SPRINGFIELD — State Senator Michael E. Hastings led the way on a new law to safeguard the professional independence of attorneys and protect clients from undue influence by private equity investors, hedge funds and investor‑backed management services organizations.
“This bill is about one simple truth: Illinois clients deserve attorneys who are loyal to them, not to some distant investor chasing a quarterly return,” said Hastings (D-Frankfort).
While Illinois currently has laws limiting outside influence on law firms, private equity companies have found a new loophole using ‘management service organizations.’ Through MSOs, private equity can control key aspects of a law firm like billing, technology, marketing and administrative staff, enabling the control of firm strategy without technically owning the practice.
Hastings’ law prohibits private equity groups, hedge funds and related entities from interfering with lawyers’ professional judgment, controlling client records or setting staffing standards based on competency or proficiency. It also restricts investor‑linked fees tied to law firm revenues or profits — a move supporters say reinforces ethical legal practice and strengthens client protections.
The law makes sure any cross-state fee sharing follows proper licensing and the Illinois Rules of Professional Conduct. In the case of violations, it lays a framework for statutory damages, attorney’s fees, injunctive relief and disciplinary action.
House Bill 5487 was signed into law Friday and takes effect immediately.
