N.C. State Bar v. Ely

• Decision Date: 06 February 2018
• Docket Number: No. COA17-546,COA17-546
• Citation: 257 N.C.App. 651,810 S.E.2d 346
• Parties: The NORTH CAROLINA STATE BAR, Plaintiff, v. Dawn E. ELY, Attorney, Defendant.
• Court: North Carolina Court of Appeals

257 N.C.App. 651

810 S.E.2d 346

The NORTH CAROLINA STATE BAR, Plaintiff,

v.Dawn E. ELY, Attorney, Defendant.

No. COA17-546

Court of Appeals of North Carolina.

Filed: February 6, 2018

The North Carolina State Bar, by Deputy Counsel David R. Johnson and Counsel Katherine Jean, for plaintiff-appellee.

Crawford & Crawford, PLLC, Raleigh, 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

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."

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.

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 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 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, 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 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

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