HB5487eng 104TH GENERAL ASSEMBLY

HB5487 Engrossed LRB104 20746 JRC 34250 b

AN ACT concerning civil law.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Attorney Act is amended by adding Section 13 as follows:

(705 ILCS 205/13 new)

Sec. 13. Protection of clients.

(a) As used in this Section:

"Alternative business structure" means any entity that provides legal services while allowing non-attorney ownership or decision-making authority of the entity.

"Alternative business structure" does not include nonprofit organizations.

"Management services organization" means an entity that provides management and administrative support services in exchange for ownership of a law firm's assets or payments.

(b) An entity owned, operated, or controlled in whole or in part by persons not licensed as attorneys, including management services organizations, that is involved with a law firm or lawyer's practice may not do any of the following:

(1) Interfere with the professional judgment of attorneys in representing clients.

(2) Exercise control over or be delegated the power to do any of the following:

(A) accessing, owning, or determining the content of client records, or accessing any attorney-client communications;

(B) selecting, hiring, or terminating attorneys or allied legal staff; or

(C) setting competency, productivity, or proficiency parameters for attorneys or allied legal staff.

(3) Charge any fee to the attorney or law firm that is directly or indirectly based on the fees, revenues, or profits of the attorney or law firm.

(c) Any contract involving management of a law firm or attorney's practice with any entity owned, operated, or controlled by persons not licensed as attorneys, including management services organizations, may not limit an attorney or allied legal staff member from:

(1) competing with that law firm or practice in the event of termination or resignation; or

(2) disparaging or commenting on that law firm or practice as to any issues involving quality of services, ethical or professional challenges in the practice of law, or revenue-increasing strategies employed by an entity owned, operated, or controlled in whole or in part by persons not licensed as attorneys.

(d) An attorney licensed or otherwise authorized to practice in this State may not share legal fees directly or indirectly with an out-of-state alternative business structure unless all the following apply:

(1) The attorney is also licensed in the state in which the alternative business structure is approved.

(2) The fees are compensation for providing legal services in that state.

(3) The law of that state is controlling under Rule 8.5 of the Illinois Rules of Professional Conduct or any successor rule.

(e) A violation of this Section may constitute cause for the imposition of discipline by the Attorney Registration and Disciplinary Commission and subject the attorney to the following penalties:

(1) statutory damages of $10,000 per violation or 3 times the actual damages incurred by the client, whichever is greater;

(2) attorney's fees and costs; and

(3) injunctive or declaratory relief.

(f) This Section does not apply to any arrangement for the sharing of legal fees if both of the following conditions are satisfied:

(1) The arrangement for the sharing of legal fees was ordered or approved by a court or tribunal of competent jurisdiction, including, but not limited to, the establishment or distribution of a common benefit fund in coordinated, consolidated, or multidistrict litigation.

(2) The manner by which legal fees are to be allocated is subject to judicial or tribunal oversight and determined by the court to be fair, reasonable, and necessary for the administration of justice.

(g) This Section applies only to contracts entered into on or after the effective date of this amendatory Act of the 104th General Assembly.

Section 99. Effective date. This Act takes effect upon becoming law.