“But I Did Stay At A Holiday Inn Last Night!”: Unauthorized Practice of Law By Corporate Reps In IL

brady bunchIn Rohr Burg Motors, Inc. v. Kulbarsh, 2014 IL App (1st) 131664, the First District expands on the rule requiring a corporation to be represented by counsel in litigation.

The plaintiff car dealer filed a pro se (i.e. not through an attorney) complaint seeking return of a car the defendant retained after promising to return it to the dealer in exchange for a refund. 

When the dealer’s check bounced, plaintiff kept the car and wouldn’t give it up.  The dealer sued to get the car back.

The check did eventually clear and was cashed by the defendant within a week.  Still, the defendant argued that the dealership committed fraud by submitting a bad check and filed defenses and counterclaims based on the original bounced check.

Representing A Corporation Through a Non-Lawyer – The Rules and Consequences

Upholding summary judgment for the car dealer, the Court first rejected the plaintiff’s argument that the dealer’s complaint was void since a nonattorney filed it. 

The Illinois Attorney Act, 705 ILCS 205/1, plainly provides that “no person shall be permitted to practice as an attorney within this State without having….obtained a license for that purpose….”

Because of this, a corporation’s complaint filed by a non lawyer would normally be void.  This so-called “nullity rule” aims to foster the policy of deterring the unauthorized practice of law. 

The  reason for the rule in the corporate context is that a corporate representative’s interests will often be at odds with the corporate entity’s.  A corporation can, however, defend itself through an officer in a small claims case (a case that seeks damages under $10k). See Supreme Court Rule 282.

The Court here found that sanctions for a corporation’s unauthorized practice of law should be proportionate to the gravity of the violation.  A blanket rule that voids all nonlawyer corporate court filings should be applied only where it furthers the purposes of protecting the public and the integrity of the court system.

The factors a court considers in determining whether to sanction a corporation that acts through a nonattorney include: (1) whether the conduct was done with knowledge that it was improper, (2) whether the corporation acted diligently and promptly in correcting the mistake by obtaining counsel, (3) whether the nonattorney’s participation is minimal or substantial; and (4) whether the participation results in prejudice to the opposing party.  (¶¶ 39-44).

Applying these rules, the Court found that the car dealer’s filing a complaint through its nonlawyer director wasn’t egregious enough to warrant invalidating all of the plaintiff’s filings.  The Court noted there was no evidence the corporate agent intentionally filed suit without an attorney and that within two months of the complaint filing, the plaintiff hired an attorney to represent it in the lawsuit.

Finally, the court found that defendant wasn’t prejudiced by the filing of a complaint by a nonlawyer.  The complaint sufficiently apprised the defendant of the nature of plaintiff’s claims.

Take-aways: Corporate representation by a non-attorney won’t always void the litigation.  The Court will tie any sanction to the seriousness of the unauthorized practice of law violation.  If the mistake is corrected or is only a technical one, it won’t doom the pro se corporation’s filings.

  

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PaulP

Litigation attorney at Fisher Kanaris, P.C. representing businesses and individuals in all types of commercial disputes.