Illinois Bill Targeting Private Equity in Law Could Have Much Broader Impacts, Critics Warn

Legal ethics attorney Trisha Rich was quoted in a Law.com article about Illinois House Bill (HB) 5487, which seeks to limit private equity involvement in the legal services industry. The bill, currently awaiting Gov. JB Pritzker's signature, would amend the state's Attorney Act to prohibit management services organizations (MSOs) from interfering with attorneys' professional judgment, charging fees based on attorney or law firm fees, revenue or profits, and making hiring or other personnel decisions. It would also ban fee-splitting between Illinois attorneys and out-of-state alternative business structures (ABS). Proponents say the law provides needed safeguards to protect lawyers from outside investor influence and ensure clients receive the top-quality legal support to which they are entitled; critics, including Trisha, raise concerns about its effectiveness given potential duplication with the existing Model Rules of Professional Conduct, specifically Rule 5.4 that prohibits fee-sharing with nonlawyers, as well as its constitutionality under Illinois' framework for regulating the practice of law. She also warned about the bill's broad scope, saying it could interfere with everyday vendor relationships for recruiting and technology services.

"Court reporting companies and software vendors and document reviews and staffing companies and legal advertising companies – it just sweeps up every kind of company that services the profession that's not wholly owned by lawyers," she highlighted.

Trisha also published a Holland & Knight alert after HB 5487 was passed that provides a comprehensive breakdown of its provisions and potential implications for law firm operations.

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