Updates to Annotated South Carolina Rules of Professional Conduct

Author Nathan M. Crystal provides updates to the Annotated South Carolina Rules of Professional Conduct, keeping subscribers current on the latest rule changes and other ethics developments covered by the book.

Author, Annotated Rules of Professional Conduct

Nathan M. Crystal


Charleston

Updates

Significant changes in bold.

Rule 12(c)(5), RLDE, is deleted and replaced with new paragraph (i), which provides:

(i) Disclosure to Appropriate Disciplinary Authority. Commission counsel, disciplinary counsel, or a member of the staff of the Commission or the Office of Disciplinary Counsel may:

(1) Disclose the existence of a complaint to a representative of an appropriate disciplinary authority in any jurisdiction in which a lawyer is admitted to practice law or has applied for admission to practice law; or

(2) Disclose confidential information related to a complaint or investigation to a representative of an appropriate disciplinary authority in any jurisdiction if it appears that information may assist in the discharge of their duties when there is evidence the lawyer committed misconduct under lawyer disciplinary rules of that jurisdiction or where a lawyer receives any sanction under Rule 7(b).


Rule 14(d), RLDE, is amended to provide:

(d) Filing Complaint with Disciplinary Counsel.

(1) Filing of a complaint with the Office of Disciplinary Counsel, along with any relevant supporting documentation or exhibits, shall be made by:

(A) Delivering one unbound copy to the Office of Disciplinary Counsel. Delivery of a copy under this provision means handing it to an employee of the Office of Disciplinary Counsel; or

(B) Depositing one unbound copy in the U.S. Mail, properly addressed to the Office of Disciplinary Counsel with sufficient first-class postage attached.

(2) A complaint must be made against a specific lawyer and contain a clear statement of the details of each act of alleged misconduct or incapacity and include details such as:

(A) a brief description of the legal matter that gives rise to the complaint; and

(B) a detailed factual description of the alleged misconduct or incapacity.

The Office of Disciplinary Counsel may require the complainant provide additional information; however, the complainant's failure to provide sufficient and specific detail may result in individual allegations not being investigated or the dismissal of the complaint.


Rule 18(b), RLDE, is amended to provide:

(b) Limited Right to Review. Although entitled to notice, a complainant is not a party to the proceeding. However, upon notice of a dismissal by disciplinary counsel pursuant to Rule 19(d)(1) or Rule 19(f)(3), a complainant may seek review by the investigative panel. Disciplinary counsel shall inform the complainant of the following review process in the notice of dismissal. The complainant may seek review by submitting a request to the disciplinary counsel in writing within 30 days of the date of the notice of dismissal. Upon receipt of the request for review, disciplinary counsel shall provide the lawyer with a copy of the request. The lawyer may submit a written response within 15 days. Disciplinary counsel shall submit the complainant's request and the lawyer's response, if any, for consideration at the next meeting of the investigative panel. Notification in writing shall be mailed to the complainant and the lawyer within 20 days of the investigative panel's decision. The complainant is not entitled to appeal or otherwise seek review of a dismissal or referral by disciplinary counsel pursuant to Rule 19(a) or of any decision, action, or disposition by the investigative panel, the hearing panel, the Commission chair or vice-chair, or the Supreme Court.


Rule 19(a), RLDE, is amended, and new paragraph (f) is added to Rule 19, which provide:

(a) Screening. Disciplinary counsel shall evaluate all information coming to disciplinary counsel's attention by complaint or from other sources that alleges lawyer misconduct, incapacity, or the inability to participate in a disciplinary investigation or assist in the defense of formal proceedings due to a physical or mental condition.

(1) As part of the screening evaluation, disciplinary counsel may:

(A) Request the complainant provide additional information before determining whether to dismiss or investigate;

(B) Provide the lawyer with an opportunity to respond to or address the allegations in the complaint before determining whether to dismiss or investigate;

(C) Conduct a limited review of publicly available documents or other information before determining whether to dismiss or investigate.

(2) If the complaint is facially frivolous or the information would not constitute misconduct, incapacity, or the inability to participate in a disciplinary investigation or assist in the defense of formal proceedings if it were true, disciplinary counsel shall dismiss the complaint or, if appropriate, refer the matter to another agency. Disciplinary counsel may also dismiss a complaint submitted by a person who provides information about a lawyer based solely on published news reports, social media posts, or otherwise where the complainant appears to have no personal knowledge of the information submitted.

(3) If the information raises allegations that would constitute lawyer misconduct, incapacity, or the inability to participate in a disciplinary investigation or assist in the defense of formal proceedings if true, disciplinary counsel shall conduct an investigation. (4) Disciplinary counsel shall notify the complainant of the disposition of the complaint. If dismissed, disciplinary counsel is not required to notify the lawyer of the complaint or disposition but may release information about the complaint to the lawyer upon written request.

 

(f) Time Limitation for Filing a Complaint Alleging Lawyer Misconduct.

(1) A complaint must be filed with the Office of Disciplinary Counsel within five years of the time the complainant discovered or reasonably should have discovered the alleged misconduct.

(2) The five-year time limitation shall not apply to complaints when the allegations involve fraud, conversion, conviction of a serious crime, or when the lawyer is alleged to have concealed or attempted to conceal the conduct. Additionally, the five-year limitation shall not apply to the imposition of reciprocal discipline.

(3) Disciplinary counsel may dismiss a complaint based on the time limitation if raised by the lawyer and none of exceptions in paragraphs (f)(1) and (2) apply.

Rule 1.1 Causation and Damages

Marlowe v. S.C. DOT, 2025 S.C. LEXIS 43 (Mar. 26, 2025). In an inverse condemnation case in which construction of a new highway allegedly caused flooding of plaintiff’s home, the plaintiff’s expert testimony was insufficient to meet the “most probably” standard for causation; the expert’s testimony that the construction of the highway was a “substantial contributor” or that there was “a possibility” that the construction caused flooding of the plaintiff’s home was insufficient to prevent summary judgment for the defendant.

Rule 3.1 Non-Meritorious Assertions in Litigation

Hood v. United Servs. Auto Ass'n, 445 S.C. 1, 910 S.E.2d 767 (2025) is an important case on the liability and obligations of insurers in defending first-party insurance claims. Hood was involved in a three-car accident and was a defendant in one action arising from the accident; USAA provided defense counsel to Hood in that case. The main issue in that case regarding Hood’s liability was whether she had her headlights on when the accident occurred. Hood through her counsel presented direct and expert evidence that her headlights were on. Hood brought a separate action against the driver of another vehicle involved in the accident. The insurer for that driver tendered its full policy limits, and Hood’s insurer, USAA, handled defense of Hood’s UIM claim; the policy limit for that claim was $1 million. Mediation did not produce a settlement, and the case went to trial with Hood recovering a judgment in excess of $1 million. USAA paid its full policy limit, but Hood brought suit against USAA for the excess judgment on a number of theories, including negligence and bad faith refusal to settle. The principal holding of the case was that an insured does not have a tort claim for negligence against its insurer; instead, the obligations of the insurer are based solely on the insurance contract. An insured does have a contractual claim for bad faith refusal to process or settle a claim as recognized by the South Carolina Supreme Court in Tyger River Pine Co. v. Maryland Cas. Co., 170 S.C. 286, 170 S.E. 346 (1933) (third-party claims); Nichols v. State Farm Mut. Auto. Ins., 279 S.C. 336, 306 S.E.2d 616 (1983) (first-party claims). Evidence of negligence by the insurer is relevant to a bad faith claim, but does not create an independent tort claim. The court reasoned that an insurer does not have an independent duty to the insured other than the duty arising from the insurance contract, and recognition of a tort claim for negligence would be duplicative of the contract claim for bad faith refusal to settle. While the case contains a number of other points of interest to plaintiffs’ and insurance defense counsel, three stand out. All of these relate to claims for bad faith refusal to settle. First, the USAA did not violate the duty of good faith by failing to offer in mediation the amount of its policy reserve for this claim. When an insurance company takes over defense of a UIM claim, it is acting in its own interest and does not have duties to the insured beyond acting in good faith. In fact, South Carolina statutory law recognizes this right. S.C. Code Ann. § 38-77-160 (2015). In UIM cases counsel retained by the UIM carrier represents the insurer and not the insured. The court agreed with decisions in other jurisdictions that the amount of the policy reserve is not an admission or recognition by the insurer of the value of the claim. Second, USAA did not violate the duty of good faith when its counsel in mediation of the UIM case represented that counsel was offering his full settlement of $200,000, when in fact he had settlement authority of $250,000. The court stated that the duty of good faith did not require an insurer to offer the full extent of its settlement authority. It should also be noted that counsel for a party does not act unethically in misrepresenting settlement authority because such a representation under conventions of negotiation is not treated as a statement of material fact. See SCRPC 4.1 and cmt. 3. Third, USAA did not violate the duty of good faith by arguing in the UIM litigation that Hood’s lights were off when counsel hired by USAA to defend Hood in the action against Hood had argued and offered evidence that her lights were on. The court concluded that USAA’s conduct was proper. USAA did not take inconsistent positions because it was not a party to the original tort action, and counsel hired by USAA to represent Hood had a duty to zealously argue the defense favorable to her. USAA was a party to the UIM case and had the right to raise defenses to protect its interest. The court pointed out that substantial evidence supported the defense that Hood was at fault because her lights were off, and she even conceded in that action that her lights were off and did not call her expert witness to support an argument that her lights were of.

Rule 3.4 Knowing Disobedience to Rules of Tribunal

Innovative Waste Mgmt., Inc. v. Crest Energy Partners GP, LLC, 445 S.C. 19, 911 S.E.2d 406 (2025), holds that striking of pleadings is a proper sanction for discovery abuse. The court was clear in holding that a party is not subject to sanctions for discovery abuse because the party moves to quash subpoenas or requests a protective order. However, in that case the appellants “engaged in a deliberate pattern of discovery abuse,” including missing discovery deadlines, failing to comply with motions to compel, and dishonoring representations to cooperate in discovery. Moreover, appellants’ willful noncompliance was a tactic designed to delay and supported the extreme sanction of dismissal of pleadings. In addition, the failure to appeal prior discovery orders by refusal to comply with the order and obtain a contempt sanction constitutes a waiver of the right to appeal and makes those orders the law of the case. For discussion of the requirements for sanctions under SCRCP 11 see Bauknight v. Pope, 445 S.C. 408, 914 S.E.2d 848 (2025) (holding that Rule 11 is clear that sanctions may be imposed on a party as well as its counsel). Welch v. Advance Auto. Parts, Inc., 2025 S.C. LEXIS 64 (May 21, 2025) is an appeal of discovery orders in a South Carolina asbestos case. The trial court struck defendant’s answer and placed it in default for failure to comply with court-ordered discovery. The case is significant in two respects. First, defendant refused to produce a 30(b)(6) (organization) witness. The court’s decision discusses the purpose and importance of the rule including the obligation of the organization to prepare the witness to testify on the designated subject matter. Second, defendant claimed that it could not legally comply with the court’s discovery orders because they violated a Quebec “blocking statute.” The South Carolina Supreme Court, relying on decisions from the U.S. Supreme Court, held that such statutes did not deprive US courts from ordering and enforcing discovery.

Rule 3.4 Improper Trial Tactics

Washington v. State, 445 S.C. 233, 911 S.E.2d 536 (Ct. App. 2025) was a case of first-degree criminal assault. There was no physical evidence of the assault, which turned on the credibility of the minor defendant. In closing argument the prosecutor vouched for the victim’s credibility: “I submit to you [Victim] was wholly credible. That she's only capable of telling the truth.” On appeal the State argued that the trial court’s curative instruction was sufficient to overcome this deficiency, but the S.C. Court of Appeals disagreed. The case is significant because it provides guidance on when a curative instruction is sufficient to overcome a trial error. The S.C. Court of Appeals emphasized the following factors: (1) the vouching comments were extensive rather than fleeting; (2) the statements were made during summation rather than when the witness testified; and (3) defense counsel did not object to the vouching comments. The court distinguished the S.C. Supreme Court’s previous decision in State v. Reyes, 432 S.C. 394, 853 S.E.2d 334 (2020) where the curative instruction was sufficient.

Rule 5.5 Practice of Law by Nonlawyers

U.S. Bank Nat'l Ass'n v. Mack-Marion, 445 S.C. 103, 912 S.E.2d 236 (2025) expanded the jurisdiction of lower courts to consider claims of unauthorized practice of law. In 2001, Frances Mack-Marion refinanced her property by taking out a new mortgage; the refinancing occurred without attorney supervision. In 2011, the South Carolina Supreme Court ruled that mortgage lenders are not entitled to equitable remedies to enforce their mortgages that closed without attorney supervision. Matrix Financial Services Corporation v. Frazer, 394 S.C. 134, 140, 714 S.E.2d 532, 535 (2011). In 2020, U.S. Bank National Association (“U.S. Bank”), the successor in interest to Mack-Marion's loan, started foreclosure proceedings against her. In response Mack-Marion asserted several counterclaims, including a declaratory judgment that U.S. Bank was barred from the equitable remedy of mortgage foreclosure under Matrix. The bank filed motions to dismiss the counterclaims contending that (1) the master-in-equity, to whom the case had been assigned, did not have subject matter jurisdiction over claims for the unauthorized practice of law, which could only be brought before the South Carolina Supreme Court, and (2) the mortgage was recorded before the effective date of the Matrix decision. The master-in-equity granted the motion to dismiss. Mack-Marion appealed, and the S.C. Supreme Court granted her motion to have the case certified to it. U.S. Bank’s subject matter jurisdiction argued rested on previous decisions of the South Carolina Supreme Court and the South Carolina Court of Appeals which seemed to indicate that unauthorized practice claims could only be brought in the original jurisdiction of the S.C. Supreme Court. In Mack-Marion the court clarified how lower courts should handle civil claims involving the unauthorized practice of law. First, the court reaffirmed its prior rulings that South Carolina does not recognize a cause of action for the unauthorized practice of law. To have a valid claim involving the unauthorized practice of law a “party must show something more than the unauthorized practice of law to have a valid claim.” Second, the court overruled prior case law to the extent that it found that lower courts did not have subject matter jurisdiction over claims that were “intertwined” with the unauthorized practice of law. Under the court's decision in Mack-Marion, lower courts would have subject matter jurisdiction over such claims if the South Carolina Supreme Court had found that the conduct in question was the unauthorized practice of law. That was the situation in Mack-Marion because the S.C. Supreme Court had already found in Matrix that mortgage lenders engaged in the unauthorized practice of law by closing loans without attorney supervision. Third, while the master-in-equity had subject matter jurisdiction over Mack-Marion's counterclaims, the court nonetheless affirmed the dismissal of those counterclaims because the mortgage was recorded before the court’s decision in Matrix. Mack-Marion asked the court to rule that Matrix should be applied retroactively but the court did not “see a sound reason to do so.” *** Fourth, the court clarified that it would only exercise subject matter jurisdiction to determine whether conduct constituted the unauthorized practice of law when the conduct raised a novel question. See Nathan M. Crystal, South Carolina Doesn't Recognize a Cause of Action for UPL, Right? - Not So Fast, 36 S. Carolina Lawyer 16 (March 2025).

Rule 7.1 False, Deceptive, and Misleading Communications; Advertising by Out-of-State Lawyers; Creating Unjustified Expectations; Comparison with Other Lawyers; Rule 7.2 Identification of a Responsible Lawyer

In re Matter of Hostilo, 2025 S.C. LEXIS 44 (Apr. 9, 2025). Respondent, a lawyer admitted to practice in Georgia but not in South Carolina, engaged in advertising in South Carolina and was therefore subject to the South Carolina Rules of Professional Conduct under S.C. Supreme Court Rule 418. Respondent also employed South Carolina admitted attorneys who provide legal services in South Carolina. The S.C. Supreme Court accepted respondent’s conditional admission and administered a public reprimand for numerous violations of the advertising rules in the firm’s website, YouTube video, and billboard. The case reads like a checklist of advertisements a firm should not make. Careful reading of the opinion by any lawyer who engages in advertising is worthwhile. The following violations, however, are particularly worth noting: · Misrepresentation about length of practice in South Carolina and other jurisdictions; · Statements about results obtained in cases without the required disclaimers; · Comparison of services rendered by respondent’s firm with services rendered by other lawyers without the required disclaimers; · Testimonials and endorsements without the proper disclaimers; · Violation of the requirement that advertising be “predominantly informational,” particularly by visual emphasis of money; · Failure to review advertisement for compliance with the Rules of Professional Conduct.