Assembly

June 22, 2013

Agenda Item 9B Legislation – SB 31

MEMORANDUM

To: Special Committee on Collaborative Law From: Charles J. Northrup General Counsel Date: February 26, 2013 Re: Separation of Powers and SB 31 _______________________________________________________________________ On February 21, 2013 the Special Committee requested that I research the issue of whether SB 31 (collaborative law) posed separation of powers issues. The results of my research and analysis are below. I believe that many of SB 31’s provisions likely violate the separation of powers. I. Separation of Powers The legislature is prohibited from enacting laws that unduly infringe upon the inherent powers of the courts. Lebron v. Gottlieb Memorial Hospital, 237 Ill.2d 217, 233, 930 N.E.2d 895, 912 (2010), citing Best v. Taylor Machine Works, 179 Ill.2d 367, 411 (1997). Legislative enactments that directly and irreconcilably conflict with rules of the court on matters within the court’s authority also violate the separation of powers doctrine. Burger v. Lutheran General Hospital, 198 Ill. 2d 21, 33, 759 N.E.2d 533, 542 (2001). As a matter of preserving the independence of the judiciary, court rules supersede inconsistent statutory provisions. Kunkel v. Walton, 179 Ill. 2d 519, 529, 689 N.E.2d 1047 (1997). Nevertheless, the separation of powers doctrine is not absolute nor is it violated “merely because separate spheres of governmental authority may overlap.” Best, 179 Ill. 2d at 411. Laws that compliment the authority of the judiciary or that have only a peripheral effect on court administration may be acceptable. Kunkel, 179 Ill. 2d at 528. The Illinois Supreme Court has made it clear that lawyer regulation is within its sole authority. E.g., Ford Motor Credit Company v. Sperry, 214 Ill. 2d 371, 382, 827 N.E.2d 422, 429 citing People ex rel.Chicago Bar Association v. Goodman, 366 Ill 346 (1937)(“This court has the inherent power to define and regulate the practice of law in this state.”). This includes the “power to prescribe rules governing attorney conduct…”. Ford Motor Credit Company, 214 Ill.2d at 382 citing People ex rel. Brazen v. Finley, 119 Ill.2d 485, 494 (1988). The comprehensive scheme of lawyer regulation, including the Illinois Rules of Professional Conduct, disciplinary procedures and penalties, and the

establishment of the ARDC are all part of the Court’s exclusive authority over the regulation of lawyers. Brazen, 119 Ill. 2d at 494. More applicable to SB 31 issues, the Court recognizes by rule that “lawyers who represent clients in alternative dispute resolution processes are governed by the Rules of Professional Conduct. RPC 2.4, Comment [5]. No Illinois case specifically discusses whether a statute affecting a lawyer’s professional conduct violates the separation of powers doctrine. But cf. Cripe v. Leiter, 184 Ill. 2d 185, 703 N.E.2d 100 (1998)(Refusal to apply Illinois’ Consumer Fraud Act to the conduct of lawyers in part due to the Court’s exclusive role in lawyer regulation.); Brazen, 119 Ill. 2d 485(a lower court’s attempt to regulate lawyer conduct via a certification of ethical compliance was struck down as an encroachment upon the Supreme Court’s sole authority to regulate the practice of law). Separation of powers cases in Illinois have addressed legislative encroachment in such areas as: assessing damages (Lebron, 237 Ill. 2d at 242 (legislative limitations on noneconomic damages in medical malpractice cases encroached upon the judicial prerogative of considering excessiveness of jury damages award); and discovery (Kunkel, 179 Ill. 2d at 531(automatic waiver of any privilege of physician confidentiality inconsistent with and undermines the court’s comprehensive scheme for fair and efficient discovery). (Conversely, statutory requirements to attach an evidentiary transcript to a court order for the issuance of a tax deed (People ex rel. County Collector v. Jeri, Ltd., 40 Ill. 2d 293 (1968)); or imposing a 48 hour waiting period in divorce cases (Strukoff v. Strukoff, 76 Ill. 2d 53, 389 N.E.2d 1170 (1979)) were not found to violate the separation of powers.) Other states have addressed the issue and come to differing conclusions on the interplay between statutes and lawyer conduct. Beyers v. Richmond, 594 Pa. 654, 937 A.2d 1082 (2007)(Separation of powers doctrine and the court’s inherent authority to regulate attorney conduct bars application of Pennsylvania’s Unfair Trade Practices law to prosecute attorney conversion); Irwin v. Surdyk’s Liquor, 599 N.W.2d 132 (1999)(legislative delegation of attorney fee regulation to the executive branch violates separation of powers as an impingement on the court’s inherent authority to regulate lawyers); Chambers v. Stengel, 37 S.W.3d 741 (2001)(criminal penalties for improper client solicitation appropriate as a valid exercise of police power); Santa Clara County Counsel Attorney’s Association v. Woodside, 7 Cal. 4th 525, 869 P.2d 1142 (1994)(legislatively enacted bargaining rights applicable to county employed lawyers upheld absent a direct and fundamental conflict between the statute and lawyers’ ethical obligations). II. SB 31 Analysis SB 31 clearly regulates the professional conduct of lawyers in dealing with their clients (and others) when engaging in collaborative law. The provisions dealing with disqualification, imputation of conflicts, mandatory assessments and due diligence, treatment of client information, and others appear to have more than a “peripheral” effect on the administration of justice. These provisions impact the entire lawyer-client relationship during a collaborative law process. In addition, many of these provisions

appear to be in conflict, or at least inconsistent, with the Illinois Rules of Professional Conduct (“RPC”). As such they are constitutionally suspect under the separation of powers doctrine. Provisions of SB 31 that appear to be problematic include: *Section 9: This section mandates the disqualification of a party’s lawyer from representing a party before a tribunal in a proceeding related to the collaborative matter (with some exceptions). Lawyer “disqualification,” however, is governed by the RPC under conflicts of interest (RPC 1.7, 1.8, and 1.9) and withdrawal (RPC 1.16). Section 9’s mandatory disqualification requirement is inconsistent with the RPC which envisions a case by case and continuous evaluation of conflicts, a client’s informed consent, and duties of communication. The elimination of discretion in judicial acts has been referenced as a rationale for finding a separation of powers violation. Best, 179 Ill. 2d at 413. Section 9 also imputes lawyer disqualification to all other lawyers in a disqualified lawyer’s law firm. Here too, imputation is an aspect of lawyer conduct already governed by the RPC 1.10. In addition, Section 9 appears inconsistent with RPC 1.10 because RPC 1.10 provides for the waiver of the imputation. It also appears that section 9 does not allow for the screening of lateral hires as does RPC 1.10. *Section 10: This section allows a lawyer in a firm who is otherwise disqualified from representing a collaborative law party because of the imputed disqualification to nevertheless represent the party if the lawyer does not charge a fee for the representation and the party satisfies income criteria established by the firm. Generally, this carve-out for low income and pro bono representation infringes upon the Court’s authority to establish equal client rights for all legal consumers, regardless of income. (Whether such a carve-out violates the constitutional prohibition on “special legislation” was not reviewed, but a “special legislation” analysis often accompanies a court’s discussion of separation of powers.) Currently, the RPC do not contain any differing set of lawyer obligations based upon a client’s income. Specifically, section 10 seems inconsistent with the RPC in two respects: (1) section 10(b)(1) requires a lawfirm to establish income criteria for pro bono clients – currently no such requirements exists or are even contemplated, especially in that there are no mandatory pro bono requirements in Illinois; and (2) section 10(b)(3) would allow a “screening” procedure to defeat the imputed disqualification – currently the RPC only allows screening in situations of lateral hires, not as a means to undermine imputation or defeat conflicts of interests. *Section 11: This section seeks to permit representation notwithstanding an imputation of disqualification under section 9 for government agencies. Such a government agency exception conflicts with the RPC’s equal applicability to lawyers for all income classes. As noted, imputation, as well as the ability of lawyers to represent parties that may be affected by a conflict of interest, is conduct governed under the RPC. *Section 12: This section provides that a party “shall make timely, full, candid, and informal disclosure of information related to the collaborative matter without formal discovery.” Such informal disclosures are mandatory. This section may infringe, or at

least conflicts with, the Court’s authority to give effect to and preserve a fundamental right and principle of the attorney-client relationship – the confidentiality of information related to the presentation. The purpose of client confidentiality is to encourage clients to communicate “fully and frankly with the lawyer even as to embarrassing or legally damaging subject matter.” RPC 1.6, Comment [2]. Only when a lawyer is fully informed can he or she provide effective representation. Id. However, this important purpose is potentially impeded by section 12’s mandatory disclosure which may lead a prospective client to withhold information from their lawyer. *Section 14: This section provides that a lawyer must assess with a prospective collaborative party the factors the lawyer reasonably believes are relevant in determining whether collaborative law is appropriate. It also requires that lawyers provide the prospective party information the lawyer reasonably believes is sufficient for the party to make informed decisions about participating in the collaborative law (or other dispute resolution) process. These concepts are currently encompassed in RPC 1.2 addressing limited scope representations and RPC 1.4 on communication. However, section 14 requirements may be inconsistent with RPC 1.2 in that: (1) the “lawyer reasonably believes” standard applicable to lawyer disclosures contained in section 14 is likely more subjective than the RPC 1.2 standard of “reasonable under the circumstances;” and (2) the limited scope representation under RPC 1.2 does not carry with it the automatic disqualification requirement as a prerequisite to engage in a limited scope representation. *Section 15. This section requires a lawyer to investigate whether a prospective party to a collaborative law process has a history of violence or coercive behavior. This investigation obligation continues throughout the collaborative process. These obligations seem inconsistent with a lawyer’s obligations as expressed in a number of Supreme Court rules. Under RPC 3.1, as well as S. Ct. Rule 137, a lawyer’s duty of investigation extends only to the facts and law of the particular case. Performing a historical investigation on a prospective party’s (not just the lawyer’s client) prior behavior is inconsistent with these obligations. In addition, to the extent section 15 implies (or demands) a duty to make a psychological assessment of a prospective party it is inconsistent with the role of a lawyer as recognized by the Court. RPC 2.1, Comment [4] (“Matters that go beyond strictly legal questions may also be in the domain of another profession. Family matters can involve problems within the professional competence of psychiatry, clinical psychology or social work…”). Finally, as a general matter, SB 31 appears to have the effect of legislatively granting recognition to a specialty or subspecialty of the law. This is clearly inconsistent, and likely conflicts with, with RPC 7.4 that “states the general policy of the Supreme Court of Illinois not to recognize certifications of specialties or expertise… .” RPC 7.4, Comment [2]. III. Conclusion SB 31 controls the manner in which lawyers deal professionally with their clients. This type of regulation of the practice of law however, is solely within the authority of

the Supreme Court. It represents more than a peripheral impact on lawyer conduct. As such it infringes upon the Court’s authority. Specifically, as set out above, many of the provisions of SB 31 seem to conflict, or at least are inconsistent, with the Courts Rules of Professional Conduct. Where statutes conflict and are inconsistent with Court rules, the separation of powers doctrine is violated. G:\LEGAL\2012-108 - Legal Collaborative Law - CJN\Memo - Separation of Powers (SB31).doc

MEMORANDUM OF LAW To: Members of the House Judiciary Committee From: Collaborative Law Institute of Illinois Re: Constitutionality of HB1029 Dated: April 1, 2013 The Illinois State Bar Association argues that provisions of House Bill 1029 violate Article 2, Section 1 of the state constitution that reads: “The legislative, executive and judicial branches are separate. No branch shall exercise powers properly belonging to another.” ISBA further argues that:

• Because the Supreme Court has the “inherent power to define and regulate the practice of law” E.g., Ford Motor Credit Company v. Sperry, 214 Ill. 2d 371, 827 N.E.2d 422, the General Assembly does not have the power to pass any statute that would regulate the practice of law in any way, and

• Because the Supreme Court has, by rule, established the Rules of Professional Conduct, and that alternative dispute mechanisms such as collaborate law are governed by the Rules of Professional Conduct, RPC 2.4, that no statute may regulate any aspect of an alternative dispute mechanism.

Though there is no case law to support the ISBA claim that the state constitution prohibits the General Assembly from defining any aspect of an alternative dispute process, the ISBA maintains that HB1029 is a legislative encroachment upon the Supreme Court. The separation of powers clause is not designed to produce a complete divorce among the branches of our single government. People v. Bryant, 278 Ill.App.3d 578, 215 Ill.Dec. 355, 663 N.E.2d 105 (1996). The separate spheres of governmental authority may overlap. McAlister v. Schick, 147 Ill.2d 84, 167 Ill.Dec. 1021, 588 N.E.2d 1151 (1992). To determine whether a legislative enactment pertaining to judicial practice and procedure is constitutional, courts look to whether the statute conflicts with any court rules or unduly infringes on inherent judicial powers. Davidson v. Davidson, 243 Ill.App.3d 537, 183 Ill.Dec. 814, 612 N.E.2d 71 (1993). Kaufman, Litwin and Feinstein v. Edgar, 704 N.E. 2D 756, 761 (1st Dist. 1998). Does House Bill 1029 conflict with any court rule? As explained below, it does not and its Section 25 provides that, in the event of any inconsistency between the statute and a court rule, the court rule shall trump. That provision alone should alleviate any constitutional concern as it underscores that any conflict in overlapping governmental authority between the judicial and legislative branches is resolved in favor of the court rule. Even if Section 25 is not sufficient to address any potential conflict with a court rule, the question is whether a statute defining a process for an attorney to agree to voluntarily withdraw from representation as part of an alternative dispute process conflicts with any court rule. The ISBA argues that because RPC 1.16 include provisions for when a lawyer shall withdraw his or her representation, and because RPC 1.7, 1.8, 1.9 include provisions for when a lawyer shall not enter into a business relationship with a client, a statute may not delineate a procedure when an attorney may voluntarily

2

withdraw from representation. House Bill 1029 does not create a “business relationship” with the attorney and client any more than mediation or arbitration. It is simply an alternative dispute resolution method. House Bill 1029 comfortably fits within the provisions of the RPC. Rule 1.16(b)(7) reads “a lawyer may withdraw from representing a client if other good cause for withdrawal exists.” Here, ensuring an attorney who voluntarily commits to withdrawing in the event the dispute resolution fails, follows through with his or her voluntary commitment to withdraw. This is entirely consistent with the explicit language of RPC 1.16(b)(7) that permits a lawyer to withdraw for good cause. Further, Note 8 of RPC 1.16 reads “A lawyer may withdraw if the client refuses to abide by the terms of an agreement relating to the representation, such as an … agreement limiting the objectives of the representation.” Since the Notes of the Rules explicitly permit an attorney to withdraw if the client refuses to abide by a limited scope of representation, it is entirely consistent (and thus constitutional) for HB1029 to define a process of voluntary withdrawal should a client or opposing party refuse to abide by the terms of the participation agreement of a collaborative law process. Taken to its logical conclusion, the expansive ISBA interpretation of the RPC would conflict with any state statute that would define any limited scope representation agreement. Many Illinois statutes affect the practice of law; to name just a few, the Code of Civil Procedure, Workers Compensation Act, Illinois Marriage and Dissolution of Marriage Act, Mediation Act and the Arbitration Act. Each has a direct impact on the procedures, practice and behavior of practicing lawyers, yet, all were enacted by the legislative branch of government not the judicial. To single out the enactment of House Bill 1029 as unconstitutional based on a separation of powers argument disregards the reality that other statutes, some of which have been named above, have not been challenged but yet affect the practice of law. House Bill 1029 does not prescribe special training or qualifications to practice collaboratively. It is not a specialty or subspecialty. It is a methodology more like mediation than litigation. Our legislature has statutorily endorsed mediation as valid alternative dispute resolution method. Any licensed lawyer in Illinois can practice collaboratively. Of course, as in any area of the law, training hopefully makes a practitioner a better one. Collaborative is a form of alternative dispute resolution and lawyers engaged in collaborative matters remain subject to the Rules of Professional Conduct. RPC 2.4 [5]. Nothing in House Bill 1029 preempts the supremacy of the RPC. The collaborative process is a voluntary one falling within the definition of limited scope representation. ABA Formal Opinion 07-447 provides that a collaborative agreement is a “four way” agreement permissible as limited scope representation under Model Rule 1.2, which has previously been adopted by the Illinois Supreme Court (adopted July 1, 2009, effective January 1, 2010). Under Rule 1.2(c), a lawyer is allowed to limit the scope of an engagement “so long as the limitation is reasonable under the circumstances and the client gives informed consent.” Because the scope of the representation governed by a collaborative four way agreement, known as the Participation Agreement, is limited to accomplish a settlement, the lawyer’s commitment to withdraw, per Formal Opinion 07-447, “is not an agreement that impairs the ability to represent the client, but rather is consistent with the client’s limited goals for the representation.” The ISBA concern that Section 14 of House Bill 1029, requiring a collaborative lawyer to discuss with a prospective client factors which the collaborative lawyer reasonably believes relate to the appropriateness of the prospective client’s matter for the collaborative process, is somehow at odds

Author� 3/27/13 12:53 PMDeleted: .

3

with RPC 1.2, which provides “A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent” is a distinction without difference. In either Section 14 or RPC 1.2, what must be determined is whether the limited scope representation is reasonable considering the totality of the circumstances. Further, RPC 1.2 is controlling in any event; Section 14 simply underscores the obligation on the lawyer to discuss with the client the appropriateness of the collaborative process in the client’s particular case. House Bill 1029’s Section 9 requirement for lawyer disqualification from representing a party before a tribunal is an element of the limited scope representation. Both clients and their lawyers voluntarily enter into the collaborative process with informed consent. The ISBA’S reliance on Best v. Taylor Machine Works, 179 Ill.2d.367, 413 (1997) is misplaced. The Best Court addressed the issue of a unilateral, legislative mandate capping jury awards to plaintiffs. In our situation the collaborative process is voluntary; all parties and attorneys enter into of their own accord, after informed consent. ISBA posits that Section 9 is inconsistent with RPC 1.10 as to waiver of imputed conflicts and screening of hires in RPC 1.10. This is a straw dog, as the RPC controls in any event. ISBA is concerned that Section 12 infringes on attorney/client confidentiality. What ISBA fails to point out is that House Bill 1029 in Section 12 specifically says “Except as provided by law other than this Act” there shall be timely, full, candid disclosure of information. Clearly, all rules of confidentiality prevail and the collaborative process’ information disclosure provision is always subject to Illinois law. The requirement in Section 15 to investigate violence or coercive behavior is an offshoot of RPC 1.14 that requires a lawyer to take reasonably necessary protective action on a client’s behalf if that client has diminished capacity. Violence and coercive behavior frequently leads to a party’s diminished capacity. Especially in domestic relations cases it is necessary for a lawyer to know and understand the facts leading up to an impending dissolution and possible impact on the client’s ability to make reasonable decisions that will have an impact on the outcome of their case. The ISBA position that RPC 3.1 and S. Ct. Rule 137 are in conflict with Section 15 is in error. RPC 3.1 and the Supreme Court Rule create a duty on the lawyer to investigate facts and law of the particular case. Especially in domestic matters, the facts are many and those from the past are as relevant as those current. Domestic matters are, by analogy, a motion picture rather than a snapshot such as a personal injury or criminal matter.

Separation of Powers

ISBA overall position appears to be that our Constitution’s separation of powers gives exclusive authority to one branch or another on particular issues. This is a vast overstatement. “To determine whether a legislative enactment pertaining to judicial practice and procedure is constitutional, courts look to whether the statute conflicts with any court rules or unduly infringes on inherent judicial powers.” Kaufman, Litwin and Feinstein v. Edgar, 704 N.E.2d 756,761 (1st Dist. 1998). House Bill 1029 does neither of these. Collaborative is similar to mediation which the Legislature has embraced in 710 ILCS 35. House Bill 1029 compliments the authority of the judiciary in that a collaboratively arrived at judgment of dissolution of marriage would still need final approval from a judge and would only have a peripheral effect on court administration in that the process itself is outside of the courthouse until the very conclusion of the collaborative case. Laws that complement the authority of the judiciary or that

4

have only a peripheral effect on court administration may be acceptable. Kunkel v. Walton, 179 Ill. 2d 519, 528 (1997). ISBA cites a number of cases that did not find a violation of separation of powers despite statutory intervention in court administration and practice of law but gives them little or no weight. (People ex rel. County collector v. Jeri, Ltd., 40 Ill. 2d 293 (1968) and Strukoff v. Strukoff, 76 Ill. 2d 53 (1979). Other jurisdictions have enacted the Uniform Collaborative Law Act; namely, Texas, Ohio, Hawaii, Nevada, Utah and the District of Columbia. All these States have in their constitution, in one form or another, the concept of separation of powers between their governmental branches.

Conclusion

Collaborative Law is a recognized form of voluntary, alternative dispute resolution (ADR). ADR is recognized by Illinois Courts as a valid method and is referenced in the Supreme Court Rules as well as in the Illinois statutes. Case law in Illinois recognizes that the certain aspects of the practice of law are properly affected by statute and not the exclusive province of the judiciary. Collaborative lawyers remain subject to the Supreme Court Rules and the Rules of Professional. There is no aspect of House Bill 1029 that conflicts with the Supreme Court Rules and, in fact, it complements the authority of the judiciary and only has a peripheral effect on court administration.