James J. Grogan, Illinois Attorney Registration & Disciplinary Commission

Today, regulators are gaining more experience as well as professionalism. As we do so, it is natural that we ask how we can do it better. It is natural that we seek to be less reactive and more proactive.

Operating under the authority of the Illinois Supreme Court, the Illinois Attorney Registration & Disciplinary Commission (ARDC) regulates, licenses and disciplines the lawyers of the state of Illinois.

The young attorneys entering the profession today have professional and economic challenges that attorneys a generation ago did not have. Today law students graduate with a high level of debt and enter a world of significantly fewer professional opportunities. Further, nothing in their legal training equips them to deal with the business aspects of a law practice, and, once they graduate, mentoring no longer occurs on the scale it used to.

Most lawyer regulators will say that our business is to discipline. They will say that there are bad apples, and that it is the regulator’s job to remove them from the profession. Of course, we need to keep doing that. But not only do that — to only do that is the old model. We need to do more.

There are also lawyers who are not bad apples, they simply are not equipped to handle the rigors of practice. This is particularly true of sole practitioners, who operate without effective oversight. This might be less true in a large firm, where there are checks on a lawyer’s practice, such as insurance.

We have a very large attorney population in Illinois — nearly 96,000 lawyers, with over 45,000 of those based in Cook County (Chicago). In 2015, the Supreme Court allowed us to collect certain information from our lawyers during the annual registration process. That information includes, most notably, the types of structures they work in, whether they have malpractice insurance, and the succession planning they have in place. (By succession planning, I mean what happens if a lawyer is disabled, dies, or is otherwise unable to practice).

Of our 96,000 registered lawyers, 68,000 are registered as active (the others are either inactive or retired). Of those 68,000, about 20% (13,555) are sole practitioners. Those are the people in the trenches. Of those attorneys, 7,967 say they have malpractice insurance, and 5,588 say they do not.

What does it mean when a sole practitioner does not have malpractice insurance? It means, most likely, that they have not analyzed their systems. That is, when you seek malpractice insurance, the insurer requires you to analyze your systems: do you maintain certain books and records, do you have a system for screening conflicts, do you have a succession plan, etc.

The question that I find most interesting is the one regarding succession planning. If you work in-house, or for the government, and even if you work in a small firm, succession planning is not such a big issue. If something happens to you, it is likely someone else will be available to step in. But if you are a sole practitioner, this is a big deal. The information we have collected reveals that of the13,555 sole practitioners in Illinois, 10,463 say that they do not have succession plans. 2,167 say that they do, and 925 say they are not sure. (In fact, when we asked this question, we received hundreds of calls from lawyers asking us what a succession plan was).

It’s a terrible problem when a sole practitioner becomes incapacitated without a succession plan. What it usually means is that the regulator has to step in as the receiver, and the clients end up lost, unable to understand what is happening with their matters.

All of this leads to proactive management based regulation (PMBR). No one wants lawyers to fail. No one wants lawyers to not be in a position to render the most competent legal services. PMBR helps a sole practitioner to know where he/she needs help.

What we are doing is looking at what lawyers who are obliged to conduct self-assessments do, whether it’s a self-assessment done for the purposes of insurance or under the requirements of another jurisdiction, such as Australia or Nova Scotia. We are studying the mechanisms that will help sole practitioners to study their systems.

We are not doing this with the idea that big brother is watching and will come to get you if you don’t do it right. To the contrary, our goal is for sole practitioners to have successful careers so that we don’t have to deal with them. Most lawyers are perfectly competent when it comes to their one-on-one work with clients. But their offices are a mess.

Our Commission, the ARDC’s governing body, is so interested in this that each and every one of its seven members has joined the subcommittee that is studying PMBR.

There has been an evolution in how lawyers are regulated. In the 1960s and 1970s, the regulatory system for lawyers was broken. Today, regulators are gaining more experience as well as professionalism. As we do so, it is natural that we ask how we can do it better. It is natural that we seek to be less reactive and more proactive. Are we doing a good job in serving licensed lawyers? A part of this is to look outside the US, to see what is happening in England, in Australia, in Canada.

In Illinois we, as regulators, do not have the authority to regulate entities — we only have the authority to regulate individual licensees. That being said, given how often lawyers move among firms, entity regulation would be a moving target. In fact, there are only a few states in which entity regulation has caught on in any form. In Illinois, I expect that our approach will be limited to the individual lawyer. In our opinion, we can get to an entity via its individuals, on the grounds that a partner was not properly managing his or her office. In sum, not only do we not have the formal authority to regulate entities, but we also do not see the need to do so.

In 2010, the ARDC, with the approval of the Supreme Court, adopted a mission statement, which you can consult on our website. When you look at it, you will see that we perceive our role to be larger than just discipline — it also includes registration and education, and PMBR is also a natural outgrowth. We view this mission statement as being akin to Colorado’s regulatory objectives.

In our opinion, once big states like Illinois and Colorado make progress on this topic, other states will follow fairly quickly. This begs the question: why are Illinois and Colorado at the forefront of PMBR in the US? There are a number of reasons for this. To begin, more generally speaking, our two states have often been leaders in lawyer regulation. Secondly, without criticizing the unified (or integrated) bar structure, I think that the fact that in Colorado and Illinois we do not have unified bars makes developing regulatory initiatives easier. Another reason is that in each of Illinois and Colorado we have a singular regulatory system, as compared to a state like New York. In that state, regulatory authority is spread among the various judicial departments, resulting in a Balkanized system that makes the development of regulatory initiatives more difficult. Finally, in both Illinois and Colorado, the regulatory agency has a positive and healthy relationship with the Supreme Court, with regular and positive dialog. You don’t see that in many other states, where the relationship might even be adversarial.

Of course, this cannot work unless there is lawyer buy-in. So far, the reaction to PMBR we’ve received from the state and local bar associations (such as the Illinois State Bar Association, the Chicago Bar Association,…) has been quite positive. Remember, many of the officers of the bar associations are sole practitioners themselves. They understand the challenges of being a sole practitioner, and they want sole practitioners to survive. We are focusing our discussions on the young lawyer sections and well as the solo and small firm sections. In my opinion, they understand the benefits of PMBR.

While everything is on the table, it is possible that our first steps with respect to PMBR will concern sole practitioners only. Or, stated more generally, it will be directed to those who don’t have the safety net offered by a firm structure or by professional liability insurance. The reason for this focus is that our experience at the ARDC is that it is typically sole proprietors that get into trouble. For example, in 2015, 75% of the lawyers sanctioned were either sole practitioners or in small firms. What our first steps might consist of, for example, is a rule that requires those who do not otherwise have a safety net of some kind to perform a self-assessment. We might accompany this with, for example CLE (continuing legal education) credit for practitioners to learn about the self-assessment. Of course, whatever we do must be approved by the supreme court.

We don’t see that PMBR is connected to alternative business structures. Or, at least, we don’t see that it needs to be. For us, we see PMBR as our way to help lawyers, and sole practitioners in particular, to avoid us, the regulators. And as our way to help lawyers provide optimum service to their clients. That being said, again, everything is on the table for review, even if our focus at the moment is on PMBR.

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