by JENN WOOD
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The South Carolina supreme court is considering whether to tighten its rules governing private equity’s involvement in law firms — a move that could determine how much influence outside investors may have over attorneys representing South Carolinians.
In a September 10, 2026 request for written comments, the court said private equity firms have been expanding into the practice of law in many jurisdictions. It asks whether South Carolina’s existing ethics rule needs to more explicitly restrict arrangements designed to get around its prohibitions.
At issue is Rule 5.4 of the S.C. Rules of Professional Conduct, which generally bars lawyers from sharing legal fees with non-lawyers, prohibits non-lawyers from owning or managing law firms, and protects attorneys’ independent professional judgment.
The concern is straightforward: If an investor has a financial interest in a firm’s business, could that investor influence which clients the firm takes, how cases are handled or when a client is urged to settle? And who would have access to confidential information about those clients?
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The court’s notice points specifically to potential interference with the attorney-client relationship, lawyers’ independent judgment and client confidentiality. It also raises concerns about business arrangements that may appear to comply with Rule 5.4 while giving outside interests influence over a law practice.
The notice does not identify any South Carolina firms accused of violating the rule. Nor has the court proposed specific amendment language or decided to change the rule. For now, it is seeking input on whether clarification is needed.
The question has become increasingly relevant as investors look for ways to enter the legal industry. In some states, that has meant direct ownership under a different regulatory system. Arizona, for example, licenses certain businesses with non-lawyer ownership to provide legal services. Elsewhere, investors may back companies that provide law firms with services such as marketing, technology or client intake while the firms themselves remain lawyer-owned, according to an American Bar Association discussion of the trend.
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Supporters of outside investment argue that access to capital could help firms expand and make legal services more accessible. Critics warn that the pressure to deliver returns could conflict with a lawyer’s duty to put the client first.
South Carolina’s justices appear focused on whether the current rule draws a clear enough line between financial support for a law firm and control over its legal work.
The court is accepting comments from interested individuals and organizations through September 29, 2026. Submissions must be attached as Word documents or PDFs and emailed to Rule5.4comments@sccourts.org. The court said comments need not be limited to the wording of the existing rule.
FITSNews will continue following the proposed rule review and the arguments submitted to the court.
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ABOUT THE AUTHOR …
As a private investigator turned journalist, Jenn Wood brings a unique skill set to FITSNews as its research director. Known for her meticulous sourcing and victim-centered approach, she helps shape the newsroom’s most complex investigative stories while producing the FITSFiles and Cheer Incorporated podcasts. Jenn lives in South Carolina with her family, where her work continues to spotlight truth, accountability, and justice.
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2 comments
I am so sick of private equity term! This has been going on for years, and it is no ones fault other than the business owner that sold out to it!
These are not INVESTORS! They are all crooked bankers, hedge-funds, and other Wall Street crooks. Looking to steal more money. Courts can stop them. So, they buy the courts, lawyers, and your Freedoms. The attack on the US Democracy is coming from Wall Street crooks. Who think Unrestricted Capitalism can save them from the public’s rope and tree hanging. THEY ARE SO WRONG.