Wake Bar Flyer | Second Quarter 2022

The Second Chance Act is Saving Lives .... 8 ___________________________________

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VOL. L • ISSUE 2 | SECOND QUARTER 2022

BAR FLYER THE POWER OF SECOND CHANCES

BY DAYATRA T. MATTHEWS | TENTH JUDICIAL DISTRICT BAR PRESIDENT

I DON’T PRACTICE CRIMINAL LAW, but I don’t have to for me to understand that our criminal justice system should promote both accountability and redemption. I think we all know why it’s important to hold individuals accountable for their bad acts – doing so serves to uphold the human rights of other individuals under the law, deters future violations of the law and ensures the strength and legitimacy of our justice system in the eyes of the public. But do we truly understand why the redemptive nature of our system is important as well? And when I speak of the redemptive nature of our system, I’m specifically talking about those laws and processes that provide second chances to individuals with a criminal record.

Today, individuals with criminal records face significant societal and legal barriers to becoming productive members of our community. By ensuring these individuals have the opportunity for a true second chance, we can improve public safety, strengthen families and grow our economy. This is the power of second chances.

Thankfully, North Carolina gets this and has enacted legislation that taps into this power. As many of you know, in June 2020, the General Assembly passed into law one of the most transformative pieces of criminal justice legislation in our state’s history. The Second Chance Act, which came out of the NC Senate as a bipartisan “clean slate” bill (SB 562), was signed into law by Governor Cooper on June 25, 2020, with most of the new law’s most significant provisions becoming effective on December 1, 2020 and December 1, 2021, respectively.

In short summary, the Second Chance Act makes expungement of certain dismissed or “not guilty” charges automatic as an operation of law, and expands eligibility for expunging multiple nonviolent misdemeanor convictions. The Act also allows prosecutors to petition for expungement for dismissed or “not guilty” charges and “youthful convictions.” Youthful convictions are considered convictions for misdemeanor and/or Class H or I felony offenses committed before December 2019, by a person 16 and/or 17 years of age. If we add the expungement of youthful convictions with the Act’s automatic expungement allowance, we’re talking about providing an opportunity for mass relief of more than 400,000 convictions. Why, again, is this important, you ask?

Well, it’s simple. Certain aspects of our criminal justice system serve as a “revolving door” for many individuals, which has devastated communities around our state. The impact has been particularly devastating for Black communities and other people of color. Those with criminal records face debilitating collateral consequences, which often exclude them from jobs, housing and other supports. The Second Chance Act seeks to mitigate this effect by opening up opportunities for individuals with a criminal record to, say, start a business, secure employment, find a suitable place to live and to generally conduct themselves as contributing members of our local communities. When these opportunities are open, you ultimately help restore an individual’s dignity, which eventually strengthens our communities, economies and families. In other words, providing individuals with a second chance, under the right circumstances, inures to all of our benefit.

To find out what more can be done to help provide individuals with second chance opportunities, keep reading this month’s Bar Flyer to hear directly from advocates engaged in other second chance initiatives. In the meantime, I encourage you all, as members of the second largest mandatory and voluntary bars in our state, to continue stoking the embers of equal justice by upping your volunteerism at expungement and community clinics throughout Wake County. The ones sponsored by Legal Aid of NC and Campbell’s Blanchard Community Law Clinic come directly to mind, but I’m sure there are others. The point is, when those in our community need us to help restore the livelihood, well-being and yes, dignity of individuals needing a second chance, we should be ready and willing to work.

Remember, while the practice of law is what we do for a living, our profession is a high calling where service to the public and helping to improve the legal system is at the very heart of our professional creed. In fact, I would submit that there’s no better way to live out the true meaning of this creed than to do whatever we can, when can to ensure there are no legal and societal barriers for certain of our fellow citizens to becoming productive members of our communities. Now, if that’s not powerful, I don’t know what is. WBF

UPCOMING EVENTS LEARN OVER LUNCH: TRUST ACCOUNT COMPLIANCE OVERSIGHT - TACO THURSDAY! WITH LEANOR HODGE THURSDAY, JUNE 2 | 1 PM | ZOOM WCBA LUNCHEON WITH CHIEF JUSTICE PAUL NEWBY TUESDAY, JUNE 7 | 12:15 P.M. | T HE WOMAN’S CLUB SUMMER CLERK ORIENTATION THURSDAY, JUNE 9 | 1 P.M. | WAKE COUNTY JUSTICE CENTER YLD + SUMMER CLERK SOCIAL AT WATTS & WARD THURSDAY, JUNE 9 | 5 P.M.

INSIDE THIS ISSUE 2

A NOTE FROM THE EXECUTIVE DIRECTOR

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ANOTHER CHANCE AT LOVE

5

SHOULD RED FLAG CLIENTS GET SECOND CHANCES?

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MAY PICNIC

10 DIRECT EXAMINATION 11 SPRING SWEARING-IN CEREMONY 13 STOP, CALL, AND VERIFY 14 NEW MEMBERS

WAKE BAR FLYER VOL. L ISSUE 2 | SECOND QUARTER 2022 Presidents YVONNE ARMENDARIZ, WAKE COUNTY BAR ASSOCIATION DAYARRA T. MATTHEWS, TENTH J.D. BAR

YES, I EVEN PROCRASTINATED ON THIS TITLE

BY WHITNEY D.G. VON HAAM | EXECUTIVE DIRECTOR, WAKE COUNTY BAR ASSOCIATION

I DON’T KNOW ABOUT YOU, but I really

Presidents-Elect JUDGE ASHLEIGH P. DUNSTON

dislike procrastination. I can remember all too well how I felt with missed or late assignments when I was in school, and that feeling that crept over me when I realized that I’d forgotten about yet another assignment. I disliked that feeling so much that as an adult, I swore that I would do all I could to avoid that feeling every way possible.

Secretary MEREDITH PACE BREWER Treasurer ELYSIA PRENDERGAST-JONES Immediate Past Presidents DAVE HOLM, WAKE COUNTY BAR ASSOCIATION RUSSELL D. BABB, TENTH J.D. BAR Board of Directors TIFFANY COX ANNA DAVIS JAKE EPSTEIN DAVID FERRELL NIYA T. FONVILLE JUDGE SAM HAMADANI LEANOR B. HODGE JOHN HOOMANI DEAN J. RICH LEONARD (EX OFFICIO) KELLIE MYERS KIMBERLY MILLER BRIAN P. OTEN SARAH PRIVETTE KRISTINA THOMPSON JUDGE CHRISTINE WALCZYK JOHN WARD BENJAMIN O. “BOZ” ZELLINGER Young Lawyers Division President JONATHAN BOGUES Young Lawyers Division President-elect JACOB M. MORSE

Due to this feeling of dread, I tend not to procrastinate on most projects. I have solid planning procedures in place – timelines, to-do lists, calendars. I like to set a schedule and stick to it.

When the auditors entered our offices this May, I had all of their required documents printed, labeled and ready to hand over first thing, as I prefer.

When preparing for a Board meeting, I want all materials sent the Friday before the meeting, therefore making the week of the board meeting less stressful. And, I work with top-notch people who also do work before the eleventh hour in order to promote a relaxed and lower-stress environment. Is it always able to be done? Of course not. Has it been helpful that we’ve accomplished as much as we could prior to the deadline? Absolutely.

Except this: I am frequently one of the last pieces of the Bar Flyer that comes together. Why is that?

Does it harken back to my newspaper days when all writing was done on a tight deadline and perhaps that adrenaline helped me write better? Perhaps. Is it because there is a burden of figuring out something worthwhile for our members to spend time reading? Probably. One thing is for sure: As we go through the final checklist of everything needed for next quarter’s Bar Flyer, my little contribution will probably again be among the last to arrive. WBF

Executive Director WHITNEY D.G. von HAAM Wake Bar Flyer Editor CANDACE B. MARSHALL Communications SARAH L. JUSTICE Wake Bar Flyer Designer CLAIR S. SMITH Tenth Judicial District Bar Councilors JULIE L. BELL HEIDI C. BLOOM WALTER E. BROCK ASHLEY H. CAMPBELL KATHERINE A. FRYE KIMBERLY A. MOORE JUDGE ROBERT B. RADER WARREN T. SAVAGE © 2022 Wake County Bar Association & Tenth Judicial District Bar.

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ANOTHER CHANCE AT LOVE

BY JACOB A. DAVIS

WHILE CIVIL WEDDING CEREMONIES are not likely the “second chances” that come to mind when one considers our North Carolina court system, for many individuals these simple magistrate-led ceremonies are just that a second chance.

From 2013 to 2019, I had the privilege of serving as a North Carolina magistrate in Wake County, a role in which I performed nearly 6,000 civil wedding ceremonies. While touching memories from those ceremonies are innumerable, there was always something special about performing a wedding where one or both members of the wedding couple had been married before.

That information was rarely discussed openly, but was present on the wedding licenses I was handed prior to each ceremony.

There seemed to be an added weight to those ceremonies, borne I believe from the fact that each person understood, from first-hand, lived experience, the commitment they were about to make.

They understood the incredible highs and lows that marriage can dish out in sometimes sparing and sometimes generous portions - the support and encouragement, the spats and critical comments, the frustration and elation yet, with that complete and sobered picture, they were each ready to commit themselves, one to the other, for the rest of their lives. They were ready for their second chance. I loved that sentiment then and still love it now.

On many such occasions, I learned from a couple (or, more often, from their children) that not only had the couple been married before, but they had been married to one another. Those ceremonies were incredible to witness. Before me were two people who knew each other as much as two people could, who remembered the joys and challenges of their past marriage, and who understood intimately the strengths, weaknesses, talents, and foibles of the other, yet they were still willing to enter into a new relationship together, one built upon the hard-earned lessons of the first. A second chance not only at marriage, but at marriage with the person they had first committed their life to many years before.

When either spouse of a second or subsequent wedding ceremony had children from a previous relationship, or children shared by spouses being reunited, the ceremony also provided a second chance at a unified family. Children of step-parents could now live in a home where the weight of parenting and the day-to-day managing of a household could be shared between two people pulling in tandem, each bolstered and supported by the other’s efforts. Children of reunited parents would have another chance at inhabiting the encouraging and loving support system that they and their parents had once sought to cultivate.

Regardless of the context, second chances in life can often seem few and far between, but rest assured they can be found every day in county courthouses across North Carolina, punctuated by a magistrate’s pronouncement and a couple’s first kiss as newlyweds. WBF

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A MISSION TO HELP. PEOPLE WHO CARE. PROTECTION THAT COUNTS.

TODD JONES, ANDERSON AND JONES HOPE LINE MURAL, RALEIGH

Lawyers and murals have a lot in common. They’re both diverse and creative. Each is unique. Each tells a story.

Lawyers Mutual has helped tell the story for North Carolina lawyers since 1977. It’s a story of people who care and a mission to help.

919.677.8900 800.662.8843

www.lawyersmutualnc.com

It’s a story of people, protection, and a mission.

IT’S A STORY THAT KEEPS GETTING BETTER. WAKE BAR FLYER

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SECOND QUARTER 2022

SHOULD RED FLAG CLIENTS GET SECOND CHANCES?

BY CAMILLE STELL | LAWYERS MUTUAL CONSULTING & SERVICES

I RECENTLY RECEIVED AN EMAIL FROM A CLIENT THAT READ IN PART: “While I appreciate paying for services rendered, I am fairly certain we were not on the phone for an hour. Another consultant provided the same / more information without sending me a bill, thus I engaged them to help me review the document. Based on this invoice I would not recommend your services to anyone else who might ask. Once I review the phone records, I’ll pay for the call based on your hourly rate in 10ths.”

The email was distressing for many reasons. One, I have a pathological desire to be liked and it was clear this lawyer who liked me earlier during our consult, no longer liked me.

Another reason for the distress was that I didn’t purport to bill hourly.

I charge a consultation fee which I put in writing, and he agreed to up front. That fee also includes a follow-up call after the client has had time to digest the information I provide – which I was also clear about. So, he actually had more service available to him should he choose to avail himself of that service, at no additional cost.

And finally, his tone hurt my feelings. We had a very lovely conversation, and I was surprised at the turn it had taken. It felt unexpectedly harsh.

I’m sure you’ve had similar experiences. Here’s my question – do we give these clients a second chance?

responsibility as well as receiving redemption. This definition does not necessarily fit our clients.

Our red flag clients are entitled to help – but they don’t necessarily have to get the help from us. Perhaps someone else is better equipped to deal with their personality. Perhaps someone else can set better boundaries or communicate with more clarity.

Camille Stell is the President of Lawyers Mutual Consulting & Services and the founder of the online community, Leading Law. Continue this conversation by contacting Camille at camille@ lawyersmutualconsulting.com or 919.677.8900 or join Leading Law at Leading Law - Lawyers Mutual Consulting.

It is often for our client’s benefit that we allow them to find a lawyer who is a better fit. I’m not going to be able to help Mr. Doe. He no longer trusts me. And if he comes back because I’ve waived my fee and he can get more “free” advice by yelling in an email, he will likely only be happy if I behave exactly as he wants me too and I tell him exactly what he wants to hear. And that is not my role as his consultant or your role as his counselor.

This scenario won’t end better for me by giving him a second chance.

I’ve seen too many examples of red flags that have been ignored and the disastrous outcomes that can occur. I have 20 years of experience of observing these situations unfold in my work with Lawyers Mutual to know when the red flags must be considered.

Certainly, my upbringing would tell me to offer a second chance. I’ve attended many Sunday School lessons where second chances are not only the theme, but they are reason for rejoicing!

My Southern upbringing would also confirm that everyone deserves a second chance. Probably because we are each going to need a second chance ourselves, so better to have offered second chances freely and frequently!

This could potentially end worse for me. I waive my fee or discount my fee and agree to continue helping him. At which point Mr. Doe assures me he’ll pay me for the actual work I do for him. But I’ve seen this story play out too many times. My actual work still won’t be good enough. And since he effectively bullied me the first time, he’ll assume that I respond to bullying behavior so I can expect to have this very conversation with him again.

And finally, my nature tells me that second chances are required because they are so hard to offer. It goes a long way towards forgiveness to offer a second chance.

However, my career has been steeped in providing risk management advice. I know well the signs of “red flag clients”. I know how hard I see lawyers wrap themselves in knots trying to please clients (and others) who are never going to be appreciative or who are going to rat you out at the first moment of disharmony.

Here’s what I’ll say about second chances in a profession where second chances are necessary for justice. There is a difference in offering a second chance and subjecting yourself to a potentially abusive client.

I believe in second chances in my core. My home upbringing and my religious upbringing implore me to provide second chances. However, my professional experience tells me, and allows me to tell you, that when it comes to giving clients a second chance, you are not doing you or your client a service by ignoring the red flags. When your client shows you who they are, believe them, and move on. WBF

Usually, the second chance goes to someone who is not in a position of power. The second chance will improve the lot of the individual seeking the second chance. The second chance offers an opportunity for accepting

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SECOND QUARTER 2022

WE WERE THRILLED TO WELCOME OUR MEMBERS back to Mordecai Historic Park for our first fully in-person May Picnic since 2019! Members enjoyed Sam Jones BBQ and lots of sunshine as they came together under the historic oaks.

Photos: Bryan Miller, Frontrunner Productions

yan Miller,

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THE SECOND CHANCE ACT IS CHANGING LIVES

BY ASHLEY CAMPBELL, BLANCHARD COMMUNITY LAW CLINIC DIRECTOR AND CATRINA SPAGNUALO, THIRD YEAR LAW STUDENT AT CAMPBELL LAW SCHOOL

AT LEAST ONE IN FOUR NORTH CAROLINIANS HAVE CRIMINAL RECORDS. A criminal record can create devastating collateral consequences that prohibit people from accessing employment, business and occupational licensing, housing, voting, education and other rights, benefits and opportunities otherwise available to all Americans. After two years of organizing, advocacy and outreach by members of the NC Second Chance Alliance, the Second Chance Act was signed into law

by Governor Roy Cooper on June 25, 2020. This landmark piece of bipartisan legislation passed the North Carolina General Assembly unanimously and created the opportunity for thousands of people to have their criminal records expunged.

The new law expanded the types and number of convictions eligible for expunction and became effective December 2020. A provision providing for automatic expunction of most dismissed charges “by operation of law” became effective December 1, 2021. The Blanchard Community Law Clinic at Campbell Law School has been at the forefront of expunction efforts in our state. In 2021, the clinic began the Bob and Pat Barker Second Chance Initiative, using funding from the Barkers, who are committed to reducing recidivism. As part of the Second Chance Initiative, more than 100 law students and volunteer lawyers participated in five legal clinics to expunge criminal records. Three clinics were in underserved areas of eastern North Carolina – Pitt, Robeson and Onslow counties.

Two clinics were in Wake County. More than 50 volunteer lawyers, including lawyers from the Wake County Bar Association Young Lawyers Division, supported the Wake County clinics, where more than 400 clients were served.

Jessica was one of the clients served by the clinic. The first time Jessica got in trouble with the law was in May 2001 when she was 17 years old.

“As cliche as it sounds, I got caught up in the wrong crowd when I was young," she explains. "They were older and could do things that I couldn’t. I paid for it for 20 years.” For at least 15 years, Jessica could not find employment sufficient to support herself and her children due to her conviction.

She was denied employment in childcare, as a substitute teacher and at retirement homes. Jessica never got calls back from places like Walmart and Target. She could not vote or be a notary.

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In 2017, Jessica applied for a town clerk position and disclosed her record. The interim manager strongly believed in second chances and agreed to hire her. Soon after starting the position, Jessica received anonymous emails with threats to go to the town meeting to make it known that there was a felon working for the town. Once her office colleagues learned of her record, they immediately treated her differently. Jessica felt like she walked around with a scarlet letter. “No matter how long ago it was,” she says, “people look at you differently.” Even at age 38, serving as the town clerk, and having no criminal history within the last 20 years, Jessica’s criminal record defined her.

Jessica was 17 when she was convicted of her only two felonies: Forgery of Endorsement and Uttering Forged Instrument. She had four more misdemeanor convictions in the following year. She has had no criminal convictions after age 18. Jessica served her sentence and moved on, working hard to live a better life. But she suffered an additional sentence of collateral consequences and was treated like a danger to society for at least the next 20 years.

Jessica looked into expunction several times, but she was not able to afford it. She “was frustrated and gave up.” In 2021, Jessica’s entire record was expunged by law students at the Blanchard Community Law Clinic. It was “a fresh start” that she hopes more people get to experience.

Jessica has been the town clerk for nearly five years, she and believes that people trust her more now that her record is expunged. In addition, she received her certification to be a notary, voted for the first time, and is no longer embarrassed by her kids knowing she went to jail and was a felon. “I’m proud that I’ve grown and I’m proud that I’ve gotten rid of [those convictions],” she says. Criminal record expunction is life changing. It provides an opportunity for people to grow beyond their past failures, restores dignity and makes people and their families stronger. By walking alongside those who need a second chance, we can help bring healing into their lives and our communities. WBF

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DIRECT EXAMINATION: JOSUE JIMENEZ DIRECT EXAMINATION IS THE FIRST opportunity for the jury to meet a witness.

An effective lawyer will use the opportunity to personalize the witness, making the witness appear both likeable and credible. At the end of the day, the direct examination is a party’s best chance to tell his or her story.

1. When you were in elementary school, what did you want to be when you grew up?

In elementary school I could never decide between a basketball player for the LA Lakers, a pilot, a hockey player for the Mighty Ducks or a politician.

2. What was the most important lesson your parents taught you?

Never forget where you come from, and always be willing to help those who need it most.

3. Who was your favorite teacher and why?

3rd Grade teacher – Ms. Leon. She was the first teacher that I felt genuinely believed in me. She saw a future for me that I never even thought possible up to that point in my life

11. What is your hidden talent?

Kind of related to my first answer, rollerblading. I played a lot of street hockey when I lived in LA, so I became a decent skater.

12. Who are your real life heroes?

My parents.

13. When and where were you happiest?

Holidays of 2019, got to spend time with both my family and my fiancées family. Other than that, any time I’m at the beach. Although it hurts me to say this, I prefer North Carolina beaches to California beaches.

4. Did you love or hate law school?

Both. There are some aspects of it that I hated (Socractic method), and others that I loved. I really enjoyed the people I got to meet and the relationships I was able to build during my time in it.

5. Why did you become a lawyer?

I wanted to help as many people as I could and make our communities better. I felt like this profession would give me the opportunities to be helpful in ways that no other career path could.

6. What has been the most surprising or unexpected development in your career?

Working in admissions, especially at Duke Law. I never thought I wouldn’t be practicing, but so far, I’ve really enjoyed this experience. I’ll always leave the door open to returning to practice, so we’ll see where I am in five years.

7. What is your favorite book?

Most recently, “Born a Crime” by Trevor Noah.

8. What is your most marked characteristic?

My most marked characteristic in my opinion is my ability to be able to connect with almost anyone. I’ve only met a handful of people that I couldn’t carry a conversation with.

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Gregory McGuire in Raleigh Greg has more than 26 years of experience as a litigator and for seven years served as a trial judge on the North Carolina Business Court for Complex Business Cases. As a judge, he presided over hundreds of cases involving the interpretation and application of corporate law, business torts, trade secrets, non-competition agreements, trademarks, and administrative law. As a former shareholder of an international law firm, he has litigated matters in a broad range of areas of civil law.

Greg also is a certified Superior Court mediator, and is available to perform private arbitrations.

Nelson Mullins Riley & Scarborough LLP Attorneys & Counselors at Law Gregory P. McGuire, Partner

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GlenLake One | 4140 Parklake Avenue Suite 200 | Raleigh, NC 27612 919.329.3888 | nelsonmullins.com

SECOND QUARTER 2022

ON WEDNESDAY, MAY 11, 19 new Wake County attorneys were sworn-in during an in-person ceremony at the Wake County Justice Center. Senior Resident Superior Court Judge Paul Ridgeway led the special session of court as attendees were addressed by Tenth Judicial District Bar President Day Matthews, Wake County Bar Association President Yvonne Armendariz and our 2021 Joseph Branch Professionalism Award winner, Root Edmonson. Congratulations and welcome to Wake County!

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STOP, CALL AND VERIFY

BY LEANOR BAILEY HODGE | TRUST ACCOUNT COMPLIANCE COUNSEL, NC STATE BAR

IF I YELLED “STOP, DROP AND ROLL,” you would immediately know that you were on fire and would govern yourself accordingly by following my command. It would not matter whether you saw flames or even smelled smoke You would not be concerned about the time it would take to get down to the ground or the possibility that the fire might possibly be extinguished another way. You would simply hit the ground…IMMEDIATELY. You would act as if your life depended upon it because, it might. What if I told you to “Stop, Call, and Verify” would you know what to do? Would you immediately know that danger loomed ahead that could be avoided by heeding my directive? Because for too many lawyers, the answer to both questions is still no, the discipline landscape for lawyers who fall victim to wire fraud is changing.

Hopefully, everyone reading this column saw the segment titled “Wire Fraud – Heightened Discipline” in the Disciplinary Department section of the Fall 2021 State Bar Journal. If you have not, I commend it to you for reading. It was not captioned under the heading of warning, but it could fairly be taken as one. In it, a summary of grievance investigations into reports of computer hacking is provided. It offers a glimpse into some of the fact patterns at issue in the reports and details how the Grievance Committee disposed of many of these files. The piece ended with the following announcement: “ACCORDINGLY, THE GRIEVANCE COMMITTEE IS PROVIDING NOTICE THAT LAWYERS WHO FAIL TO TAKE ADEQUATE PRECAUTIONS TO PROTECT AGAINST WIRE FRAUD SCAMS CAN EXPECT IMPOSITION OF MORE SERIOUS PROFESSIONAL DISCIPLINE.” The landscape is changing for lawyers who are “victims” of wire fraud but fail to heed the warnings and guidance that have been issued about it. One such recent directive about wire fraud is the reminder that our ethical duty to be diligent in our representation of clients includes certain duties relating to protecting against fraudulent theft of entrusted funds.

Recently, in 2021 FEO 2, the Ethics Committee confirmed that our duties of competence and diligence as lawyers require us to be knowledgeable about the dangers of potential fraud in the practice of law and, specifically,

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fraudulent attempts to access entrusted client funds. The opinion notes that, in the case of counterfeit check scams, state and federal agencies have alerted lawyers to the “existence and persistence” of these scams for some time, and therefore, “reliance on the counterfeit check is unexcused.” This is not just true for counterfeit check scams, the same is true for criminal efforts to access entrusted funds by wire fraud.

The method hackers commonly use to access entrusted funds by wire fraud is the Business Email Compromise (BEC) scam. The FBI’s Internet Crime Complaint Center (IC3) began tracking the BEC scam in late 2013.

“Business E-Mail Compromise.” FBI, 28 August 2015, https://www.fbi. gov/news/stories/business-e-mail-compromise. In August 2015, the total dollar losses in the United States exceeded $740 million. Id. At that time, the victims were from all 50 states with most of the fraudulent transfers ending up in Chinese banks. Id. Fast forward to today and the scams have increased exponentially. In its 6 April 2020 Alert No. I-040620-PSA, the FBI disclosed that between January 2014 and October 2019, IC3 has received complaints of losses totaling more than $2.1 billion. The FBI reported in its 2020 IC3 Internet Crime report that in 2020 IC3 received 19,369 BEC/ EAC (Email Account Compromise) complaints with adjusted losses of more than $1.8 billion. Internet crime is big business for the criminals and a significant risk for potential victims.

The response to this rise in internet crime has included efforts to inform and educate those who might otherwise be victims of these crimes. In North Carolina, our legal community addressed the problem early on when the Ethics Committee adopted 2015 FEO 6 on 23 October 2015.

In this opinion, the Ethics Committee offered guidance about a lawyer’s ethical obligations in the wake of various types of theft of entrusted funds.

Included among the scenarios considered was wire fraud in a real estate transaction in which the hacker tricks the lawyer into wiring entrusted funds to the criminal instead of the intended recipient. This opinion informed lawyers that we must use reasonable care to prevent third parties from gaining access to client funds held in the trust account and that we have a duty to also implement reasonable security measures. It also used as an example of a reasonable security measure, calling a known number for the intended recipient of entrusted funds to verify any change in disbursement instructions – said differently – stop, call and verify. In a more recent opinion, 2020 FEO 5, which was adopted on 15 January 2020, the Ethics Committee provided a few specific examples of ways in which a lawyer can satisfy the professional obligation to protect against risks associated with transfer of funds in real property transactions. Such measures included becoming educated about real property transaction scams, adequately communicating to the client the risks associated with transfer of funds

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in real property transactions and communication of explicit instructions about how to safely transfer funds to complete the transaction. One such instruction that 2015 FEO 6 makes clear should be included about how to safely transfer funds is to stop, call, and verify.

Wire fraud is not the unexpected event it was when the FBI first began tracking the BEC scam in 2013 and when the first files were considered by the Grievance Committee in 2015. It has garnered the attention of federal and state law enforcement, regulatory agencies, many lawyers, some real estate professionals and now even members of the public. Over the past five years, law enforcement and regulatory agencies have worked together to inform those whom they regulate and the public about wire fraud, its dangers and how to protect against it. There have been articles in various publications and on websites to inform and educate readers about wire fraud. Real estate professionals have begun including information sheets about wire fraud among the materials provided to buyers and sellers of real estate. Also, the FBI has several public service announcements about BEC scams and other internet crime on its website, most, if not all of which includes information about how to protect against internet crime. Lastly, many continuing legal education and other educational presentations now include information about wire fraud and how to guard against it. In the wake of all of this information about wire fraud, it is becoming increasingly difficult for lawyers and other professionals to claim that they are victims of wire fraud.

This was evident in the manner in which the grievance investigations at the beginning were resolved, with dismissals. In 2021, with all of the education and information provided about wire fraud by law enforcement, regulators, and others, lawyers can no longer fairly claim to be tricked or duped by wire fraud absent a new twist on this almost decade old scheme. Thus, it is logical to conclude that lawyers whose entrusted funds are stolen due to wire fraud will no longer be treated as victims in the grievance process and that the outcome in future cases may be imposition of more serious professional discipline.

The need to protect your clients’ entrusted funds from theft by wire fraud certainly does not feel as urgent as protecting yourself from the spread of a fire that is spotted on your body. However, wire fraud is a perilous situation that has caused harm to many as evidenced by the statistics maintained

by IC3. Stop, Drop and Roll has become a ubiquitous phrase in the context of fire safety – so much so, that executing this command during a fire is likely to occur almost instinctively. Lawyers who electronically transfer entrusted funds could benefit from making Stop, Call and Verify a common phrase in the context of wire fraud such that this process is automatically followed anytime there is a request to change the disbursement method for entrusted funds. We can take one step toward that goal now by committing to remember that if you receive an email request seeking to change information relating to payment of funds in connection with a real estate transaction, before taking any action in response, Stop, Call and Verify. It just might be your client’s funds you are saving and possibly, yourself from There are several definitions for victim, but the one that is most applicable in the wire fraud scenario is one that is tricked or duped. “victim.” imposition of professional discipline. WBF Merriam-Webster.com. 2021. https://www.merriam-webster.com (14 October 2021). In 2013, a lawyer could more credibly claim to have been This article first appeared in the Spring 2022 edition of the State Bar Journal. the victim of wire fraud because of the lack of available information about it.

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WAKE BAR FLYER

14

SECOND QUARTER 2022

BarCARES

®

BarCARES can make a difference for Judicial District & Local Bar Members!

BarCARES is a confidential short-term counseling, coaching and crisis intervention program created as a cost-free way of helping attorneys locate assistance to deal with the problems that might be causing stress. BarCARES is provided cost-free to members of bar groups that establish a BarCARES program. A number of judicial district and local bars, law schools and other bar related groups across the state have already chosen to offer this program.

BarCARES of North Carolina, Inc, (BCNC) is a nonprofit corporation that works to expand the program to attorneys throughout North Carolina, and it monitors the overall BarCARES program operation. BarCARES, endorsed by the North Carolina Bar Association, is made possible by funding from bar groups that establish a BarCARES program, BCNC, the North Carolina Bar Association and its Foundation, and Lawyers Insurance Agency.

BarCARES can be used for problems such as: Personal Issues • crisis intervention • depression and anxiety • substance abuse (drug or alcohol) • financial concerns • career counseling

Family Issues • marriage or relationship issues • children or adolescents • parenting • family conflict

Work Functions • professional stressors • course related stress • conflict resolution

BarCARES provides members of established programs in judicial districts, bar associations, law schools and organizations up to three free visits each year. In some programs the visits may be available to family members.

Contact the BarCARES Program Coordinator for information about which BarCARES services are available to you.

BarCARES Initiative extends a statewide program offer to any member of the NCBA who lives in an area where BarCARES is not yet available. This is a one-time benefit of three sessions under the program. You may contact the BarCARES Coordinator for information about which BarCARES services are available to you.

BarCARES sessions can be used to provide assistance in resolving problems or accessing the appropriate source of help. Sometimes three sessions will be enough to take care of a problem. If it looks like the problem may require a longer term solution, the initial visits may be used to help identify the problem, to develop goals and a plan, and to access an appropriate resource, often covered under your health insurance plan. Every effort will be made for you to see a counselor who is also an approved provider under your group insurance in the event you wish to continue after the program visits are used.

BarCARES is a confidential program, no one will know if you access the program but you and anyone you choose to tell. No personally identifiable information is shared with the BarCARES Board; the associated state, local voluntary or judicial district bar association; or any other entity without the permission of the BarCARES client/ user. Additionally, any health related information included in the sessions will follow federal HIPAA Privacy & Security Rules as stated in HRC’s HIPAA Privacy & Security statement.

BarCARES program benefits are accessed by contacting the BarCARES Program Coordinator at HRC Behavioral Health & Psychiatry, PA, at 1.800.640.0735. You may also contact the BarCARES Program Coordinator just to ask questions about the program and the services it provides.

confidential counseling for the legal community and their families 1-800-640-0735 | barcares.ncbar.org