Illinois Passes HB 5487 — Most Significant US ABS/MSO Restriction Since Arizona Reform

On May 31, 2026, the Illinois General Assembly passed House Bill 5487, restricting private equity and non-lawyer involvement in law firm management. The bill defines ABS as entities allowing non-lawyers to own and lead law firms, and MSOs as entities providing management services in exchange for ownership interests or fee-linked payments. The bill bars non-lawyers from interfering with lawyer professional judgment, selecting or terminating legal staff, setting performance standards, or charging fees tied directly or indirectly to firm revenues or profits. A critical structural anomaly: the bill applies only to firms with revenues below $300 million annually, fully exempting BigLaw. The bill awaits Governor JB Pritzker's signature. Holland & Knight's analysis warns that the bill's broad and imprecise language creates uncertainty across routine vendor relationships — not just MSO-specific arrangements. Illinois joins several states evaluating restrictions as PE investment in plaintiff-side and mid-market law firms accelerates.