The Supreme Court of South Carolina

Re: Amendments to Rule 416, South Carolina Appellate Court Rules

ORDER

The South Carolina Bar has proposed a number of amendments to the Resolution of Fee Disputes Board Rules in Rule 416, SCACR.  Specifically, the Bar has proposed amendments to Rules 2, 10, 11, 12, 13, 20, and 22 of Rule 416.

Pursuant to Article V, § 4, of the South Carolina Constitution, we hereby adopt the Bar's proposed amendments to Rule 416, SCACR, with some further amendments to Rules 10 and 20 of Rule 416, as set forth in the attachment to this Order.  The amendments are effective immediately.

IT IS SO ORDERED.

Columbia, South Carolina
December 6, 2011

Amendments to Rule 416, SCACR

RULE 2. JURISDICTION

The purpose of the Board is to establish procedures whereby a dispute concerning fees, costs or disbursements between a client and an attorney who is a member of the South Carolina Bar (the Bar) may be resolved expeditiously, fairly and professionally, thereby furthering the administration of justice, encouraging the highest standards of ethical and professional conduct, assisting in upholding the integrity and honor of the legal profession, and applying the knowledge, experience and ability of the legal profession to the promotion of the public good. As used in these Rules, "fee" is deemed to include a legal fee, costs of litigation and disbursements associated with a legal cause, claim or matter and "client" is defined as a person on whose behalf professional legal services have been rendered by an attorney who is a member of the South Carolina Bar. A dispute exists when the parties to an employment agreement between lawyer and client have a genuine difference as to the fair and proper amount of a fee. The amount in dispute, as used in these Rules, is the dollar amount of that difference. A dispute does not exist solely because of the failure of the client to pay a fee.

Under no circumstances will the Board participate in: (1) a fee dispute involving an amount in dispute of $50,000 or more; (2) disputes over fees which by law must be determined or approved, as between lawyer and client, by a court, commission, judge, or other tribunal. When an allegation of attorney misconduct arises out of a fee dispute other than as to the reasonableness of the fee, the Board, in its discretion, may refer the matter to the Commission on Lawyer Conduct. If the alleged misconduct does not arise out of a fee dispute, it shall be referred to the Commission on Lawyer Conduct.

If an attorney is suspended from the practice of law after a fee dispute has been filed with the Board, the Board shall retain jurisdiction over the dispute until the conclusion of the fee dispute process. This shall include all applicable appeals under Rule 20.

No fee dispute may be filed with the Board more than three (3) years after the dispute arose.

Jurisdictional issues shall be determined by the circuit chair.

RULE 10. COMMENCEMENT OF PROCEEDINGS

All proceedings hereunder shall be commenced by filing an application in the Office of the Bar, on forms provided by the Bar. The application shall include a written statement of the facts and circumstances surrounding the dispute, furnishing complete names and addresses. If the client-applicant is not the person who paid for the lawyer's services, the third party payer, with the written consent of the client-applicant, may jointly file with the client-applicant, with both signatures affixed to the application. If the materials submitted exceed twenty-five (25) pages, the client-applicant shall submit three additional sets of the materials.

If the responding party is an attorney, the Bar shall forward the completed application, as filed, to the attorney by electronic mail, with confirmation of delivery. If the responding party is not an attorney, the Bar shall forward the completed application, as filed, to the responding party by certified mail, return receipt requested. A copy shall be sent by regular mail or email to the circuit chair in the circuit where the principal place of practice of the attorney is located. If the application involves attorneys in more than one circuit, a copy of the completed application shall be sent to the chair of the Executive Council, who shall designate which of these circuit chairs shall have jurisdiction and shall proceed with the matter.

If the amount in dispute exceeds $7,500, the circuit chair may appoint a hearing panel without assignment of the matter to an assigned member.

After the initial correspondence, all other correspondence will be sent by regular mail or, with the written consent of the client and lawyer, by email. Such written consent may be withdrawn by written notice served on all other parties or attorneys. If served by regular mail, correspondence will be deemed served upon deposit in the U.S. Mail with proper postage affixed. If served by email, service is complete upon transmission, unless the party making service learns that the attempted service did not reach the person to be served. All parties have the duty to inform the circuit chair of any change of address.

RULE 11. INVESTIGATION BY ASSIGNED MEMBER

Upon receipt of the completed application, the circuit chair shall promptly appoint the assigned member. The assigned member shall conduct an investigation sufficient to enable the rendering of an informed recommendation. The assigned member's recommendation shall be written and contain the reasons for it. This report shall be submitted to the circuit chair, with a copy to the Bar office, as soon as possible and not later than ninety (90) days after appointment of the assigned member, unless the time is extended by the circuit chair pursuant to Rule 12. The circuit chair shall send a copy of the report to each of the parties and notification of the circuit chair's concurrence or nonconcurrence with the recommendations of the assigned member.

The attorney shall respond to the issues raised in the application within thirty (30) days of being contacted by the assigned member. The assigned member may extend the period for response once and by no more than 30 days.

The parties to the dispute and any witnesses on their behalves shall make themselves available for interview at a time and place designated by the assigned member within the time required for the assigned member to make a report. If a party or a witness cannot, for any reason, be present at the designated time and place, that witness or party shall submit a written response to the assigned member within fourteen (14) days of the date the assigned member designated as the interview date, unless the assigned member grants the party or witness an extension. The party or witness may also submit a statement in writing, provided such statement is delivered to the assigned member on or before the date designated for the interview of that party or witness. The response to questions along with the written statement, if any, together shall constitute the complete statement of the party or witness concerning the dispute. In the event a party fails to respond, then the assigned member must render a decision based upon the available materials.

The assigned member may encourage resolution of the dispute by compromise where the circumstances warrant such effort. Efforts at compromise may include mediation of the dispute by the assigned member. Compromise or consent agreements, whether written or oral, become the final decision of the Board fifteen (15) days after the date of a letter from the circuit chair to the parties confirming the agreement.

If the amount in dispute does not exceed $1,000, in lieu of appointment of an assigned member, the circuit chair may assign the dispute to the staff of the Bar for an expedited investigation and recommendation. The staff in its discretion may make findings based on written submissions by the parties or on such other information as may be necessary to render an informed recommendation. In the event of such assignment, the staff shall have the same powers and be governed by the same duties and procedures as would an assigned member.

RULE 12. SCHEDULE OF PROCEEDINGS

(a) All fee disputes should be resolved within six (6) months. The assigned member's report should be completed within thirty (30) to ninety (90) days after being forwarded by the circuit chair. A fee dispute may not exceed six (6) months without the written consent of the circuit chair for good cause shown. Any extension of time granted by the circuit chair must be for a specified period of time which shall be the least amount of time deemed necessary to resolve the dispute.

(b) If an assigned member does not respond to reminders from the Bar office, the Bar office will notify the circuit chair. 

(c) If a fee dispute has been assigned and is pending, without an extension approved by the circuit chair,

(1) more than ninety (90) days, then the circuit chair may, at his or her discretion:

(A) reassign the fee dispute;

(B) if the amount exceeds $7,500, appoint a hearing panel, which shall schedule a hearing within thirty (30) days

(2) more than six (6) months, then the circuit chair shall, with the concurrence of the Executive Council Chair:

(A) reassign the fee dispute;

(B) if the amount exceeds $7,500, appoint a hearing panel, which shall schedule a hearing within thirty (30) days; or

(C) return all investigative notes and application to the designated Bar staff member for investigation as the assigned member.

In these events, the original assigned member shall immediately turn over notes and files to the circuit chair.

(d) If the circuit chair is delinquent, then the case may be reassigned to the Executive Council Chair or the Executive Council Chair's designee.

RULE 13. PROCEEDINGS OF THE BOARD

If the amount in dispute is $7,500 or less, the decision of the assigned member or Bar staff, with the concurrence of the circuit chair, shall be the final decision of the Board.

If the amount in dispute is more than $7,500, the decision of the assigned member with the concurrence of the circuit chair shall be served on the parties by first class mail, with proper postage affixed, or by email, provided the parties have consented to services by email in accordance with Rules 10. The decision is final unless a written request for a hearing panel is made by filing such request with the circuit chair within thirty (30) days after the date of mailing written notification of the decision. (For Hearing Panel Decision, see Rule 17.)

If the chair does not concur with the decision of the assigned member, a hearing panel will be appointed.

RULE 20. APPEALS

(a) A party aggrieved by the final decision of the Board may appeal the decision to the circuit court in the county where the principal place of practice of the attorney is located.

(b) To confer jurisdiction of an appeal on the circuit court, the appealing party must commence the appeal within thirty (30) days after the final decision is mailed to the appealing party, except that if based upon corruption, fraud, or other undue means, it must be commenced within thirty (30) days after such grounds are known or should have been known.

(c) In order to commence an appeal, the appealing party must:

(1) file with the clerk of the circuit court a notice of appeal along with a signed document certifying the names and addresses to which the appealing party mailed copies of the notice and the date the copies were mailed. The notice of appeal must contain (i) the names of all parties to the dispute, (ii) an indication that the appealing party is appealing from a final decision of the Resolution of Fee Disputes Board, (iii) a detailed statement of the grounds for the appeal and (iv) the name, current mailing address, and telephone number of the appealing party;

(2) pay the required filing fee to the clerk of court;

(3) mail each other party to the dispute a copy of the notice of appeal; and

(4) mail a copy of the notice to the South Carolina Bar Resolution of Fee Disputes Board.*

A notice of appeal is sufficient if it is in writing, is signed by the appealing party, and contains the information required in sub-paragraph (c)(1).

(d) Filing an appeal does not stay the issuance of a Certificate of Non-Compliance. However, if, upon the filing of a notice of appeal, a party pays the disputed sum to the Bar to be held in trust pending resolution of the appeal, no Certificate of Non-Compliance shall be issued. The Bar shall remit the disputed sum to the prevailing party within ten (10) days of the final disposition of the dispute.

(e) The Board shall supply to the circuit court a record on appeal, which shall include such of the following materials as were involved in the proceedings of the Board: the application, the decision of the assigned member, the concurrence or non-concurrence of the circuit chair, and the decision of the hearing panel.

(f) The court shall affirm or vacate the final decision of the Board. The court may vacate only where:

(1) the decision was procured by corruption, fraud, or other undue means;

(2) there was evident partiality or corruption in an assigned member or hearing panel member, or misconduct prejudicing the rights of any party;

(3) the assigned member or hearing panel members exceeded their powers;

(4) the hearing panel members refused to postpone the hearing, if any, upon sufficient cause being shown therefore, or the assigned member or hearing panel members refused to hear evidence material to the controversy, or otherwise conducted the proceeding so as to substantially prejudice the rights of a party; or            

(5) the hearing panel chair did not provide notice of the hearing as required under Rule 15.

(g) In vacating the final decision, the court may order a reconsideration by a new assigned member appointed by the circuit chair or, if vacating the decision of a hearing panel, a rehearing before a new hearing panel appointed by the circuit chair. Any reconsideration or rehearing shall be de novo, and no reports or decisions of any prior assigned member or hearing panel shall be considered. When a final decision of the Board is vacated, any judgment which may have been entered pursuant to that decision also is vacated.

(h) The parties and the circuit court shall provide the Board notice of all proceedings on appeal and the final disposition of the appeal.

RULE 22. AMENDMENTS TO RULES

Upon approval by the Bar's House of Delegates, amendments to these Rules shall be submitted to the Supreme Court of South Carolina for approval. Any amendment to these rules is effective as to any fee dispute filed after the date of approval by the Supreme Court.