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Bill

H 5741

Ban litigation retention agreements

2025-2026 Regular Session Introduced by Thomas Beach and 11 co-sponsors

Public entities in SC would be prohibited from entering into or paying for litigation services with law firms that have any General Assembly member or immediate family as an owner

Referred to Committee on Judiciary
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Bill Summary · H 5741

Overview

Bill H 5741 (2025-2026) from South Carolina would prohibit public entities in the state from entering into or maintaining litigation retention agreements with law firms that have a member of the General Assembly or an immediate family member as an owner, partner, shareholder, officer, or other compensated position. The ban applies during a member’s tenure and for one year after leaving office. The bill also bars such firms from receiving direct or indirect compensation from prohibited retention agreements, with limited exceptions for pre-approved reasonable costs.

Main purpose and intent

  • To reduce potential conflicts of interest and perceived influence in state litigation decisions by restricting relationships between public entities and law firms connected to legislators or their immediate family.
  • To ensure that litigation funding and fee arrangements involving public entities are not influenced by legislators’ or their families’ financial interests.

Key provisions and changes

  • Prohibition on public entities: State agencies, departments, boards, commissions, authorities, local governing bodies, school districts, special districts, and other political subdivisions cannot enter into, approve, renew, extend, or materially amend a litigation retention agreement with a “covered law firm.”
  • Ban duration tied to office: The prohibition lasts during the member’s tenure and for one year after the member departs from the General Assembly.
  • Prohibition on compensation: Covered law firms may not receive direct or indirect compensation from such prohibited litigation retention agreements. This includes:
    • Attorney’s fees (contingency or otherwise)
    • Referral fees and co-counsel fees
    • Local counsel fees and subcontract payments
    • Settlement-related fees
    • Expense reimbursements
    • Any other form of compensation, except for reasonable costs approved prior to the member’s election and their employment by the firm.
  • Definitions:
    • Covered law firm: Any law firm or similar legal services entity in which a General Assembly member or an immediate family member is an owner, partner, shareholder, officer, director, employee, of counsel, contractor, compensated agent, referral fee recipient, profit-sharing participant, or otherwise receives compensation from the litigation matter.
    • Public entity: A state agency or any subordinate public entity (local governments, school districts, special districts, etc.).
  • Effective date: The act would take effect upon gubernatorial approval.

Who would be affected

  • Law firms that employ or have ownership/compensation ties to current or former General Assembly members or their immediate family members.
  • Public entities in South Carolina that engage in litigation retention agreements with such firms.
  • Members of the General Assembly and their immediate family members, due to the restriction on ownership or compensated roles in eligible law firms.

Procedural and timeline aspects

  • Introduction and first reading: June 25, 2026.
  • Referred to Committee: Judiciary.
  • The bill would become law upon approval by the Governor.

Potential implications

  • Increased independence of public litigation funding decisions by insulating them from legislator-affiliated firms.
  • Practical compliance considerations for public entities to review and potentially terminate or avoid existing retention arrangements with covered firms.
  • Possible impact on firms with overlapping legislative and professional roles, prompting restructuring of ownership or affiliations to avoid prohibited status.
  • No monetary thresholds or caps are specified; the prohibition applies broadly to retention agreements and related compensation.

If you’d like, I can extract potential compliance steps for public entities or provide a quick comparison to similar ethics/procurement provisions in other states.

Compiled from official sources — confirm details with the bill’s official record.

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