skip navigation
search

End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

Many people have contributed time and effort to the project over the years, and we would like to thank them. In particular, Roger Cramton and Peter Martin not only conceived ALEL but gave much of their own labor to it. We are also grateful to Brad Wendel for his editorial contributions, to Brian Toohey and all at Jones Day for their efforts, and to all of our correspondents and contributors. Thank you.

We regret any inconvenience.

Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


South Carolina Legal Ethics

V. LAW FIRMS AND ASSOCIATIONS

5.1   Rule 5.1 Responsibilities of a Partner and Supervisory Lawyer

5.1:100   Comparative Analysis of SC Rule

Primary SC References: SC Rule 5.1
Background References: ABA Model Rule 5.1, Other Jurisdictions
Commentary:

5.1:101      Model Rule Comparison

South Carolina Rule 5.1 and its comments are identical to Model Rule 5.1.

5.1:102      Model Code Comparison

There was no direct counterpart to Rule 5.1 in the Code of Professional Responsibility.

5.1:200   Duty of Partners to Monitor Compliance with Professional Rules

Primary SC References: SC Rule 5.1(a)
Background References: ABA Model Rule 5.1(a), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 12, Wolfram 16.2

All partners in a firm have responsibility to ensure that adequate measures are in place to provide "reasonable assurance that all lawyers in the firm conform" to their ethical obligations. Rule 5.1(a). The reasonableness of measures taken to carry out these responsibilities may depend upon the firm size. The larger the firm, the more elaborate the procedures, such as conflict searches or calendaring methods, that may be required. See Rule 5.1, cmt.

5.1:300   Monitoring Duty of Supervising Lawyer

Primary SC References: SC Rule 5.1(b)
Background References: ABA Model Rule 5.1(b), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 12, Wolfram 16.2

A supervisory lawyer has general responsibility to "make reasonable efforts to ensure" that a subordinate lawyer conforms to the ethical rules. Rule 5.1(b).

5.1:400   Failing to Rectify the Misconduct of a Subordinate Lawyer

Primary SC References: SC Rule 5.1(c)
Background References: ABA Model Rule 5.1(c), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 5, Wolfram 16.2

A partner or supervisory lawyer is responsible for the misconduct of a subordinate lawyer, if the partner or supervisory lawyer (1) orders the misconduct, (2) with knowledge of the misconduct ratifies the actions of the subordinate lawyer, or (3) "knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action." Rule 5.1(c).

5.1:500   Vicarious Liability of Partners

Primary SC References: SC Rule 5.1
Background References: ABA Model Rule 5.1, Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 8, 10

A lawyer who orders another lawyer to engage in conduct that violates an ethical obligation or who ratifies such conduct, "with knowledge of the specific conduct" ratified, is responsible for the misconduct by the other lawyer under Rule 5.1(c)(1) and possibly under Rule 8.4(a) as well, which prohibits a lawyer from assisting or inducing an act of misconduct. See In re Fox, 327 S.C. 293, 490 S.E.2d 265 (1997) (as general rule, lawyer is not subject to discipline because of partner's misconduct; however, lawyer will be subject to discipline if misconduct occurred with lawyer's knowledge, consent or participation).

Lawyers who do not initiate or ratify conduct directly also may be responsible for the misconduct of another lawyer in the firm. If a supervisor or any other partner learns of misconduct by another lawyer in the firm at a time "when its consequences can be avoided or mitigated," that supervisor or partner must take reasonable remedial action or share responsibility for the misconduct. Rule 5.1(c)(2). Even if the supervisor does not learn of misconduct in time to take corrective action, the fact of a violation by a subordinate may indicate that there was inadequate supervision, thus possibly subjecting the supervisory lawyer to discipline under Rule 5.1(b). See Rule 5.1, cmt.

5.2   Rule 5.2 Responsibilities of a Subordinate Lawyer

5.2:100   Comparative Analysis of SC Rule

Primary SC References: SC Rule 5.2
Background References: ABA Model Rule 5.2, Other Jurisdictions
Commentary:

5.2:101      Model Rule Comparison

South Carolina Rule 5.2 and its comments are identical to Model Rule 5.2.

5.2:102      Model Code Comparison

There was no counterpart to Rule 5.2 in the Code of Professional Responsibility.

5.2:200   Independent Responsibility of a Subordinate Lawyer

Primary SC References: SC Rule 5.2(a)
Background References: ABA Model Rule 5.2(a), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 5, Wolfram 16.2

Every lawyer, however junior, has personal responsibility to observe the rules of professional conduct. Rule 5.2(a); see In re Rivers, 285 S.C. 492, 331 S.E.2d 332 (1984) (public reprimand for drafting questions at direction of senior attorney for investigator to ask members of venire in tort case; inexperience may be mitigating factor, but all lawyers are held to same standards of conduct regardless of experience).

5.2:300   Reliance on a Supervisor's Resolution of Arguable Ethical Issues

Primary SC References: SC Rule 5.2(b)
Background References: ABA Model Rule 5.2(b), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 5, Wolfram 16.2

Rule 5.2 acknowledges the dilemma faced by an associate lawyer directed to act in an ethically questionable manner by a more senior supervisory lawyer. While preserving the responsibility of every lawyer [see 5.2:200], the rule shields the subordinate lawyer who "acts in accordance with a supervisory lawyer's reasonable resolution of an arguable question of professional duty." Rule 5.2(b). Thus, if the resolution of an ethical question is clear, the subordinate lawyer is required to follow the clearly proper course. If the question, however, is "reasonably arguable," it should be raised to the supervisory lawyer to resolve, and the subordinate "may be guided accordingly." See Rule 5.2, cmt.

5.3   Rule 5.3 Responsibilities Regarding Nonlawyer Assistants

5.3:100   Comparative Analysis of SC Rule

Primary SC References: SC Rule 5.3
Background References: ABA Model Rule 5.3, Other Jurisdictions
Commentary:

5.3:101      Model Rule Comparison

South Carolina Rule 5.3 and its comments are identical to Model Rule 5.3.

5.3:102      Model Code Comparison

Rule 5.3 did not have a direct counterpart in the Code of Professional Responsibility but is drawn in part from DR 4-101(D) and DR 7-107(J).

5.3:200   Duty to Establish Safeguards

Primary SC References: SC Rule 5.3(a)
Background References: ABA Model Rule 5.3(a), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 4, 5, Wolfram 16.3

Rule 5.3 imposes substantially the same obligations upon partners and supervisory lawyers regarding the conduct of nonlawyer employees or contractors of the firm as are imposed under Rule 5.1 regarding the conduct of other lawyers. Partners are responsible for ensuring that adequate measures exist to offer "reasonable assurance" that a nonlawyer's conduct is "compatible with the professional obligations of the lawyer." Rule 5.3(a).

5.3:300   Duty to Control Nonlawyer Assistants

Primary SC References: SC Rule 5.3(b)
Background References: ABA Model Rule 5.3(b), Other Jurisdictions
Commentary: ABA/BNA 21:8601, ALI-LGL 4, 5, Wolfram 16.3

Lawyers with supervisory authority also must make reasonable efforts to ensure compatible conduct. Rule 5.3(b). In In re Marshall, 331 S.C. 5114, 498 S.E.2d 869 (1998), the court suspended respondent for, among other reasons, allowing her paralegal complete control of respondent's law office, including the control of the finances. The paralegal forged respondent's name on checks, embezzled funds from the law practice, and even handled cases for "clients" whom respondent never even met. The paralegal has subsequently been featured on "America's Most Wanted" for her escapades. See also In re Mitchell, 318 S.C. 118, 456 S.E.2d 396 (1995) (inadequate lawyer supervision resulted in office issuing false affidavit of consideration in real estate transaction); In re Gibbes, 315 S.C. 186, 432 S.E.2d 482 (1993) (lawyer failed to supervise adequately employee who embezzled client money). A lawyer may employ an independent paralegal service as long as the lawyer adequately supervises and is responsible for the work performed. S.C. Bar Ethics Adv. Op. # 96-13.

5.3:400   Responsibility for Misconduct of Nonlawyer Assistants

Primary SC References: SC Rule 5.3(c)
Background References: ABA Model Rule 5.3(c), Other Jurisdictions
Commentary: ABA/BNA 91:201, ALI-LGL 4, 5, Wolfram 16.3

A lawyer cannot instruct a nonlawyer to engage in conduct that would be impermissible for the lawyer. Ordering conduct by a nonlawyer that is incompatible with the lawyer's ethical duties or ratifying such specific conduct subjects the lawyer to responsibility for the misconduct. Rule 5.3(c); see In re Brooks, 274 S.C. 601, 267 S.E.2d 74 (1980) (lawyer responsible for forgeries by secretary, when lawyer apparently knew of the misconduct). Also, if the lawyer learns of the misconduct in time to avoid or mitigate its consequence, the lawyer must take reasonable remedial measures or bear responsibility. See In re Campbell, 313 S.C. 374, 438 S.E.2d 230 (1993) (upon learning of employee's fraud, lawyer did not assist client in recovering funds). Even if a supervisory lawyer is not held responsible under Rule 5.3(c) for the particular violation by a nonlawyer, the fact of its occurrence may indicate a breach of the lawyer's obligation to have in place reasonable preventative measures.

5.4   Rule 5.4 Professional Independence of a Lawyer [Restrictions on Form of Practice]

5.4:100   Comparative Analysis of SC Rule

Primary SC References: SC Rule 5.4
Background References: ABA Model Rule 5.4, Other Jurisdictions
Commentary:

5.4:101      Model Rule Comparison

South Carolina Rule 5.4 and its comments are identical to Model Rule 5.4, except that South Carolina has changed Rule 5.4(a)(2) to read as follows:

A lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation which fairly represents the services rendered by the deceased lawyer.

5.4:102      Model Code Comparison

Rule 5.4 is drawn from DR 3-102(A), DR 3-103(A), and DR 5-107(B) and (C) of the Code of Professional Responsibility.

5.4:200   Sharing Fees with a Nonlawyer

Primary SC References: SC Rule 5.4(a)
Background References: ABA Model Rule 5.4(a), Other Jurisdictions
Commentary: ABA/BNA 41:801, ALI-LGL 60, Wolfram 16.4, 16.5

As lawyers have sought to expand the range of services provided to clients from traditional legal services to include other disciplines, significant attention has been given to appropriate methods of compensating nonlawyer employees or consultants. Rule 5.4 sets forth several basic prohibitions that govern a lawyer's business relationship with nonlawyers. First, a lawyer may not share legal fees with a nonlawyer except in very limited circumstances. Rule 5.4(a). See In re Brown, 275 S.C. 180, 268 S.E.2d 284 (1980) (unspecified acts of fee splitting).

The exceptions to Rule 5.4(a) permit a sharing of legal fees with nonlawyers only (1) if the payments are made pursuant to an agreement between the lawyer and the firm providing for payments to be made to the lawyer's estate or other beneficiary for a reasonable time after the lawyer's death or (2) if the payments are of earned compensation paid to a deceased lawyer's estate or (3) if the payments are made pursuant to a compensation or retirement plan that includes nonlawyer employees.

A lawyer may not pay bonuses to a nonlawyer investigator based upon a percentage of legal fees collected in specific cases worked on by the investigator. In re Anonymous Member of the South Carolina Bar, 295 S.C. 25, 367 S.E.2d 17 (1988). However, it "may be permissible" to pay an investigator a percentage of the profits if the compensation plan is not tied to a percentage of any particular legal fee. Id. at 27-28, 367 S.E.2d at 18. A paralegal may not be compensated on the basis of a percentage of fees collected each week. In re Brown, 319 S.C. 342, 461 S.E.2d 385 (1995).

Premiums paid to title insurors are not legal fees and do not run afoul of this rule. S.C. Bar Ethics Adv. Op. # 92-03. Similarly, an investigator's fee charged separately from the legal fee is permitted; such an arrangement is distinguishable from one in which the investigator is paid out of the legal fee. See S.C. Bar Ethics Adv. Op. # 91-32.

A lawyer not licensed to practice in the state who is not in good standing with the bar of any jurisdiction at the time services are performed for a client is considered a nonlawyer for purposes of being unable to share a legal fee. S.C. Bar Ethics Adv. Op. # 89-10.

5.4:300   Forming a Partnership with Nonlawyers

Primary SC References: SC Rule 5.4(b)
Background References: ABA Model Rule 5.4(b), Other Jurisdictions
Commentary: ABA/BNA 91:401, ALI-LGL 60, Wolfram 16.4, 16.5

A lawyer may not provide legal services to clients through a partnership with any nonlawyer. Rule 5.4(b). Thus, a lawyer may not participate in an organization created by professionals of various disciplines to offer estate planning advice, including individual consultations, to customers. S.C. Bar Ethics Adv. Op. # 91-04. See also S.C. Bar Ethics Adv. Op. # 88-18. An out-of-state law firm, however, may establish a partnership with in-state lawyers to practice law across state lines, although it is unclear whether a branch office could properly be staffed only with associates. S.C. Bar Ethics Adv. Op. # 87-05.

Although a relationship between a lawyer and a CPA firm may be arranged to comply with the Rules of Professional Conduct, some relationships are impermissible. A lawyer may not engage in the practice of law either in the capacity of an employee of or an equity holder in a CPA firm, nor may the lawyer enter into an exclusive referral relationship with a CPA firm. S.C. Bar Ethics Adv. Op. # 99-07.

5.4:400   Third Party Interference with a Lawyer's Professional Judgment

Primary SC References: SC Rule 5.4(c)
Background References: ABA Model Rule 5.4(c), Other Jurisdictions
Commentary: ABA/BNA 51:901, ALI-LGL 60, Wolfram 8.8

It is not uncommon for a person or entity other than the client to pay a lawyer's fees. Such arrangements are ethically proper so long as the lawyer does not allow the third party to direct or regulate the lawyer's delivery of legal services. Rule 5.4(c). See also 1.8:710.

5.4:500   Nonlawyer Ownership in or Control of Profit-Making Legal Service Organizations

Primary SC References: SC Rule 5.4(d)
Background References: ABA Model Rule 5.4(d), Other Jurisdictions
Commentary: ABA/BNA 91:401, ALI-LGL 60, Wolfram 16.4, 16.5

A lawyer may not provide legal services to clients through a professional corporation or association if a nonlawyer owns any part of the business (except for the personal representative of a deceased lawyer during administration of the estate), is a director or officer, or has a right to control the lawyer's exercise of professional judgment. Rule 5.4(d). See S.C. Bar Ethics Adv. Op. # 90-03.

5.4:510      Group Legal Services

[The discussion of this topic has not yet been written.]

5.4:520      Nonprofit Organizations Delivering Legal Services

[The discussion of this topic has not yet been written.]

5.5   Rule 5.5 Unauthorized Practice of Law

5.5:100   Comparative Analysis of SC Rule

Primary SC References: SC Rule 5.5. See also S.C. App. Ct. R. 404 (Pro Hac Vice Admission) and 405 (Limited Certificate of Admission).
Background References: ABA Model Rule 5.5, Other Jurisdictions
Commentary:

5.5:101      Model Rule Comparison

South Carolina Rule 5.5 and its comments are identical to Model Rule 5.5.

5.5:102      Model Code Comparison

Rule 5.5 is drawn from DR 3-101 of the Code of Professional Responsibility.

5.5:200   Engaging in Unauthorized Practice

Primary SC References: SC Rule 5.5(a)
Background References: ABA Model Rule 5.5(a), Other Jurisdictions
Commentary: ABA/BNA 21:8001, ALI-LGL 3, 4, Wolfram 15.1

5.5:210      Practice of Law by Nonlawyers

Whether conduct of a nonlawyer constitutes the unauthorized practice of law is a legal, rather than a purely ethical, issue. See generally S.C. Code Ann. 40-5-310 (barring practice by persons not admitted to bar); 40-5-320 (barring practice of law by corporations); 40-5-80 (permitting nonlawyer, acting with consent of court, to represent another person without compensation). See S.C. Bar Ethics Adv. Ops. ## 97-24, 90-33, 90-16.

Prohibitions on the unauthorized practice of law apply most clearly to appearances by nonlawyers in court. See Renaissance Enter. v. Summit Teleservices, 334 S.C. 649, 515 S.E.2d 257 (1999) (nonlawyer cannot represent corporation in either circuit or appellate courts); Travelers Ins. Co. v. The Roof Doctor, Inc., 325 S.C. 614, 481 S.E.2d 451 (Ct. App 1997) (when president of The Roof Doctor filed answer on behalf of his company, his actions constituted the unauthorized practice of law).

Restrictions on the unauthorized practice of law also apply to business matters. In the leading case of State v. Buyers Service Co., Inc, 292 S.C. 426, 357 S.E.2d 15 (1987), the court held that a commercial title company engaged in the unauthorized practice of law by providing title opinions, preparing title documents, handling real estate closings, and recording title documents. The practices complained of were found to "entail specialized legal knowledge and ability." Id. at 430, 357 S.E.2d at 17. See also In re Easler, 275 S.C. 400, 272 S.E.2d 32 (1980) (preparation of deed, supervision of its execution, and filing of deed by a nonlawyer without supervision or approval of a licensed lawyer constituted unauthorized practice).

The court has, however, recognized some limited exceptions to the prohibition on the unauthorized practice of law. Because of their unique training and certification requirements, certified public accountants do not run afoul of unauthorized practice rules when rendering "professional assistance, including compensated representation before agencies and the Probate Court, that is within their professional expertise and qualifications." In re Unauthorized Practice of Law Rules Proposed by the South Carolina Bar, 309 S.C. 304, 422 S.E.2d 123 (1992). The Supreme Court also permitted nonlawyer officers, agents, or employees of a business to represent the business in civil Magistrate Court proceedings. The representative must be authorized in writing by the chief officer of the business or must hold a Limited Certificate of Admission under Rule 405. The nonlawyer representative may be compensated, and the business "assumes the risk of any problems." Id. In In re Myers, 334 S.C. 47, 512 S.E.2d 791 (1999), the court decided whether certain tasks performed by a nonattorney employee of the solicitor in the Lexington County transfer court constituted the unauthorized practice of law. The court held that "general, preparatory, case management activities conducted by a nonattorney do not constitute the practice of law provided that the solicitor or an assistant solicitor supervises the work and has complete responsibility for the work product. However, plea negotiations and representation of the state in transfer court guilty plea proceedings constitutes the practice of law and the state may only be represented by a solicitor or assistant solicitor during plea negotiations and guilt plea proceedings." Id. at 49, 512 S.E.2d at 791-792.

A lawyer or former lawyer may be sanctioned for practicing while under suspension or following disbarment. See, e.g. In re Brown, 310 S.C. 463, 427 S.E.2d 645 (1993) (client relationship continued during period of suspension); In re Smith, 310 S.C. 449, 427 S.E.2d 634 (1992) (lawyer accepted fees during period of temporary suspension); In re Bosserman, 298 S.C. 198, 379 S.E.2d 130 (1989) (lawyer continued to practice after suspension). A lawyer may not hire a disbarred or suspended lawyer in any capacity in connection with the practice of law. S.C. App. Ct. R. 413, R. 34.

5.5:220      Admission and Residency Requirements for Out-of-State Lawyers

South Carolina Appellate Court Rule 405 provides for limited certificates of admission for lawyers admitted in another state to enable them to provide legal services to corporate (or other entity) employers.

5.5:230      Pro Hac Vice Admission [see also 8.1:240]

South Carolina Appellate Court Rule 404 provides for pro hac vice admission of lawyers admitted to practice in other jurisdictions "to participate in the trial or argument of any case in which the attorney is associated with a member in good standing of the South Carolina Bar." A lawyer may not use the pro hac vice rule to appear in court on a regular basis and thereby circumvent the normal admissions process. South Carolina Medical Malpractice Joint Underwriting Assn. v. Froelich, 297 S.C. 400, 377 S.E.2d 306 (1989).

5.5:240      Performing Legal Services in Another Jurisdiction

[The discussion of this topic has not yet been written.]

5.5:300   Assisting in the Unauthorized Practice of Law

Primary SC References: SC Rule 5.5(b)
Background References: ABA Model Rule 5.5(b), Other Jurisdictions
Commentary: ABA/BNA 21:8201, ALI-LGL 4, Wolfram 15.1

Lawyers may from time to time associate with nonlawyers to provide a variety of services to clients. A nonlawyer adjustor may investigate, interview witnesses, and conduct research under the supervision of a lawyer, but should not engage in actual negotiation of a claim. S.C. Bar Ethics Adv. Op. # 89-24. Nonlawyers may perform purely ministerial acts of preparing forms, but may not render legal advice, negotiate claims, or appear at proceedings, unless specifically permitted to do by law. S.C. Bar Ethics Adv. Op. # 90-12. See also S.C. Bar Ethics Adv. Op. # 91-32 (nonlawyer may not prepare and send cease and desist letters).

Similar restrictions on assistance in the unauthorized practice of law apply in business matters. A lawyer must insure that ancillary services provided by nonlawyers do not entail the practice of law. A lawyer, for example, may hire nonlawyers to complete forms and research titles in connection with a real estate closing, if the lawyer deals with the client and supervises the nonlawyer's work. S.C. Bar Ethics Adv. Op. # 88-02. But see In re Reeve, 335 S.C. 169, 516 S.E.2d 200 (1999) (lawyer reprimanded for allowing nonlegal staff to conduct real estate closings at which lawyer not present). On the application of the prohibition to estate planning and retirement work, see S.C. Bar Ethics Adv. Op. # 93-24 (lawyer admitted in another jurisdiction but not in South Carolina conducting estate planning seminars with assistance of South Carolina lawyer) and S.C. Bar Ethics Adv. Op. # 93-05 (ancillary business owned 50-50 by accountants and lawyers to provide services for retirement plans).

A corporation other than a professional corporation (and probably also a limited liability company), may not practice law. S.C. Code Ann. 40-5-320. Thus, a lawyer who is hired by a corporation to provide legal services to third-parties may run afoul of the unauthorized practice restrictions. See S.C. Bar Ethics Adv. Op. # 91-36 (company may not use staff lawyers to draft trust documents for third-parties); S.C. Bar Ethics Adv. Op. # 90-03 (consulting firm owned by nonlawyers may not employ lawyers to provide legal services to others). See also ABA Formal Op. # 95-392 (if in-house counsel performs legal work for clients other than the company, the lawyer may not share legal fees with the company, but could reimburse the company for actual costs incurred by the company). A lawyer should not participate in an operation in which nonlawyers draft legal documents, and institute, negotiate, or settle lawsuits without the proper supervision of a lawyer. See S.C. Bar Ethics Adv. Op. # 91-18. Nor should a lawyer assist a scheme in which a nonlawyer, acting as a conduit, obtains specific legal advice for a customer from the lawyer and then conveys that advice to the customer. S.C. Bar Ethics Adv. Op. # 90-09.

5.6   Rule 5.6 Restrictions on Right to Practice

5.6:100   Comparative Analysis of SC Rule

Primary SC References: SC Rule 5.6
Background References: ABA Model Rule 5.6, Other Jurisdictions
Commentary:

5.6:101      Model Rule Comparison

South Carolina Rule 5.6 and its comments are identical to Model Rule 5.6, except the South Carolina comments do not include comment 3 from the Model Rule dealing with restrictions on the right to practice law pursuant to sale of a law practice under Rule 1.17. The omission is probably not significant because S.C. Rule 1.17(c) provides that the agreement for sale of a law practice may include reasonable restrictions on a seller's right to practice without violating Rule 5.6.

5.6:102      Model Code Comparison

Rule 5.6 is based on DR 2-108 of the Code of Professional Responsibility.

5.6:200   Restrictions on Lawyers Leaving a Firm

Primary SC References: SC Rule 5.6(a)
Background References: ABA Model Rule 5.6(a), Other Jurisdictions
Commentary: ABA/BNA 51:1201 ALI-LGL 10

Rule 5.6 disallows a lawyer generally from entering into an agreement restricting the lawyer's right to practice either after leaving the firm or as a condition of a settlement agreement in a private controversy. This rule is intended to avoid restrictions that may limit the choice of counsel available to persons seeking legal representation.

An absolute ban on practice by a lawyer upon departure from a law firm clearly would be unenforceable under Rule 5.6(a). The issue more typically is whether financial benefits payable upon withdrawal from the firm may be conditioned upon any type of agreement not to compete with the firm. The issue is one that has generated differing interpretations in courts around the nation, depending apparently upon the source of compensation at issue and the extent of any limitations. After a lengthy review of case law nationwide, the South Carolina Bar Ethics Advisory Committee concluded that a partnership agreement providing for forfeiture of certain earned compensation upon withdrawal if the lawyer continues to practice law would violate Rule 5.6. See S.C. Bar Ethics Adv. Op. # 91-20 and cases cited therein. The concern reflected in Opinion 91-20 is that substantial financial disincentives have much the same practical effect as an absolute ban upon practice. If the purpose of the agreement is to provide retirement compensation, which is permitted under Rule 5.6, then the agreement should specify clearly the qualifications for retirement. Id. See also ABA Formal Op. # 94-381 (agreement that lawyer for corporation will not later represent parties against corporation violates Rule 5.6).

For a discussion of the obligations owed by departing lawyers to their former firms, see John Freeman, Departing Lawyers' Duties, S.C. LAW., Jan.-Feb. 1998, at 10 (discussing issues involved when lawyer leaves his firm, including communicating this fact to clients in advance of departure and removing departing lawyer's name from old firm's name); John Freeman, Firm Loyalty Versus Lawyer Mobility, S.C. LAW., Jan.-Feb. 1997, at 10 (discussing duty of loyalty which lawyer owes to other lawyers within his firm).

5.6:300   Settlements Restricting a Lawyer's Future Practice

Primary SC References: SC Rule 5.6(b)
Background References: ABA Model Rule 5.6(b), Other Jurisdictions
Commentary: ABA/BNA 51:1201, ALI-LGL 10, Wolfram 16.2.3

Rule 5.6 applies to departures by lawyers from firms but may also apply to settlement agreements restricting counsel's ability to handle future claims. See ABA Formal Op. # 93-371 (agreement as part of civil settlement that plaintiff's lawyer will not later represent other parties against defendant violates Rule 5.6 and request by counsel for such agreement violates Rule 8.4(a)); ABA Formal Op. # 95-394 (despite language applying Rule 5.6 to private controversies, rule applies also to matters in which government is party).

5.7   Rule 5.7 Responsibilities Regarding Law-Related Services

5.7:100   Comparative Analysis of SC Rule

Primary SC References:
Background References: ABA Model Rule 5.7, Other Jurisdictions
Commentary:

5.7:101      Model Rule Comparison

South Carolina has not adopted Model Rule 5.7 or any equivalent provision.

5.7:102      Model Code Comparison

South Carolina has not adopted Model Rule 5.7 or any equivalent provision.

5.7:200   Applicability of Ethics Rules to Ancillary Business Activities

Primary SC References:
Background References: ABA Model Rule 5.7, Other Jurisdictions
Commentary: ABA/BNA 101:2101

[The discussion of this topic has not yet been written.]