"Yes" to nonlawyers in Illinois administrative adjudications: in Grafner v Department of Employment Security, the appellate court ruled that nonlawyers could represent an employer in administrative proceedings before the Illinois Department of Employment Security. But how broadly does the ruling apply?
In Grafner v Department of Employment Security, 2009 WL 2424210 (1st D 2009) Ellen Grafner argued that nonlawyers could not represent St. Bartholomew Parish (SBP) in administrative proceedings before the Illinois Department of Employment Security (IDES) involving her dispute with SBP over employment compensation benefits. The nonlawyers were Michael Johnson of NSN Employer Services (NSN) and Father Malave of SBP.
The appellate court ruled there was no unauthorized practice of law because the proceedings were "largely routine," involved factual issues related to "minimal amounts," and contained no "complex and intricate legal problems." Unfortunately, while recognizing that some administrative hearings before IDES and elsewhere might prompt unauthorized legal practice issues, the court provided no further guidance.
The hearings in Grafner
Grafner worked as a part-time musician for SBP from late November 2006 to early January 2007. She claimed benefits because she said she was hired to work during the Christmas season only. SBP asserted Grafner voluntarily quit. The DES "claim adjudicator" ruled against Grafner, who then sought a hearing before an administrative law judge, also known as a hearing referee.
During a telephone hearing on August 12, 2007, before the referee, Grafner was represented by a lawyer and SBP by Johnson. At the hearing the circuit court evidence rules were inapplicable. Grafner's attempts to disqualify Johnson at the hearing on unauthorized legal practice grounds were denied.
Grafner testified at the hearing, as did Father Malave, who was questioned by the referee. After Grafner's lawyer questioned Malave, Johnson asked Malave whether there had been a written employment contract.
Grafner then testified, during which time she was asked by Johnson about what she had said to Malave about her leaving SBP. Johnson's participation was said by SBP to involve only "clarifying" questions. After the testimony, Malave made "a closing remark" which was followed by a response from Grafner's lawyer. Grafner argued both Johnson and Malave engaged in unauthorized legal practice.
On August 13, 2007, an adverse ruling by the referee was appealed to the IDES Board of review (Board). Grafner urged unauthorized legal practice. The Board affirmed, as did an Illinois circuit court. Grafner appealed to the appellate court, first district, which benefitted from several amici, including the Illinois State Bar Association (ISBA) in support of Grafner.
The appeals court agreed with the parties that the appropriate review standard on the unauthorized practice issues was "clearly erroneous" as there were "mixed questions of law and fact" demanding significant deference to IDES's "experience in construing and applying" the unemployment compensation statutes. Upon review of Johnson's "dialogue" during the telephone hearing and Malave's "closing remarks" supporting the parish's position, the appeals court affirmed.
As to Malave, the appeals court said little. It did note his "actions are consistent with actions undertaken by a witness during unemployment proceedings on behalf of its employer." It did not address SBP's argument that Malave's conduct fell "within the corporate pro se exception."
As to Johnson, the court reviewed precedents indicating legal practice involved advice or service requiring "the use of any degree of legal knowledge or skill" typically employed during court or tribunal appearances, pleading or evidence presentations, and "negotiations with third parties." Here, Johnson was found to have had no "preformulated questions" and no "tactical, strategy" conduct. rather, he "merely asked fact clarifying follow-up questions."
In focusing on the "character" of Johnson's conduct, "not the place it was done" or the fee charged, the appeals court used its ruling in Perto v Board of Review, 274 Ill App 3d 485, 654 NE2d 232 (2d D 1995). There, an employer's nonattorney representative "responded to a Department form letter, sent the Department a letter requesting a hearing and detailed the employer's position in a letter with facts." As with Grafner, in Perto the nonlawyer's acts required "no legal knowledge or skill and were instead simple, fact based inquiries or responses."
The appeals court also found "persuasive" Harkness v Unemployment Compensation Board, 591 Pa 543, 920 A2d 162 (2007), which used Perto to find that a nonlawyer representative in an unemployment compensation hearing could serve "as an adjunct to the employer (or claimant)" in offering viewpoints, especially where "minimal amounts" are in controversy, nothing is "intended to be intensely litigated," "informal, speedy and low cost...proceedings" are desired, and there is a "long history of participation" by nonlawyer representatives.
Finally, the court noted the relevant Illinois statute "expressly states" that an individual or an entity "may be represented by a union or any duly authorized agent" in a proceeding before "the referee or the Board of review." 820 ILCS 405/806.
Presiding Justice O'Brien specially concurred, agreeing with the outcome but observing that "this is the unauthorized practice of law." He found reversal was "not the appropriate remedy," which lies with the General Assembly or the Illinois Supreme Court.
Administrative adjudications after Grafner
Important questions remain. Should there be written laws on nonlawyer conduct in unemployment compensation proceedings before a referee or the board? If so, who should write them? No justice in Grafner commented on the possibly exclusive (or primary) supreme court authority over legal practice standards in Illinois and its tension with statutes allowing nonlawyer representation (pro se or independent) in administrative hearings, a point raised by the ISBA.
Should nonlawyer conduct standards differ in unemployment compensation and other administrative proceedings, especially those having no "long history of participation" by nonlawyers? How should pro se entities be allowed to proceed?
Further, in unemployment compensation disputes, should it matter if proceedings have been initiated, so that nonlawyer representatives might negotiate prefiling settlements, especially where the facts, not the law, underlie the disputes? To date, nonlawyer insurance adjusters apparently have been allowed to negotiate prefiling settlements with insureds and with third parties harmed by insureds. But see Jones v Allstate Ins Co, 146 Wash 2d 291, 45 P3d 1068 (2002) (insurance adjusters held to lawyer conduct standards in third-party settings).
Further, prior to an administrative proceeding before a referee, is it always easy to predict whether "complex and intricate legal problems" will arise, the types deemed in Harkness to be outside the scope of nonlawyer representation? If not, what happens when such problems do arise--for example, during a telephone hearing of the kind held in Grafner? Should further actions cease and a new hearing be scheduled?
Should it matter in a Grafner setting whether representation is undertaken by Michael Johnson or Father Malave? If so, many hearings will no longer be "informal, speedy and low cost."
Finally, is it fair to make Ellen Grafner responsible for determining every time a nonlawyer asks a question of a witness whether the question is only fact-clarifying or is something more? Similarly, is it fair to make Ellen Grafner responsible for determining whether a nonlawyer witness--after testimony--is only making closing remarks or is making closing arguments?
The Grafner court noted that another first district decision from another division, Sudzus v Department of Employment Security, 914 NE2d 208 (1st D 2009), decided a similar issue on nonlawyer representatives in a "consistent" way. Unfortunately, there, as in Petro and Harkness, the court provided little guidance on these post-Grafner questions.
In Sudzus the nonlawyer was the owner of the employer from whom unemployment benefits were sought. The Sudzus court did note that nonlawyer representation was "expressly authorized" by statute in at least three other settings (certain labor relations and retirement matters), but did not speak of the lawmaking authority or the limits on representation in those settings.
The Grafner court recognized that significant unauthorized legal practice issues can arise during administrative adjudications. Unfortunately, its ruling provides little guidance on many of these issues.
Should a nonlawyer be specially licensed for representative work in unemployment compensation proceedings? If so, who should write the guidelines? Are nonlawyer representation guidelines needed in other settings, and, if so, who should write them and how should they read?
Administrative hearings on unemployment compensation disputes, wholly arising under statute, seem quite different from administrative hearings involving, for example, employment discrimination claims before the Illinois Human rights Commission. The latter have origins in both the constitution and statutes; may be reviewed de novo in an Illinois circuit court; and often are intertwined with federal antidiscrimination claims and Illinois tort law claims.
Given the uncertainties after Grafner, the Illinois Supreme Court should soon explore more fully the possible roles of nonlawyers in administrative adjudications, perhaps through a continuation of its recent rulemaking initiatives on professional standards for the practice of law. As it said in Chicago Bar Association v Goodman, 366 Ill 346, 8 NE2d 941 (1937), a case involving a lay person representing workers in workmen's compensation proceedings, the "General Assembly has no authority to grant a layman the right to practice law" and thus cannot, itself or through its administrative agency, "lawfully declare not to be the practice of law, those activities the performance of which the judicial department may determine is the practice of law."
Jeffrey A. Parness is a professor emeritus at the Northern Illinois University College of Law, where he taught as a regular faculty member from 1982-2006 and where he still teaches.