Feb 09, 2017

Corporations and LLCs must have legal representation at administrative hearings

Gone are the days when business owners could represent their LLC or corporation in an administrative hearing. For many years administrative law judges hearing cases in the City of Chicago allowed non-attorney representation for matters regarding ordinance violations. In recent years it has been determined that non-attorneys appearing on behalf of such entities at administrative hearings were committing the unauthorized practice of law. Unfortunately, many business owners are unaware of this requirement and they continue to attend administrative hearings without legal representation.

Generally, Illinois law prohibits individuals who are not licensed to practice law in the state of Illinois from advising or representing others, including corporations and other types of entities, in legal matters. Section 2-416 of the Illinois Code of Civil Procedure seems to provide an exception to the general rule for corporations, as it states that a corporation can “prosecute as plaintiff or defend as defendant any small claims proceeding in any court of this State.”

However, this code section contradicts Illinois Supreme Court Rule 282, which provides “no corporation may appear as claimant, assignee, subrogee or counterclaimant in a small claims proceeding, unless represented by counsel.” The rule goes on to provide includes a very narrow exception that non-attorney agents can defend entities against tort and contract claims under $10,000. The enforcement of ordinances and imposition of fines are not covered by the exception in Rule 282. In Illinois, when a statute directly and irreconcilably conflicts with a Supreme Court Rule on a matter within the Court’s authority, such as the administration of the practice of law, the Supreme Court Rule prevails.

Should you attend an administrative hearing on behalf of an entity without an attorney, a default judgment may be entered because you will not be allowed to appear on its behalf. In order to vacate the default judgment, you will need to engage an attorney to file a motion on your behalf, in most cases resulting in an additional hearing and costs.

Therefore, it is recommended that business owners engage legal representation shortly after receiving an ordinance violation in order to prevent a default judgment and additional expense.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.

Client alert authored by: Kara Allen, Associate

This alert originally appeared in the Winter 2017 Real Estate Focus newsletter.