Opinion ID: 2091881
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: In the instant cause, the circuit court, pursuant to section 2-1401(f) of the Code of Civil Procedure (735 ILCS 5/2-1401(f) (West 2000)), vacated a prior judgment order entered on May 8, 2000, reasoning that the May 8 order awarding statutory attorney fees to Ford Credit was void ab initio because the law firms representing Ford Credit lacked Rule 721(c) registration with this court. At issue in this appeal is whether a law firm's failure to register as a professional service corporation with this court, pursuant to the requirement set forth in our Rule 721(c), renders the legal services provided by that law firm the unauthorized practice of law, nullifies the proceedings in which the firm participated, and causes the resulting judgments of such proceedings to be void. Our review of this issue is de novo. People v. Johnson, 206 Ill.2d 348, 359, 276 Ill.Dec. 399, 794 N.E.2d 294 (2002). Petitions for relief from judgments filed pursuant to section 2-1401 of the Code of Civil Procedure (735 ILCS 5/2-1401 (West 2000)) invoke[] the equitable powers of the circuit court, which should prevent enforcement of a    judgment when it would be unfair, unjust, or unconscionable. Smith v. Airoom, Inc., 114 Ill.2d 209, 225, 102 Ill.Dec. 368, 499 N.E.2d 1381 (1986). At issue in the instant cause is subsection (f) of section 2-1401, which provides: Nothing contained in this Section affects any existing right to relief from a void order or judgment, or to employ any existing method to procure that relief. 735 ILCS 5/2-1401(f) (West 2000). Section 2-1401(f) codifies a common law rule allowing litigants to attack a void judgment at any time. See Sarkissian v. Chicago Board of Education, 201 Ill.2d 95, 104-05, 267 Ill.Dec. 58, 776 N.E.2d 195 (2002). In a petition to vacate a void judgment brought pursuant to subsection (f) of section 2-1401, the general rules pertaining to petitions filed under section 2-1401  that they must be brought within two years of the order of judgment, that the petitioner must allege a meritorious defense to the original action, and that the petitioner must show that the petition was brought with due diligencedo not apply. Sarkissian, 201 Ill.2d at 104, 267 Ill.Dec. 58, 776 N.E.2d 195. Rather, [t]he allegation that the judgment or order is void substitutes for and negates the need to allege a meritorious defense and due diligence. Sarkissian, 201 Ill.2d at 104, 267 Ill.Dec. 58, 776 N.E.2d 195. A void order or judgment is, generally, one entered by a court without jurisdiction of the subject matter or the parties, or by a court that lacks the inherent power to make or enter the order involved. In re Estate of Steinfeld, 158 Ill.2d 1, 12, 196 Ill.Dec. 636, 630 N.E.2d 801 (1994); People v. Wade, 116 Ill.2d 1, 5, 107 Ill.Dec. 63, 506 N.E.2d 954 (1987). A void judgment is from its inception a complete nullity and without legal effect. In re Application of the Cook County Collector for Judgment & Sale Against Lands & Lots Returned Delinquent for Nonpayment of General Taxes for the Year 1985, 228 Ill. App.3d 719, 731, 170 Ill.Dec. 649, 593 N.E.2d 538 (1991); In re Marriage of Allcock, 107 Ill.App.3d 150, 153, 62 Ill.Dec. 865, 437 N.E.2d 392 (1982). We have cautioned, however, that in declaring a prior order to be void, the court must be mindful that it is setting aside a final judgment based upon a collateral attack. Accordingly, we have recently held that `[b]ecause of the disastrous consequences which follow when orders and judgments are allowed to be collaterally attacked, orders should be characterized as void only when no other alternative is possible.' Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill.2d 325, 341, 264 Ill. Dec. 283, 770 N.E.2d 177 (2002), quoting In re Marriage of Vernon, 253 Ill.App.3d 783, 788, 192 Ill.Dec. 668, 625 N.E.2d 823 (1993). In its submission to this court, Ford Credit contends that the lower courts erred in holding that the judgment order awarding Ford Credit statutory attorney fees was void ab initio. According to Ford Credit, the appellate court majority improperly equated a law firm's failure to register with this court pursuant to Rule 721(c) with the unauthorized practice of law. Ford Credit notes that the sole claim raised by defendant in the circuit court to support his argument that the attorney fees award is void and should be vacated is that the law firms hired by Ford Credit did not register with this court under Rule 721. The circuit court held, and the appellate majority agreed, that this defect alone was sufficient to void the previously entered judgment order. Ford Credit argues that there are several points upon which the appellate court should be reversed. First, Ford Credit notes that in arriving at its ruling, the appellate majority improperly relied upon Remole Soil Service, Inc. v. Benson, 68 Ill.App.2d 234, 215 N.E.2d 678 (1966), a case which Ford Credit asserts is factually inapposite to the matter at bar. Ford Credit additionally contends that, by relying upon Remole, the appellate majority failed to follow its own factually relevant precedent. Ford Credit notes that only a few months prior to filing its ruling in the instant cause, the appellate court decided Joseph P. Storto, P.C. v. Becker, 341 Ill. App.3d 337, 275 Ill.Dec. 153, 792 N.E.2d 384 (2003), wherein the court ruled that a law firm's failure to register pursuant to our Rule 721(c) did not result in the voiding of a contract for attorney fees. Second, Ford Credit observes that the appellate majority failed to consider that the judgment award for statutory attorney fees was in its own favor as the prevailing party in the consumer fraud action, and was not awarded to its law firms. Third, Ford Credit notes that, at all times during this litigation, it was represented by attorneys who were duly licensed to practice law in this state. As such, Ford Credit contends, there was no unauthorized practice of law by any lawyer involved in this case. In addition, Ford Credit asserts that the lower courts failed to consider the fact that the law firm of Schulz & Associates, P.C., was properly registered with this court on April 9, 2002, the date on which the circuit court entered its decision to void the attorney fees judgment order. Finally, Ford Credit contends that the judgment order awarding statutory attorney fees was not void, because there was no claim that the circuit court lacked jurisdiction over either the subject matter or the parties. As such, Ford Credit concludes, defendant's motion to vacate the judgment order awarding attorney fees was an improper collateral attack. In response, defendant asserts that the circuit court properly granted his motion to vacate the judgment order awarding Ford Credit statutory attorney fees, and that the action of the circuit court was properly affirmed by the appellate majority. In his submission to this court, defendant contends that by failing to advise the circuit court that their law firms lacked registration with this court pursuant to Rule 721(c), Ford's attorneys had committed a fraud on the court. Defendant contends that all work performed on behalf of Ford Credit and itemized in the fee petition occurred while the law firms lacked the required registration, and that Illinois statutes and Rule 721 prohibit the collection of legal fees by a corporation that has failed to obtain a certificate of registration. As a result, defendant contends, the judgment order awarding attorney fees to Ford Credit is void as against public policy. In his brief to this court, defendant further urges this court to hold that the fee award to Ford was void because it exceeded the trial court's inherent power and authority by infringing on the exclusive authority of the Illinois Supreme Court to regulate the practice of law in Illinois by professional service corporation law firms. Defendant concludes by arguing that because Ford Credit had no right to recover attorney fees paid to professional service corporations which were not authorized to practice, the circuit court did not acquire subject matter jurisdiction to adjudicate such a claim for fees nor to enter judgment thereon in favor of Ford. We reject each of defendant's arguments. This court has the inherent power to define and regulate the practice of law in this state. In re Anastaplo, 3 Ill.2d 471, 475, 121 N.E.2d 826 (1954); People ex rel. Chicago Bar Ass'n v. Goodman, 366 Ill. 346, 349-50, 8 N.E.2d 941 (1937). More specifically, the power to prescribe rules governing attorney conduct, and to discipline attorneys for violating those rules, rests solely in this court. People ex rel. Brazen v. Finley, 119 Ill.2d 485, 494, 116 Ill.Dec. 683, 519 N.E.2d 898 (1988). To this end, our court has promulgated rules which set forth detailed regulations for the study of law and which govern the admission of applicants to our state bar. See 134 Ill.2d Rs. 701 through 720. This court has also created a comprehensive scheme to regulate attorneys and discipline them for misconduct. As part of this regulatory scheme, we have promulgated rules of professional conduct for state-licensed attorneys (See 134 Ill.2d Rs. 1.1 through 8.5), and have constituted an Attorney Registration and Disciplinary Commission (ARDC) (134 Ill.2d R. 751), and created the office of an Administrator (134 Ill.2d R. 752) to supervise [t]he registration of, and disciplinary proceedings affecting, members of the Illinois bar. 134 Ill.2d R. 751(a). In addition, this court has promulgated detailed rules which prescribe the appropriate discipline when the Rules of Professional Conduct are violated. See 134 Ill.2d Rs. 751 through 775; 137 Ill.2d Rs. 776, 777; 188 Ill.2d R. 778; 155 Ill.2d R. 780. This court has also created a procedural framework within which the ARDC performs its duties to investigate complaints of misconduct against licensed attorneys, hold hearings on those complaints, and provide review of the findings with respect to those complaints. 166 Ill.2d R. 753. The above-described regulatory rules which govern the admission of lawyers to our state bar, regulate the practice of law and the conduct of lawyers, and prescribe discipline for lawyer misconduct are intended to safeguard the public and assure the integrity of our legal system. These regulatory provisions assure that only those individuals who are fit and qualified to practice law will be licensed in this state, that those individuals will practice law ethically and with competence, and that any infractions of the Rules of Professional Conduct will be investigated and discipline will be imposed if appropriate. In contrast to the regulatory rules discussed above, the provisions contained in our Rule 721 do not have as their primary purpose the protection of the public safety. Rather, Rule 721 is designed to permit duly licensed lawyers the business option of organizing in professional service corporations as a means of providing them with limited liability protection. Under the Corporation Practice of Law Prohibition Act (705 ILCS 220/0.01 et seq. (West 2000)), a corporation is prevented from practicing law. However, with the passage of the Professional Service Corporation Act (805 ILCS 10/1 et seq. (West 2000)), licensed professionals were afforded the choice of organizing their practices in a corporate form. By enacting the Professional Service Corporation Act, the legislature intended to provide for the incorporation of an individual or group of individuals to render the same professional service or related professional services to the public for which such individuals are required by law to be licensed    while preserving the established professional aspects of the personal relationship between the professional person and those he serves professionally. 805 ILCS 10/2 (West 2000). Section 7 of the Professional Service Corporation Act requires that the corporations organized and incorporated under this Act must render professional services only through its officers, employees and agents who are duly licensed    to render such professional services within this State. 805 ILCS 10/7 (West 2000). Section 16 of the Professional Service Corporation Act specifically applies to attorneys at law and provides: [T]he provisions of this Act shall be applicable to attorneys at law only to the extent and under such terms and conditions as the Supreme Court of Illinois shall determine to be necessary and appropriate. 805 ILCS 10/16 (West 2000). It is through Rule 721 that this court allows duly licensed lawyers the option to organize their law firms under one of several statutory vehicles providing limited liability, including professional service corporations. Paragraph (a) of Rule 721 requires that each corporate shareholder and any employee engaged in the practice of law must be licensed to practice law, and that the entity shall do nothing which, if done by an individual attorney, would violate the standards of professional conduct applicable to attorneys licensed by this court. 166 Ill.2d R. 721(a)(3). [1] Paragraph (b) of this rule requires that the corporation, and the attorneys practicing through this entity, must abide by the standards of professional conduct applicable to attorneys licensed by this court. 166 Ill.2d R. 721(b). Paragraph (c) requires each corporation or association that seeks to practice law to register with this court. See 166 Ill.2d R. 721(c). Specifically, Rule 721(c) provides: (c) No corporation or association or limited liability company shall engage in the practice of law in Illinois, or open or maintain an establishment for that purpose in Illinois, without a certificate of registration issued by this court. The initial registration application requires a fee of $50 (166 Ill.2d R. 721(e)), and annual renewals must be accompanied by a $40 fee (166 Ill.2d R. 721(f)). Finally, any violation of this rule by the entity is a ground for the court to terminate or suspend the right of the [entity] to practice law or otherwise to discipline it. 166 Ill.2d R. 721(b). In the matter before us, defendant's sole claim in the circuit court to support his argument that the judgment order awarding attorney fees to Ford Credit is void and must be vacated is that the law firms representing Ford Credit throughout the litigation were not registered with this court pursuant to Rule 721(c). The circuit court held, and the appellate majority agreed, that this defect alone rendered the previously entered judgment order void, as the law firm's failure to register under Rule 721(c) equated with the unauthorized practice of law. We reject this analysis. We hold that a correct interpretation of the scope and purpose of our Rule 721(c) was set forth in Joseph P. Storto, P.C. v. Becker, 341 Ill. App.3d 337, 275 Ill.Dec. 153, 792 N.E.2d 384 (2003), a decision which the appellate court below acknowledged but refused to follow. The Storto case also involved the question of a law firm's failure to register with this court pursuant to Rule 721(c). That case arose from an attorney fees dispute between the plaintiff law firm and its former client. After the parties ended their attorney-client relationship, the firm filed suit against the client seeking unpaid fees. The defendant client moved for summary judgment, arguing that because the firm was not properly registered with this court pursuant to Rule 721(c), the contract for legal fees was void as a matter of public policy, and she was entitled to judgment as a matter of law. The trial court granted the motion, holding that because the law firm was not properly registered under Rule 721(c), it was without authority to provide legal services and the contract it had entered into with the client was invalid. On appeal, the appellate court reversed. The Storto court observed that although Rule 721(c) requires that professional service corporations register with this court, the rule also lacks civil or criminal penalties for noncompliance. [C]riminal or civil penalties would indicate that the licensing requirements were enacted because they have a significant impact on public health or safety. Storto, 341 Ill.App.3d at 344, 275 Ill.Dec. 153, 792 N.E.2d 384. Because Rule 721(c) fails to include civil or criminal liability for the failure to register, the Storto court held that this indicated that the registration requirement was not promulgated for the protection of the public safety. Storto, 341 Ill.App.3d at 344, 275 Ill.Dec. 153, 792 N.E.2d 384. In addition, the Storto court reasoned that this conclusion was supported by the fact that a law firm generally does not incorporate to benefit its clients or to advance the public welfare. [Citation]. Rather, a law firm incorporates to enjoy certain tax benefits and to reduce its potential civil liability. Storto, 341 Ill.App.3d at 344, 275 Ill.Dec. 153, 792 N.E.2d 384. Accordingly, the Storto court determined that, because Rule 721(c) was not enacted for the protection of the public, the contractual obligations owed to a professional service corporation law firm which lacked registration under Rule 721(c) could not be voided absent a showing of prejudice resulting from the failure to register. Storto, 341 Ill.App.3d at 342-44, 275 Ill.Dec. 153, 792 N.E.2d 384. Under the circumstances presented in that case, the court concluded that allowing the client to escape her contractual obligations would be disproportionate to the wrong committed by the law firm. Storto, 341 Ill.App.3d at 343, 275 Ill.Dec. 153, 792 N.E.2d 384. We adopt the analysis of Rule 721 set forth by the court in the Storto decision. We hold that a violation of the registration requirement contained in Rule 721(c) does not lead to the conclusion that the lawyers of the unregistered firm lacked either the authority or the competence to practice law. We emphasize that there is a fundamental difference between an unlicensed individual representing a party in legal proceedings or performing activities traditionally considered to be the practice of law and duly licensed attorneys who happen to belong to a law firm that has not filed its registration and paid its fees pursuant to Rule 721(c). The material inquiry in assessing whether there has been an unauthorized practice of law is whether the individual who acts on behalf of a client is duly licensed by this court, as it is only individualsand not corporations who are granted the privilege to practice law. When unlicensed individuals engage in the practice of law, the public is at risk of harm. In contrast, when a law firm fails to comply with the registration requirement in our Rule 721(c), it is the noncomplying firm that is harmed, not the public. By failing to register, the law firm loses its right to invoke the corporate protections of limited liability that are set forth in Rule 721. This reality further underscores that the registration requirement in Rule 721(c) was not enacted to safeguard the public welfare, but to benefit those law firms seeking the tax and limited liability advantages of incorporation. Therefore, duly licensed attorneys who belong to a firm that lacks Rule 721(c) registration do not, by virtue of the unregistered nature of the firm, engage in the unauthorized practice of law. Cf. People v. Brigham, 151 Ill.2d 58, 175 Ill.Dec. 720, 600 N.E.2d 1178 (1992) (defendant was not automatically deprived of his sixth amendment right to counsel because his attorney had failed to pay his annual registration dues with this court; counsel's oversight of nonpayment did not diminish his competency as an attorney). Accordingly, the appellate court erred in applying the nullity rule set forth in Remole Soil Service, Inc. v. Benson, 68 Ill. App.2d 234, 215 N.E.2d 678 (1966), to a violation of the registration requirement of Rule 721(c). In affirming the circuit court's holding that the judgment order awarding Ford Credit attorney fees was null and void, the appellate court principally relied on Remole. We hold that Remole is factually inapposite to the cause before us. In Remole, an Illinois corporation initiated a lawsuit in small claims court against the defendant. The suit was filed and tried to judgment by the corporation's office manager, who was an unlicensed attorney. Thereafter, the defendant filed a motion with the court to find the corporation and its office manager in contempt for practicing law without a license. The circuit court denied the motion. On appeal, the appellate court reversed. The Remole court cited the rule that, generally, corporations are prohibited from the practice of law, and determined that the corporation in that case violated that rule when its office manager filed and tried the corporation's lawsuit. It is clear that the office manager was engaged in the practice of law. We find nothing in the statutes, case law, or Supreme Court Rules which directly or by reasonable implication permits a business corporation to prosecute or defend its own suits in our courts, on any level except through a licensed attorney. It necessarily follows that the plaintiff and its sales manager are in technical contempt of court. Remole, 68 Ill.App.2d at 239, 215 N.E.2d 678. The Remole court then held that `[p]roceedings in a suit by a person not entitled to practice are a nullity, and the suit may be dismissed. If the cause has proceeded to judgment, the judgment is void and will be reversed.' Remole, 68 Ill.App.2d at 239, 215 N.E.2d 678, quoting 7 C.J.S. Attorney & Client § 16b. Applying the nullity rule to the facts before it, the Remole court held that because the legal proceedings in that case were instituted without authority, they violated the law. Therefore, the court concluded, the judgment resulting from such proceedings was void. Accordingly, the appellate court in Remole instructed the circuit court to vacate the judgment against the defendant and to the dismiss the suit at the corporation's cost. Although the nullity rule set forth by the court in Remole remains valid law, its application to the facts in the instant cause by the appellate court is misplaced. We note that the nullityor voidness rule is well established in our courts. See, e.g., Pratt-Holdampf v. Trinity Medical Center, 338 Ill.App.3d 1079, 1083, 273 Ill. Dec. 708, 789 N.E.2d 882 (2003); Ratcliffe v. Apantaku, 318 Ill.App.3d 621, 626, 252 Ill.Dec. 305, 742 N.E.2d 843 (2000); Berg v. Mid-America Industrial, Inc., 293 Ill. App.3d 731, 737, 228 Ill.Dec. 1, 688 N.E.2d 699 (1997); City of Chicago v. Witvoet, 12 Ill.App.3d 654, 655-56, 299 N.E.2d 128 (1973). This rule is grounded in the fact that there are risks to individual clients and to the integrity of the legal system inherent in representation by an unlicensed person: The purpose of the nullity rule is    to protect litigants against the mistakes of the ignorant and the schemes of the unscrupulous and to protect the court itself in the administration of its proceedings from those lacking requisite skills. Janiczek v. Dover Management Co., 134 Ill.App.3d 543, 546, 89 Ill. Dec. 673, 481 N.E.2d 25 (1985), citing City of Chicago v. Witvoet, 12 Ill.App.3d 654, 655-56, 299 N.E.2d 128. Accordingly, it is well settled that the effect of a person's unauthorized practice on behalf of a party is to require dismissal of the cause or to treat the particular actions taken by the representative as a nullity. Pratt-Holdampf, 338 Ill.App.3d at 1083, 273 Ill.Dec. 708, 789 N.E.2d 882; see also People v. Dunson, 316 Ill.App.3d 760, 764, 250 Ill. Dec. 77, 737 N.E.2d 699 (2000); Blue v. People, 223 Ill.App.3d 594, 596, 165 Ill.Dec. 894, 585 N.E.2d 625 (1992). In the instant cause, the appellate court erroneously held that the circumstances at bar were similar to the facts presented in Remole, and, therefore the nullity rule likewise applied in this matter. The appellate majority reasoned as follows: [T]he firm was not properly registered with the supreme court when it obtained the attorney fees award. Like the plaintiff in Remole, it performed legal services without authorization and in violation of the law. The general rule of dismissal applies under such circumstances. Accordingly, we agree with the trial court's declaration that the order was void ab initio.  344 Ill.App.3d at 1072, 280 Ill.Dec. 9, 801 N.E.2d 954. We reiterate our holding that duly licensed attorneys who practice with a law firm that lacks Rule 721(c) registration do not, by virtue of the unregistered nature of the law firm, engage in the unauthorized practice of law. In the instant matter, there is no dispute that the attorney representing Ford Credit throughout these proceedings was duly licensed to practice law and in good standing with this court. Therefore, it was error for the lower courts to hold that the nullity rule applied to void the award of attorney fees to Ford Credit for the legal services rendered by this attorney. [2] The goals of protecting the public and ensuring the integrity of the court system which underpin the invocation of the nullity rule were not implicated by the facts in the instant cause. In sum, we hold that the appellate court erred in affirming the judgment of the circuit court that the failure of the law firms representing Ford Credit in this litigation to register as professional service corporation law firms with this court pursuant to Rule 721(c) rendered the legal services provided by the firms' attorneys the unauthorized practice of law. As stated, there is a fundamental difference between an unlicensed individual engaging in the practice of law and a duly licensed lawyer who practices with an unregistered firm. A duly licensed attorney who belongs to a firm that lacks Rule 721(c) registration does not, by virtue of the unregistered nature of the firm, engage in the unauthorized practice of law. Because Ford Credit was at all times represented by a duly licensed attorney in good standing with this court, the judgment award granting Ford Credit statutory attorney fees should not have been vacated as void.