LAW FIRM OWNERSHIP

Illinois General Assembly - Full Text of SB3812

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SB3812 - 104th General Assembly

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Introduced

Senate Amendment 001

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Introduced

Senate Amendment 001

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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3812

Introduced 2/6/2026, by Sen. Michael E. Hastings

SYNOPSIS AS INTRODUCED:

705 ILCS 205/13 new

Amends the Attorney Act. Prohibits a private equity group, hedge
fund, or any entity owned, operated, or controlled by a private equity
group or hedge fund, including management services organizations, that is
involved with a law firm or an attorney's practice from: (1) interfering
with the professional judgment of attorneys in representing clients; (2)
exercising control over or being delegated the power to own or determine
the content of client records, select, hire, or terminate the employment
of attorneys or allied legal staff in whole or in part based on competency
or proficiency; or set competency or proficiency parameters for attorneys
or allied legal staff; or (3) charging 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. Prohibits an attorney from sharing legal fees
directly or indirectly with an out-of-state alternative business structure
unless: (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; and (3) the law of that state
is controlling under the Illinois Rules of Professional Conduct or a
successor rule. Provides for the recovery of statutory damages, attorney's
fees and costs, and injunctive or declaratory relief as a remedy for
violation. Defines terms. Contains applicability provisions. Effective
immediately.
LRB104 16659 JRC 30063 b

A BILL FOR

SB3812
LRB104 16659 JRC 30063 b
1

AN ACT concerning civil law.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

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

6

(705 ILCS 205/13 new)
7

Sec. 13.
Protection of clients.
8

(a) As used in this Section:
9

"Alternative business structure" means any entity that
10
provides legal services while allowing non-attorney ownership
11
or decision-making authority of the entity. "Alternative
12
business structure" does not include nonprofit organizations.
13

"Hedge fund" means a pool of funds managed by investors
14
for the purpose of earning a return on those funds, regardless
15
of the strategies used to manage the funds. A hedge fund
16
includes, but is not limited to, a pool of funds managed or
17
controlled by a private limited partnership.
18

"Management services organization" means an entity that
19
provides management and administrative support services in
20
exchange for ownership of some or all of the law firm's assets.
21

"Private equity group" means an investor or group of
22
investors who primarily engage in the raising of capital and
23
who invests, develops or disposes of assets.

SB3812
- 2 -
LRB104 16659 JRC 30063 b
1

(b) A private equity group, hedge fund, or any entity
2
owned, operated, or controlled by a private equity group or
3
hedge fund, including management services organizations, that
4
is involved with a law firm or lawyer's practice may not do any
5
of the following:
6

(1) Interfere with the professional judgment of
7

attorneys in representing clients.
8

(2) Exercise control over or be delegated the power to
9

do any of the following:
10

(A) owning or determining content of client
11

records;
12

(B) selecting, hiring, or terminating attorneys or
13

allied legal staff in whole or in part based on
14

competency or proficiency; or
15

(C) setting competency or proficiency parameters
16

for attorneys or allied legal staff.
17

(3) Charge any fee to the attorney or law firm that is
18

directly or indirectly based on the fees, revenues, or
19

profits of the attorney or law firm.
20

(c) Any contract involving management of a law firm or
21
attorney's practice with a private equity group, hedge fund,
22
or any entity owned, operated, or controlled by a private
23
equity group or hedge fund, including management service
24
organizations, may not include any provision limiting a
25
attorney or allied legal staff member in that practice from:
26

(1) competing with that law firm or practice in the

SB3812
- 3 -
LRB104 16659 JRC 30063 b
1

event of termination or resignation; or
2

(2) disparaging or commenting on that law firm or
3

practice as to any issues involving quality of services,
4

ethical or professional challenges in the practice of law,
5

or revenue-increasing strategies employed by the private
6

equity group, hedge fund, or any entity owned, operated,
7

or controlled by a private equity group or hedge fund,
8

including management services organizations.
9

(d) An attorney licensed or otherwise authorized to
10
practice in this State may not share legal fees directly or
11
indirectly with an out-of-state alternative business structure
12
unless all the following apply:
13

(1) The attorney is also licensed in the state in
14

which the alternative business structure is approved.
15

(2) The fees are compensation for providing legal
16

services in that state.
17

(3) The law of that state is controlling under Rule
18

8.5 of the Illinois Rules of Professional Conduct or any
19

successor rule.
20

(e) A violation of this Section may constitute cause for
21
the imposition of discipline by the Attorney Registration and
22
Disciplinary Commission and subject the attorney to the
23
following penalties:
24

(1) statutory damages of $10,000 per violation or 3
25

times the actual damages incurred by the client, whichever
26

is greater;

SB3812
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LRB104 16659 JRC 30063 b
1

(2) attorney's fees and costs; and
2

(3) injunctive or declaratory relief.
3

(f) This Section does not apply to any arrangement for the
4
sharing of legal fees if both of the following conditions are
5
satisfied:
6

(1) The arrangement for the sharing of legal fees was
7

ordered or approved by a court or tribunal of competent
8

jurisdiction, including, but not limited to, the
9

establishment or distribution of a common benefit fund in
10

coordinated, consolidated, or multidistrict litigation.
11

(2) The manner by which legal fees are to be allocated
12

is subject to judicial or tribunal oversight and
13

determined by the court to be fair, reasonable, and
14

necessary for the administration of justice.
15

(g) This Section applies only to contracts entered into on
16
or after the effective date of this amendatory Act of the 104th
17
General Assembly.

18

Section 99.
Effective date.
This Act takes effect upon
19
becoming law.

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