A Cook County judge has cleared another sitting Cook County judge and that judge’s former law partner to cash in on their share of a $15 million legal fee award for work the judge and his law partner performed on the court case nearly two decades ago.
Cook County Associate Judge Neil H. Cohen once more shot down objections to the fee award from lawyers for a group of businessmen who had been involved in the long-running court fight over their handling of proceeds from bonds issued by villages in Chicago’s suburbs.
The defendants in the case have consistently argued allowing current Cook County Circuit Judge Patrick Sherlock and his ex-law partner, Peter Carey, to claim a stake in the judgment ordered by Judge Cohen would appear to be a conflict, since both Cohen and Sherlock are judges serving in the same county court system.
Cook County Judge Patrick Sherlock
| Youtube screenshot
Cohen, however, has consistently ruled that he had the authority to rule in the case, because he had no personal or professional connections to Judge Sherlock, and that the court should not be concerned with how lawyers who receive a fee award may choose to split those fees with other lawyers.
“This court wants to be very clear on this matter,” Judge Cohen wrote in his order, issued Oct. 30. “This court is not awarding any fees to Attorney Carey or Judge Sherlock. This court is not awarding any fees … based upon whatever work Attorneys Carey or Sherlock did in this case.”
The decision comes as the latest step in the legal action, which has continued in Cook County’s courts since 2001.
NEARLY 20 YEARS IN COURT
At that time, a group of investors first filed suit against their former business partners. They had all been involved in partnerships created in the 1990s to invest in bonds issued by the villages of Broadview and Bedford Park.
According to the lawsuit, the villages paid the bond investors from those villages’ Tax Increment Financing (TIF) funds, which are funded from local property taxes.
According to the lawsuit, the defendants, including Dennis Hiffman, John Shaffer, E. Thomas Collins Jr. and Richard Hulina, allegedly redirected proceeds away from the partnerships and to themselves. The plaintiffs alleged the defendants amassed as much as $50 million in the process.
The defendants, collectively identified in court documents as “HCH,” have contested the accusations in court ever since.
Initially, the plaintiffs in the lawsuit were represented by Carey and Sherlock, who were then both attorneys and law partners.
However, Carey and Sherlock stepped out of the case in 2003, allegedly over a dispute with one of the initial plaintiff investors, who wished to accept a settlement deal Carey characterized as “wholly inadequate.”
Carey and Sherlock were then replaced in the case by attorneys with the firm of Edward T. Joyce & Associates, of Chicago. The Joyce attorneys then continued to represent the remaining plaintiff investors.
Edward T. Joyce is now Sherlock’s father-in-law.
In 2007, Sherlock was appointed by the Illinois Supreme Court as a judge in Cook County. He was elected in 2014, and was retained by voters in November 2020. Sherlock is assigned to cases in the Cook County Circuit Court’s Law Division.
The lawsuit against the HCH defendants is being heard in the county court’s Chancery Division.
In late 2018, Judge Cohen ruled in favor of the plaintiffs, finding the HCH defendants had violated their fiduciary duties to the other investors. Judge Cohen ultimately ordered HCH to pay damages of about $80 million. The money was divided into so-called “common funds,” designed to reimburse the partnerships for the alleged losses.
In the past two years, however, the focus of the case has largely been trained on how much the Joyce lawyers, and Carey and Sherlock, should be paid, particularly given Sherlock's current position on the Cook County bench.
In 2019, Cohen rejected requests from the HCH defendants to recuse himself from considering those fee arrangements. HCH asserted it was not proper for one judge to award his judicial colleague a potentially large fee award – in this case, more than $1 million.
However, Cohen also said he was not willing to award fees directly to Carey and Sherlock in the case.
Following that ruling, however, Carey and Sherlock reportedly reached a deal with the Joyce firm, under which they would receive a 7% cut of whatever fees the Joyce firm was awarded in the case.
At the beginning of 2020, Joyce submitted a $24.7 million fee request, arguing they should be entitled to about 30% of the total common funds, given their work on the case over more than 15 years.
They called the litigation a “significant and risky expenditure” for a firm their size.
They noted, for instance, that while HCH has been ordered to pay $80 million, almost all of that would be essentially paid to themselves, as it would go back into the partnerships which are 97% owned by the HCH defendants.
The investor plaintiffs, by contrast, hold only about 2-3% of the ownership stakes, collectively, HCH has noted, meaning only about $1.9 million would actually change hands from the judgment. They calculated this to mean the Joyce attorneys should actually be owed only about that same amount in fees.
Further, the defendants again noted the “appearance of impropriety that may be additionally caused by the 7% arrangement” among the Joyce lawyers, Carey and Sherlock.
NOT COURT'S BUSINESS HOW LAWYERS SPEND FEES
Judge Cohen has repeatedly acknowledged the economic reality of the judgment, yet still ordered the Joyce firm to receive $14.88 million in fees.
That then prompted motions from both sides to either reconsider or correct various aspects of the judgment.
On Oct. 30, however, Cohen refused all those requests, saying he did not believe the July 30 order approving the fee award to be unreasonable or in error.
Judge Cohen also took particular umbrage at HCH’s repeated attempts to shoot down the fee award on the basis of Carey’s and Sherlock’s potential to collect more than $1 million, under their deal with Joyce.
“… Defendants fail to support their argument with any caselaw which directs – or even advises – that in awarding a fee award it should consider as a factor how a prevailing attorney is going to spend the money has validly earned,” Cohen wrote.
“… This court has repeatedly told the parties in court and on the record that what Attorney Joyce chooses to do with his rightfully earned fee is for him to decide. It is not for this court to look into his mind or his heart or use a crystal ball to determine how he will choose to spend the fees he has validly earned. What this court can, should and will do is determine the correct manner by which to determine those fees.”
HCH is represented in the case by attorneys Robert H. Lang, of the firm of Thompson Coburn LLP; John D. Burke, of Ice Miller LLP; and Matthew T. Furton, of Locke Lord LLP, all of Chicago.