A Chicago-based debt-settlement company used lawyers as a “front” to illegally collect massive fees from financially struggling consumers who were seeking help, Attorney General Lisa Madigan alleged Wednesday.

Madigan filed a lawsuit Wednesday against the national firm Legal Helpers Debt Resolution, based at 233 S. Wacker Drive in Chicago.

The company, also known as the law firm Macey, Aleman, Hyslip & Searns, charged upfront fees for debt-consolidation services, which became illegal in Illinois last year, the suit alleges.

The Debt Settlement Consumer Protection Act forbids debt-settlement companies from charging upfront fees and requires they only collect fees if a consumer’s debt is actually settled. Attorneys are exempted from the law, allowing them to charge upfront fees.

Legal Helpers illegally charged fees upfront under a guise that attorneys were providing the debt-settlement service to consumers, according to the suit. Madigan said attorneys with Legal Helpers served only as a front to the business — that the actual debt-settlement service was contracted out to non-lawyer, third-party companies.

“They are essentially a referral source for a scavenger industry” seeking to profit from people’s debt problems, Madigan said.

The firm charges non-refundable fees that include a $500 retainer, $49 monthly charge and 15 percent of the total debt, according to the lawsuit.

While the firm promised to make its customers debt free, it never lowered the debt and often left them worse off financially, the attorney general said.

Jason Searns, general counsel and managing partner with the Legal Helpers, said Wednesday his firm has done nothing wrong and is simply providing an alternative for clients who don’t want to declare bankruptcy.

“We’re a bona fide law firm providing legal services,” he said. “Our attorneys review every client’s file to determine what’s appropriate for them.”

Searns said Legal Helpers has a different business model than firms that simply “rent a lawyer” so they can take advantage of the upfront-fee exemption. His firm provides legal counsel to clients and has a “strategic alliance” with debt-settlement firms to provide debt-management services.

“It’s all under our supervision and our auditing control,” Searns said. “When the facts come out, it will show we’re perfectly fine in what we’re doing with our clients.”

Legal Helpers has a C-minus rating with the Better Business Bureau. At least 1,117 Illinois consumers signed up with Legal Helpers, as of Oct. 1, 2010, the suit says.