HB 5487

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Full Text of HB5487
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	HB5487 - 104th General Assembly
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		HB5487 Enrolled		LRB104 20746 JRC 34250 b
1    AN ACT concerning civil law.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Attorney Act is amended by adding Section
513 as follows:
6    (705 ILCS 205/13 new)
7    Sec. 13. Protection of clients.
8    (a) As used in this Section:
9    "Allied legal staff" means persons who are not licensed as 
10attorneys and may have access to attorney-client and 
11work-product privileged information in their work, including, 
12but not limited to, paralegals and legal assistants.
13    "Alternative business structure" means any entity that 
14provides legal services and allows persons who are not 
15licensed as attorneys to have ownership or decision-making 
16authority. "Alternative business structure" does not include 
17nonprofit organizations.
18    "Management services organization" means an entity that 
19provides management and administrative support services in 
20exchange for ownership of a law firm's assets or payments.
21    (b) The provisions of this Section apply only to:
22        (1) a licensed attorney or law firm operating in 
23    Illinois with annual global revenue from that licensed 
		HB5487 Enrolled	- 2 -	LRB104 20746 JRC 34250 b
1    attorney's or law firm's provision of legal services that 
2    is less than $300,000,000; in determining a licensed 
3    attorney's or law firm's revenue for purposes of this 
4    paragraph (1), the determination shall be:
5            (A) made by taking into account the global revenue 
6        of any partnership or law firm affiliated with the 
7        licensed attorney or law firm, whether or not the 
8        affiliated partnership or other law firm is domiciled 
9        in Illinois; and
10            (B) based on publicly-available information; and
11        (2) a licensed attorney or law firm that regularly 
12    represents clients on a contingent fee basis, where the 
13    fee is based on the resolution or outcome of actual or 
14    threatened private litigation, and that has derived more 
15    than 50% of the attorney's or law firm's revenues from the 
16    contingent fee arrangements in each of the preceding 3 
17    calendar years; in determining a licensed attorney's or 
18    law firm's revenue for purposes of this paragraph (2), the 
19    determination shall be made by taking into account the 
20    gross global revenue of the attorney or law firm, together 
21    with any partnership or law firm affiliated with such 
22    attorney or law firm, whether or not such affiliated 
23    partnership or other law firm is domiciled in Illinois.
24    Upon request of the Attorney Registration and Disciplinary 
25Commission or another governmental authority or agency charged 
26with administering or enforcing the provisions of this 
		HB5487 Enrolled	- 3 -	LRB104 20746 JRC 34250 b
1Section, or upon order of a court of competent jurisdiction, a 
2licensed attorney or law firm shall be permitted to provide a 
3self-certification attesting, under oath, to the fact that (i) 
4the licensed attorney's or law firm's annual global revenue is 
5more or less than $300,000,000, (ii) the licensed attorney or 
6law firm regularly represents clients on a contingent fee 
7basis, as that term is used in this subsection, and derived 
8more or less than 50% of the licensed attorney's or law firm's 
9revenues from contingent fee arrangements in each of the 
10previous 3 calendar years, as determined in accordance with 
11this subsection, or (iii) both (i) and (ii).
12    (c) Any attorney or law firm subject to this Section that 
13is party to an agreement with a management services 
14organization must disclose in all attorney-client contracts 
15that the attorney or law firm is party to such an agreement and 
16the material terms of the agreement. Failure to comply with 
17this duty will subject the lawyer or law firm to the provisions 
18of subsection (g).
19    (d) An entity owned, operated, or controlled in whole or 
20in part by persons not licensed as attorneys, including 
21management services organizations, that is involved with a law 
22firm's or attorney's practice may not do any of the following:
23        (1) interfere with the professional judgment of 
24    attorneys in representing clients;
25        (2) exercise control over or be delegated the power to 
26    do any of the following:
		HB5487 Enrolled	- 4 -	LRB104 20746 JRC 34250 b
1            (A) to reveal, own, or determine the content of 
2        client records or to reveal any attorney-client 
3        communications;
4            (B) to select, hire, or terminate attorneys or 
5        allied legal staff; or
6            (C) to set competency, productivity, or 
7        proficiency parameters for attorneys or allied legal 
8        staff;
9        (3) charge any fee to the attorney or law firm that is 
10    directly or indirectly based on the attorney's fees, 
11    revenues, or profits of the attorney or law firm. 
12    The prohibition in paragraph (3) of this subsection does 
13not apply to the repayment of a loan or extension of credit the 
14attorney or law firm is obligated to repay if that the amount 
15of the borrower's obligation is not contingent upon or 
16calculated on the basis of the borrower's attorney's fees, 
17revenues, profits, or other financial performance.
18    (e) Any contract involving management of a law firm or an 
19attorney's practice with any entity owned, operated, or 
20controlled by persons not licensed as attorneys, including 
21management services organizations, may not limit an attorney 
22or allied legal staff member from:
23        (1) competing with that law firm or its practice in 
24    the event of termination or resignation; or
25        (2) disparaging or commenting on that law firm or 
26    practice as to any issues involving quality of services, 
		HB5487 Enrolled	- 5 -	LRB104 20746 JRC 34250 b
1    ethical or professional challenges in the practice of law, 
2    or revenue-increasing strategies employed by an entity 
3    owned, operated, or controlled in whole or in part by 
4    persons not licensed as attorneys.
5    (f) An attorney licensed or otherwise authorized to 
6practice in this State may not share legal fees directly or 
7indirectly with an out-of-state alternative business structure 
8unless all the following apply:
9        (1) The attorney is also licensed in the state in 
10    which the alternative business structure is approved.
11        (2) The fees are compensation for providing legal 
12    services in that state.
13        (3) The law of that state is controlling under Rule 
14    8.5 of the Illinois Rules of Professional Conduct or any 
15    successor rule.
16    (g) A violation of this Section may constitute cause for 
17the imposition of discipline by the Attorney Registration and 
18Disciplinary Commission and subject the attorney, the 
19management services organization, and the alternative business 
20structure to the following penalties:
21        (1) statutory damages of $10,000 per violation or 3 
22    times the actual damages incurred by the client, whichever 
23    is greater;
24        (2) attorney's fees and costs; and
25        (3) injunctive or declaratory relief.
26    (h) This Section does not apply to any arrangement for the 
		HB5487 Enrolled	- 6 -	LRB104 20746 JRC 34250 b
1sharing of legal fees if both of the following conditions are 
2satisfied:
3        (1) The arrangement for the sharing of legal fees was 
4    ordered or approved by a court or tribunal of competent 
5    jurisdiction, including, but not limited to, the 
6    establishment or distribution of a common benefit fund in 
7    coordinated, consolidated, or multidistrict litigation.
8        (2) The manner by which legal fees are to be allocated 
9    is subject to judicial or tribunal oversight and 
10    determined by the court to be fair, reasonable, and 
11    necessary for the administration of justice.
12    (i) This Section applies only to contracts entered into on 
13or after the effective date of this amendatory Act of the 104th 
14General Assembly.
15    Section 99. Effective date. This Act takes effect upon
16becoming law.