Cook County Record

Monday, March 30, 2020

Judge: IL state agency overreached in prosecuting property tax lawyers for using comps in tax appeals


By Jonathan Bilyk | Jun 27, 2018

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State bureaucrats who regulate real estate appraisers in Illinois have no authority to prosecute property tax lawyers, a Cook County judge has ruled, finding regulators overreached in claiming lawyers violated state appraiser licensing rules by using comparable property values to argue for a lower tax assessment for thieir clients.

On June 20, Cook County Circuit Judge Raymond Mitchell sided with the Illinois State Bar Association completely, granting a swift win to the state’s primary legal professional association in its dispute with the Illinois Department of Financial and Professional Regulation over the state agency’s attempt to prosecute two property tax lawyers on charges they offered appraisal services without a proper state license.

“In short, an attorney’s reference to comparable valuations in a property tax proceeding constitutes the practice of law, which is regulated exclusively by the Illinois Supreme Court,” Judge Mitchell wrote. “This activity falls outside of the Appraisal Act and is plainly beyond the reach of the IDFPR.”

Thomas McNulty | Neal Gerber & Eisenberg

The state Bar Association had filed suit about a year ago, asking the courts to declare the IDFPR had overstepped its authority in bringing charges against two property tax lawyers, identified as G. Terence Bader and David Bass. The agency had accused the attorneys of including an “opinion of value” of properties in arguments before property tax appeals boards on behalf of clients.

Calling the state agency’s actions “literally unprecedented,” the IDFPR asserted this action violated Illinois state law, which restricts real estate appraisal activity solely to appraisers licensed by the state.

ISBA, however, countered the prosecutions were misplaced, as such prosecutions, whether successful or not, would impeded the ability of property tax lawyers from effectively representing clients and impinge on property tax appellants’ rights to retain legal counsel before a government authority.

Further, ISBA asserted the IDFPR even lacks authority to regulate attorneys in such a manner, as the practice of law in Illinois is regulated by the Illinois Supreme Court.

In its arguments, ISBA has repeatedly asserted the work of property tax attorneys hired to represent clients before property tax review boards is fundamentally different from that of appraisers, who are expected to be objective, as attorneys by definition must be partial to the interests of their clients.

“Property tax lawyers marshal the evidence and assert legal arguments regarding valuation based on that evidence, but they do not thereby offer their own opinion of value as evidence,” wrote ISBA’s attorney, Thomas J. McNulty, of the firm of Neal Gerber & Eisenberg, of Chicago, in a brief filed earlier this spring with the court. “The ‘opinion of value’ contained in an appraisal under the Appraisal Act, on the other hand, constitutes evidence rather than legal argument.

“It is axiomatic that opinions are a type of evidence. It is equally fundamental that argument by a lawyer does not constitute evidence.”

In its motions, ISBA said it was not asserting lawyers cannot be prosecuted for violating the law. Rather, they said, the actions by the state amount to outlawing the work of the state’s approximately 400 property tax lawyers, harming those who may have been mistreated by officials overseeing the property tax system, by denying them the chance to acquire legal representation.

State officials, however, argued property tax lawyers have essentially engaged in a legal and regulatory sleight of hand, dressing up appraisal services as “legal argumentation.”

“It does not matter that Plaintiff’s members do not hold themselves out as ‘appraisers’ or call their written work ‘appraisals,’” wrote Assistant Illinois Attorney General Michael Arnold, in a brief filed in support of the state agency. “Plaintiff (ISBA) points to nothing in the Appraisal Act that even suggests that a person could evade the Act’s licensing requirements by not using certain words.”

Each side had asked the judge to end the matter quickly in its favor. The IDFPR had asked Judge Mitchell to dismiss the lawsuit, asserting ISBA lacked standing, because it had filed a lawsuit without exhausting administrative remedies available to it through the IDFPR review and hearing process.

ISBA, however, had requested summary judgment, saying the state had legally trespassed in prosecuting the two lawyers.

Judge Mitchell sided with the state Bar Association.

He slammed the door on the state’s dismissal request, finding the lawyers, in presenting evidence of property valuation before the tax appeal boards, were engaged in the practice of law, and therefore, could not be regulated by the IDFPR. Therefore, the judge said, since the IDFPR had no jurisdiction over the lawyers on this question, the agency’s administrative review process could not apply.

The judge then granted summary judgment to ISBA, declaring he agreed with ISBA’s arguments concerning the nature of the evidence presented by property tax lawyers in such tax appeal proceedings.

“Lawyers argue. Appraisers opine. A lawyer’s argument is not evidence,” Judge Mitchell wrote in his order. “Argument is not opinion. Instead, the attorney offers ‘legal analysis of the facts’ in order to advocate for their client.”

If state lawmakers had intended for the state’s appraiser regulations to apply to lawyers, Judge Mitchell said, they would have “stated that intention with specificity.”

“… There is nothing in the text and structure of the Appraisal Act that suggests the General Assembly intended its prohibition on unlicensed appraisers to extend to what is the traditional practice of law in the property tax context,” the judge said.

The judge’s order barred state agencies from attempting to further prosecute Illinois lawyers “for engaging in the submission of a comparison of properties or income approach valuation … in a real estate tax assessment proceeding.”

The order was “final” and “disposes of the case in its entirety,” the judge said.

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Organizations in this Story

Thomas J. McNultyNeal Gerber & Eisenberg LLPIllinois Supreme CourtIllinois Attorney GeneralIllinois Department of Financial and Professional RegualtionIllinois State Bar AssociationCircuit Court of Cook County