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On September 10, 2026, the South Carolina Supreme Court requested written comments on Rule 5.4 of the Rules of Professional Conduct. Rule 5.4 governs how lawyers remain professionally independent by banning attorneys from sharing fees with non-attorneys. The intent behind the rule is to ensure that attorneys' ethical duties to their clients are not clouded by an investor's desire for profit.
In this request for comment, the Court's asked whether the current rule was clear enough to prohibit private equity firms from investing in law firms. We believe that the Court should clarify the rule to explicitly ban outside investment in law firms.
The South Carolina Policy Council submitted comments on this matter largely because we understand that private equity investment, and any type of external party investment into law firms will have deleterious effects on the legal profession and the litigation environment. Investors care about one thing: their bottom line. Lawyers are supposed to focus on representing their client to the exclusion of other considerations. The duty to one’s clients does not preclude reasonable compensation, of course, but the duty to the client is first. If external party investors were allowed to run law firms, we would see increased litigation, heightened verdicts, and ultimately upward pressure on insurance rates.
We appreciate the Court extending an opportunity for the public to comment on this Rule. Under Chief Justice Kittredge’s leadership, the South Carolina Court system has increased its transparency and public engagement, a development that the South Carolina Policy Council finds laudable.
To learn more, you can read our letter to the Supreme Court in its entirety here: