium’s website that Abelman could serve as
an attorney on behalf of Palladium despite his status with the State Bar being
“inactive” as well as the fact that he had never actually signed a contract with
Palladium. She further included the hyperlink to the website in her emails to Maupin
and the other recipients.
***
Thus, we are satisfied that the findings of fact contained in the DHC’s order of
discipline support its conclusions that Ely violated Rules 5.5(b)(2), 7.1(a), 7.3(a), and
8.4(c) and that those findings were supported by clear, cogent, and convincing
evidence. Accordingly, we overrule Ely’s arguments as to the adjudicatory phase of
the DHC’s order. See N.C. State Bar v. Sutton, __ N.C. App. __, __, 791 S.E.2d 881,
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900 (2016) (upholding DHC’s findings of fact and conclusions of law in adjudicatory
portion of disciplinary order), appeal dismissed, 369 N.C. 534, 797 S.E.2d 296 (2017).
III. Dispositional Phase
We next consider Ely’s challenges to the DHC’s findings and conclusions
concerning the dispositional phase. The DHC may consider several factors in
determining the appropriateness of a disciplinary measure. See 27 N.C. Admin. Code
1B.0114(w) (2016) (listing factors that DHC may find as meriting suspension,
disbarment, or other disciplinary measures).3
However, it is well settled that
[t]he DHC must support its punishment choice with
written findings that are consistent with the statutory
scheme of N.C. Gen. Stat. § 84-28(c). The order must also
include adequate and specific findings that address how
the punishment choice (1) is supported by the particular
set of factual circumstances and (2) effectively provides
protection for the public.
N.C. State Bar v. Adams, 239 N.C. App. 489, 495-96, 769 S.E.2d 406, 411 (2015)
(internal citations omitted). Here, Ely challenges Conclusion No. 1 of the DHC’s
order, which states as follows:
1. The Hearing Panel considered all of the factors
enumerated in 27 N.C.A.C. 1B § .0114(w)(1), (2) and (3) of
the Rules and Regulations of the State Bar, and concludes
that the following factors are applicable:
27 N.C.A.C. 1B § .0114(w)(l)
3Since the DHC’s 24 August 2016 order, this regulation has since been removed from 27 N.C.
Admin. Code 1B.0114(w) and is now contained in 27 N.C. Admin. Code 1B.0116(f).
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a. Factor (B), Intent of the defendant to
commit acts where the harm or potential
harm is foreseeable; and
b. Factor (I), Acts of dishonesty,
misrepresentation, deceit, or fabrication.
27 N.C.A.C. 1B § .0114(w)(2)
a. Factor (A), Acts of dishonesty,
misrepresentation, deceit, or fabrication.
27 N.C.A.C. 1B § .0114(w)(3)
a. Factor (G), Multiple offenses; and
b. Factor (O), Refusal to acknowledge
wrongful nature of conduct.
We address Ely’s arguments as to each challenged factor in turn.
A. Intent to Commit Acts Causing Potential Harm
Ely contends that the DHC erred by concluding that she intended to commit
any act with the potential to cause harm. However, the DHC found that Ely (1)
falsely held herself out as a CLO who was able to provide legal services despite her
administrative suspension; (2) contacted a North Carolina business owner on behalf
of her company seeking to provide legal services for her own pecuniary gain; and (3)
advertised the services of Abelman despite his inactive status and lack of any
employment contract with Palladium.
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Opinion of the Court
The DHC’s findings support the notion that Ely’s wrongful acts were not by
mistake or accident but were instead intentionally committed. See Sutton, __ N.C.
App. at __, 791 S.E.2d at 901 (“To the extent Defendant argues there is no evidence
that he knew he was violating a rule or causing a disruption, it is axiomatic that one’s
state of mind is rarely shown by direct evidence and must often be inferred from the
circumstances.” (citation omitted)). Indeed, as previously discussed, Ely’s own
testimony reveals that she approved of her business development director sending
emails on her behalf with the intent of targeting small businesses in need of legal
services and that she intended to communicate to Maupin that she was an attorney.
Thus, we cannot say that the DHC erred in concluding that she intended to commit
acts creating the potential for foreseeable harm.
B. Acts of Dishonesty, Misrepresentation, Deceit or Fabrication
Ely also argues that the DHC erroneously concluded that she committed acts
of dishonesty, misrepresentation, deceit, or fabrication. However, her argument on
this issue is largely derivative of her previous arguments as to the DHC’s findings in
the adjudicatory phase. The DHC concluded that Ely “made false or misleading
statements” in violation of Rule 7.1(a) about both her and her company’s ability to
provide legal services and that she engaged in the unauthorized practice of law in
violation of Rule 5.5(b)(2). As discussed above, these conclusions were supported by
the DHC’s findings of fact.
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C. Multiple Offenses
Ely next asserts that the DHC’s conclusion that she committed multiple
offenses constituted error. Once again, Ely’s arguments on this issue simply restate
her previous challenges to the findings made in connection with the adjudicatory
phase of the proceedings. The DHC properly concluded that Ely violated the North
Carolina Rules of Professional Conduct by (1) holding herself out as legally able to
provide legal services; (2) holding her company out on its website as authorized to
provide legal services; (3) contacting Maupin via email; and (4) listing Abelman as an
attorney employed by her company on its website. Thus, we reject Ely’s contention
that the DHC improperly found that she had committed multiple offenses.
D. Refusal to Acknowledge Wrongful Conduct
Finally, Ely argues that the DHC improperly concluded that she refused to
recognize the wrongful nature of her conduct. The DHC found during the
dispositional phase as follows:
2. Defendant has not acknowledged the wrongful
nature of her conduct or indicated remorse.
During the 15 July 2016 hearing, Ely continually refused to accept the fact
that her conduct was in violation of North Carolina’s Rules of Professional Conduct.
The DHC chairman repeatedly gave Ely opportunities to acknowledge her violations,
but she was unwilling to do so. Accordingly, Finding of Fact No. 2 and the DHC’s
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N.C. STATE BAR V. ELY
Opinion of the Court
subsequent conclusion of law that Ely had “[r]efus[ed] to acknowledge the wrongful
nature of [her] conduct” was supported by clear, cogent, and convincing evidence.
IV. Five-Year Suspension
The only remaining question before us is whether the findings and conclusions
of the DHC adequately support its ultimate disciplinary decision. See Talford, 356
N.C. at 639, 576 S.E.2d at 314. Ely contends that her five-year suspension
constituted an excessive punishment because the DHC order fails to demonstrate
that (1) there was a significant potential harm resulting from her actions; and (2) a
lesser sanction would be inadequate to protect the public. In support of this
argument, Ely asserts that the DHC did not properly apply the test required by our
Supreme Court in Talford.
In Talford, the DHC entered an order disbarring an attorney for
mismanagement of a trust account. On appeal, the attorney argued that the DHC’s
findings of fact and conclusions of law from the dispositional phase of the hearing did
not adequately explain the conclusion that his misconduct had resulted in a
significant potential harm to clients or support the determination that a lesser
sanction was inadequate to protect the public. Id. at 639, 576 S.E.2d at 314. Our
Supreme Court agreed, stating as follows:
. . . . None of [the DHC’s] discipline-related findings
of fact even address, much less explain, why disbarment is
an appropriate sanction under the circumstances.
. . . Certainly, none of the DHC’s discipline-related findings
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Opinion of the Court
and conclusions expressly identify a particular harm,
resulting from [the attorney’s] actions, that either impeded
the administration of justice or was suffered by a client, the
public, or the legal profession. The order also does not
expressly address how [the attorney’s] failure to maintain
accurate financial records might result in potentially
significant harm to any of the four entities. . . . [I]n order
to justify the imposition of a more severe sanction, such as
censure, suspension, or disbarment, the attorney’s
misconduct must show either significant harm or the
potential for significant harm. The portion of the DHC
order pertaining to discipline assuredly does not expressly
link defendant’s conduct with such potential, and our
review of both the underlying evidence and the DHC’s
findings and conclusions fails to find support for an
inference of such potential. For while we may recognize
that an attorney’s pattern of commingling account funds
necessarily creates the potential for harm to his clients, our
review of a specific transgression must also encompass its
context, duration, and result.
....
. . . [I]n order to impose a more severe sanction
under the statute—censure, suspension, or disbarment—
an attorney’s misconduct must include attending
circumstances that demonstrate: (1) a risk of significant
potential harm, and (2) that the chosen sanction is
necessary in order to protect the public. This Court has
already determined that the attending circumstances of
defendant’s misconduct fail to evidence a risk of significant
potential harm to clients. Thus, in our view, the expressed
parameters of the statute preclude the DHC on the facts of
this case from imposing on defendant any sanction that
requires such a showing. . . .
Id. at 639-41, 576 S.E.2d at 314-15 (internal citations omitted).
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Opinion of the Court
In its analysis in Talford, the Supreme Court “undertook an exhaustive review
of the various sanctions imposed on offending attorneys in the past” and determined
that “the disbarment judgment imposed on defendant stands as an aberration . . . .”
Id. at 641-42, 576 S.E.2d at 315 (citation and quotation marks omitted). Based on
this determination, the Court concluded that there was no rational basis to support
disbarment as an appropriate sanction. Id. at 642, 576 S.E.2d at 315.
This Court, however, has distinguished Talford in a number of disbarment and
suspension cases in which the order of discipline at issue sufficiently demonstrated
significant actual or potential harm and established the inadequacy of a lesser
sanction. See, e.g., N.C. State Bar v. Livingston, __ N.C. App. __, __, __ S.E.2d __, __,
slip op. at 38 (filed 19 December 2017) (No. COA17-277) (DHC’s imposition of five-
year suspension with opportunity to petition for stay after two years was fully
supported by harm shown); Sutton, __ N.C. App. at __, 791 S.E.2d at 896 (five-year
suspension by DHC complied with requirements of N.C. Gen. Stat. § 84-28); N.C.
State Bar v. Adams, 239 N.C. App. 489, 502, 769 S.E.2d 406, 415 (2015) (DHC’s
findings of fact and conclusions of law adequately supported four-year suspension of
defendant’s license); N.C. State Bar v. Ethridge, 188 N.C. App. 653, 670, 657 S.E.2d
378, 388 (2008) (DHC’s conclusion of law “declaring defendant’s conduct posed
significant harm to his client and the legal profession has a rational basis in the
evidence” and supported disbarment); N.C. State Bar v. Leonard, 178 N.C. App. 432,
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Opinion of the Court
446, 632 S.E.2d 183, 191 (2006) (DHC’s decision to disbar defendant had rational
basis where “a determination that [defendant’s] misconduct poses a significant
potential harm to clients” was “[i]mplicit in a finding that [he] . . . violated Rule 8.4(b)
and (c)”), disc. review denied, __ N.C. __, 641 S.E.2d 693 (2006).
In the present case, the DHC’s order of discipline contained findings of fact and
conclusions of law explaining why it believed a five-year suspension was the
appropriate sanction for Ely. Its findings of fact included the following:
2. Defendant has not acknowledged the wrongful
nature of her conduct or indicated remorse.
3. By attempting to practice law in North Carolina
despite not being actively licensed here, Defendant caused
significant potential harm to her company’s clients and to
the standing of the profession in the eyes of the public
because it showed her disregard for one of the foundational
duties of an attorney — practicing law solely within the
bounds of licensure. Such erosion of public confidence in
attorneys tends to sully the reputation of, and fosters
disrespect for, the profession as a whole. Confidence in the
legal profession is a building block for public trust in the
entire legal system.
4. The Hearing Panel finds by clear, cogent, and
convincing evidence any additional facts that may be
contained in the conclusions regarding discipline set out
below.
5. The Hearing Panel has carefully considered all
of the different forms of discipline available to it, including
admonition, reprimand, censure, suspension, and
disbarment, in considering the appropriate discipline to
impose in this case.
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The DHC then made the following conclusions of law:
1. The Hearing Panel considered all of the factors
enumerated in 27 N.C.A.C. 1B § .0114(w)(1), (2) and (3) of
the Rules and Regulations of the State Bar, and concludes
that the following factors are applicable:
27 N.C.A.C. 1B § .0114(w)(l)
a. Factor (B), Intent of the defendant to
commit acts where the harm or potential
harm is foreseeable; and
b. Factor (I), Acts of dishonesty,
misrepresentation, deceit, or fabrication.
27 N.C.A.C. 1B § .0114(w)(2)
a. Factor (A), Acts of dishonesty,
misrepresentation, deceit, or fabrication.
27 N.C.A.C. 1B § .0114(w)(3)
a. Factor (G), Multiple offenses; and
b. Factor (O), Refusal to acknowledge
wrongful nature of conduct.
2. Although the Hearing Panel determined one of
the factors under 27 N.C.A.C. 1B § .0114(w)(2) to be
present, the Hearing Panel concluded that disbarment was
not warranted in light of all of the circumstances of the
case.
3. The Hearing Panel considered all of the
disciplinary options available to it and determined that
imposition of a suspension is appropriate and necessary.
4. The Hearing Panel concluded that Defendant,
by unlawfully providing and offering to provide legal
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Opinion of the Court
services to others through herself and her company,
exposed the public to significant potential harm.
Whenever attorneys engage in the unauthorized practice of
law, there is the potential for significant harm, particularly
when money exchanges hands, court appearances are
made, and legal forms are drafted or filed on behalf of
others. The risks of this type of arrangement include
divided loyalties, fee splitting, inadequate representation,
excessive fees, a lack of understanding sufficient to
adequately represent and protect the interests of clients in
a given jurisdiction, and criminal activity. There is also the
inherent danger that someone other than a licensed North
Carolina attorney will provide legal services to North
Carolina citizens, thereby hampering the State Bar’s
ability to protect the public by regulating the practice of
law in this state.
5. The Hearing Panel considered all lesser
sanctions and concluded that discipline short of an active
suspension would not adequately protect the ·public.
Imposition of lesser discipline would fail to acknowledge
the seriousness of the offenses Defendant committed and
would send the wrong message to members of the Bar and
the public regarding the conduct expected of members of
the Bar of this State.
Based on the DHC’s findings and conclusions, we cannot say that its decision
to suspend Ely’s license for five years exceeded its statutory authority. The DHC’s
order sufficiently linked Ely’s multiple instances of improper conduct to the potential
for significant harm to the public. Furthermore, the DHC expressly weighed the
other disciplinary options available to it before ultimately determining that a lesser
sanction would fail to adequately address the severity of her misconduct. Finally, we
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note that the DHC’s order provides Ely with an opportunity to reduce her suspension
to two years if she complies with the requirements of her administrative suspension.
Thus, the DHC has established a rational basis for its decision, and Ely has
failed to demonstrate that her suspension was contrary to applicable law. See
Ethridge, 188 N.C. App. at 670, 657 S.E.2d at 389 (DHC’s findings and conclusions
had rational basis in evidence to support sanction imposed); Leonard, 178 N.C. App.
at 446, 632 S.E.2d at 191 (DHC’s decision to disbar defendant had rational basis in
evidence).
Conclusion
For the reasons stated above, we affirm the DHC’s 24 August 2016 order.
AFFIRMED.
Judges DILLON and INMAN concur.
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