In North Carolina, can a lawyer link a criminal plea to settling the related civil fraud claim and demand a confession of judgment?

Plain-English summary

A client charged with conspiracy to defraud a victim was negotiating a plea, while the victim's lawyer proposed that the victim would not object to the plea and would stand mute at sentencing if the client gave the victim a confession of judgment in the related civil case and the client's spouse, who was not involved in the fraud, also agreed to make payments. The client would sign a confession of judgment, but his spouse did not want to join; the victim's lawyer said that without the spouse's agreement he would withdraw the victim's support for the plea, and the district attorney would only accept a plea with the victim's approval. The committee was asked whether the victim's lawyer's conduct violated the rules.

The opinion explained that the old Rule 7.5 of the superseded 1985 rules, which barred presenting or threatening criminal charges primarily to gain a civil advantage, was deliberately omitted from the Revised Rules adopted in 1997. Its absence did not mean all such threats are permitted or that extortion or abuse of the legal system is condoned (Rule 8.4). A lawyer may present, participate in presenting, or threaten to present criminal charges to gain a civil advantage if the charges are related to the civil matter, the lawyer reasonably believes they are well grounded in fact and warranted by law, and the conduct is not a crime under North Carolina law (citing ABA Formal Op. 363 (1992) and Rule 8.4(b)). Because the victim's fraud claim was related to the criminal charges, the victim's lawyer would not violate the rules by proposing acquiescence to the plea in exchange for a confession of judgment, provided he reasonably believed both were warranted and did not exert or suggest improper influence over the criminal system; and it was not improper to seek adequate security through a promissory note from the spouse even though no claim was made against her. The committee set out four guidelines: (1) such a threat or charge may be made only if the lawyer reasonably believes both the civil claim and the criminal charges are well grounded and the client's objective is not wrongful; (2) the proposed civil settlement may not exceed the amount the victim is lawfully entitled to; (3) the lawyer may not imply an ability to influence the district attorney, judge, or criminal justice system improperly; and (4) the lawyer may not imply an ability to interfere with the due administration of justice or that the client will agree to falsify evidence.

Currency note

This opinion was issued in 1999, before North Carolina's adoption of the 2003 revisions to the Rules of Professional Conduct, and it interprets the then-current Revised Rules (adopted 1997) after the deletion of the superseded 1985 Rule 7.5, relying on Rule 8.4(b) and ABA Formal Op. 363. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific requirement mentioned here.

Common questions

Q: Does North Carolina have a rule barring threats of criminal charges to gain a civil advantage?

A: Not anymore. The opinion noted that the old Rule 7.5 was deliberately omitted from the Revised Rules, but stressed that this does not permit extortion or abuse of the legal system, which Rule 8.4 still reaches.

Q: When may a lawyer link a criminal matter to settling a related civil claim?

A: The opinion permitted it where the criminal charges are related to the civil matter, the lawyer reasonably believes both are well grounded in fact and warranted by law, and the lawyer's conduct is not itself a crime (Rule 8.4(b); ABA Formal Op. 363).

Q: Can the lawyer demand security from a spouse who did not commit the fraud?

A: Yes. The opinion held it was not improper to seek adequate security for the confession of judgment through a promissory note from the client's spouse, even though no civil or criminal claim was being made against the spouse.

Q: What lines may the lawyer not cross?

A: The opinion held the civil settlement may not exceed the amount lawfully owed, and the lawyer may not imply an ability to improperly influence the prosecutor, judge, or criminal system, interfere with the administration of justice, or agree to falsify evidence.

Background and rules framework

The opinion applied North Carolina Rule 8.4 (misconduct, including 8.4(b) on criminal acts reflecting on fitness), the analogue to Model Rule 8.4, to a lawyer's threat to use the criminal process for advantage in a related civil matter, an area also bordering Rule 3.4 (fairness to opposing party). It relied on the deletion of the superseded 1985 Rule 7.5 and on ABA Formal Op. 363 (1992).

Citations and references

Rules of Professional Conduct:

• MR 8.4 (misconduct) / NC Rule 8.4(b)
• MR 3.4 (fairness to opposing party and counsel)

Other opinions cited:

• ABA Formal Op. 363 (1992): a lawyer may use criminal charges in a related civil matter only within stated limits

See also

• ABA Formal Op. 92-363: Threats of Prosecution in a Civil Matter
• CA Ethics Op. 1983-073: No Threat of Administrative or Disciplinary Charges

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/98-formal-ethics-opinion-19/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry:

Attorney A represents Client who is charged with criminal conspiracy to defraud Victim. Client was indicted on several counts and, because of his prior record, will likely receive active jail time. Attorney is negotiating a plea with the district attorney office. In the interim, Attorney Z, who represents the prosecuting witness, Victim, has conveyed to Attorney A the following proposal: Victim will not object to the plea arrangement and will stand mute at sentencing if Client will give Victim a confession of judgment in the corresponding civil action thereby agreeing to repay Victim pursuant to a payment schedule and Client's spouse will also execute an agreement to make payments to Victim. Victim and the district attorney's office acknowledge that spouse was not a part of the effort to defraud Victim and is not liable in any criminal prosecution or civil action.

Client is willing to enter into a confession of judgment for the full amount owing and agrees to a payment schedule that increases substantially once Client's spouse begins working. Client's spouse, however, does not want to enter into the contractual arrangement. If Client's spouse does not consent to this arrangement, Attorney Z has indicated that he will contact the district attorney's office to withdraw Victim's support for the plea. The district attorney's office is willing to enter into a plea only with the approval of Victim.

Does the conduct of Victim's attorney violate the Revised Rules of Professional Conduct?

Opinion:

Rule 7.5 of the superseded (1985) Rules of Professional Conduct, prohibited a lawyer from "present[ing], participat[ing] in presenting, or threaten[ing] to present criminal charges primarily to obtain an advantage in a civil matter." Rule 7.5 was deliberately omitted from the Revised Rules of Professional Conduct adopted on July 24, 1997. See Executive Summary of the Report of the Committee to Review the Rules of Professional Conduct in Materials for the North Carolina Supreme Court on the Proposed Revised Rules of Professional Conduct, N.C. State Bar, Raleigh, N.C., April 4, 1997. The absence of the rule from the Revised Rules of Professional Conduct does not mean, however, that all threats involving the criminal justice system are permitted nor does it mean that abuse of the legal system or extortion are condoned. See Rule 8.4 of the Revised Rules of Professional Conduct. A lawyer may present, participate in presenting, or threaten to present criminal charges to obtain an advantage in a civil matter if the criminal charges are related to the civil matter and the lawyer reasonably believes that the charges are well grounded in fact and warranted by law and, further provided, the lawyer's conduct does not constitute a crime under North Carolina law. See ABA Comm. on Ethics and Professional Responsibility, Formal Op. 363 (1992) and Rule 8.4(b).

Victim's civil claim for fraud against Client is related to the criminal charges against Client. If Attorney Z has a well-founded belief that both the civil claim and the criminal charges are warranted by the law and the facts, and Attorney Z has not attempted to exert or suggest improper influence over the criminal justice system, Attorney Z has not violated the Revised Rules of Professional Conduct by proposing that Victim will acquiesce to the plea agreement in exchange for a confession of judgment from Client. Moreover, it is not improper for Attorney Z to seek adequate security for Client's confession of judgment in the form of a promissory note from Client's spouse even though no civil or criminal claims are being made against Client's spouse.

Although the rule prohibiting threats of criminal prosecution to gain an advantage in a civil matter was omitted from the Revised Rules of Professional Conduct, a lawyer representing a client with a civil claim that also constitutes a crime should adhere to the following guidelines: (1) a threat to present criminal charges or the presentation of criminal charges may only be made if the lawyer reasonably believes that both the civil claim and the criminal charges are well-grounded in fact and warranted by law and the client's objective is not wrongful; (2) the proposed settlement of the civil claim may not exceed the amount to which the victim may be entitled under applicable law; (3) the lawyer may not imply an ability to influence the district attorney, the judge, or the criminal justice system improperly; and (4) the lawyer may not imply that the lawyer has the ability to interfere with the due administration of justice and the criminal proceedings or that the client will enter into any agreement to falsify evidence.