S.C. Ethics Opinion 25-02 Signals Growing Opposition To Alternative Business Structures

South Carolina is the latest state to push back against Alternative Business Structures (ABS). On March 13, 2026, and following California's enactment of Assembly Bill (AB) 931 in October 2025 – which largely froze California lawyers' ability to experiment with certain ABS arrangements for the next four years – South Carolina's Ethics Advisory Committee (Committee) has now issued Ethics Advisory Opinion 25-02 (Opinion). The Opinion concluded that South Carolina lawyers may not serve as local co-counsel with an ABS that has nonlawyer owners or partners, owns an interest in an ABS that practices law or splits fees with an ABS. This development reflects a pushback against the ABS model that other jurisdictions have embraced.

A Closer Look

The Opinion rests on Rule 5.4 of the South Carolina Rules of Professional Conduct – a near-verbatim adoption of the ABA Model Rule – which prohibits lawyers from sharing fees with nonlawyers and from practicing in any entity where a nonlawyer holds an ownership interest or exercises control over a lawyer's professional judgment, nor may a South Carolina lawyer invest in or hold an ownership stake in an ABS entity co-owned with nonlawyers who practice law. To that end, the Committee also invoked Rule 8.4(a), which prohibits lawyers from knowingly assisting or inducing another to violate the rules "or do so through the acts of another." This means that a South Carolina lawyer cannot split fees with an ABS attorney knowing that the fee will, by the very design of the ABS structure, be distributed in ways South Carolina law does not permit. And, under Rule 8.5(a), these obligations follow the South Carolina lawyer regardless of where the conduct occurs. Critically, the Committee made clear that the structure of the fee split is irrelevant – if legal fees earned on South Carolia matters end up, directly or indirectly, in the hands of nonlawyers through an ABS, the arrangement violates the rule.

The Committee referenced comparable ethics opinions from Texas, Maryland and Georgia, each of which reached similar conclusions under their respective versions of Rule 5.4. Additionally, the Committee noted that the Supreme Court of Georgia amended Rule 5.4 to include a limited exception permitting Georgia lawyers to share fees with ABS firms operating in other jurisdictions.

Of course, Ethics Opinion 25-02 is advisory in nature and does not carry the force of binding authority. Even so, South Carolina practitioners should keep the Committee's interpretation of Rule 5.4 in mind. South Carolina attorneys who enter a co-counsel or fee-sharing agreement with an ABS entity should expect that their actions will be scrutinized according to the guidelines set by this opinion.

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