The North Carolina State Bar issued Formal Ethics Opinion 2024-03 in October 2024, making it one of the states with explicit, binding AI ethics guidance for attorneys. The opinion addresses competence, confidentiality, billing, and disclosure obligations — covering the full spectrum of concerns firms face when integrating generative AI into practice.
North Carolina's approach is notable for its clarity on court disclosure. Attorneys must disclose AI use when it materially assisted in producing court filings. The opinion also draws a hard line between billing AI overhead as a cost versus billing it as attorney time — a distinction many states have avoided making explicit.
What the Bar Says
Formal Ethics Opinion 2024-03 (October 2024) establishes that North Carolina lawyers must maintain competence in understanding AI tools they use, per Rule 1.1. The opinion requires attorneys to supervise AI output with the same diligence they would apply to work performed by a junior associate or paralegal.
The opinion emphasizes that lawyers remain fully responsible for all work product, regardless of how it was generated. Using AI does not relieve an attorney of the duty to verify accuracy, check citations, and ensure the final product meets professional standards. The North Carolina State Bar treats AI as a tool — not a substitute for professional judgment.
Billing Implications
The opinion makes a critical distinction: AI overhead may be charged as a cost, but not as attorney time. If a firm pays for an AI platform subscription, that cost can be passed through to clients as an expense — similar to Westlaw or LexisNexis charges. But the time an AI tool spends generating a draft cannot be billed at attorney hourly rates.
Fees for AI-assisted work must reflect actual attorney effort under Rule 1.5. If AI reduces the time a lawyer spends on a task from 5 hours to 1 hour, the client should see that reflected in the bill. Firms that continue billing pre-AI time estimates for AI-accelerated work risk fee disputes and disciplinary scrutiny.
Confidentiality Rules
Under Rule 1.6, attorneys must make reasonable efforts to prevent disclosure of client information through AI tools. This means evaluating how the AI platform stores, processes, and potentially trains on input data before using it with any client matter.
The opinion does not prescribe specific technical requirements but places the burden on the attorney to understand data handling practices. In practice, this means reviewing vendor terms of service, confirming data is not used for model training, and using enterprise-grade AI tools rather than consumer chatbots for client-related work.
What's Still Unclear
The opinion does not define a threshold for what constitutes "material" AI assistance triggering the disclosure requirement. A lawyer who uses AI to check grammar likely does not need to disclose, but the line between incidental and material use remains subjective.
The opinion also does not address AI-generated legal research specifically — whether AI-found case law requires additional verification steps beyond what traditional research tools demand. As AI hallucination risks become better understood, expect follow-up guidance on verification obligations for AI-sourced citations.
The Bottom Line: North Carolina has clear, enforceable AI ethics rules — bill AI as a cost not attorney time, protect client data in AI tools, and disclose material AI use in court filings.
AI-Assisted Research. This piece was researched and written with AI assistance, reviewed and edited by Manu Ayala. For deeper takes and the perspective behind the research, follow me on LinkedIn or email me directly.