CHICAGO - A group of Chicago lawyers can collect $15 million in fees - including at least $2 million for a sitting Cook County judge and his former law partner - from a court fight that has spanned more than two decades, a state appeals court has ruled, despite assertions from the defendants that the lawyers' work, while lengthy, generated little real benefit for anyone else.
Further, the appeals court said those lawyers can also potentially pursue other law firms who represented the defendant businessmen, to perhaps generate still more damages, and more legal fees, in the complex, sprawling, long-running court fight.
On Feb. 13, a three-justice panel of the Illinois First District Appellate Court sided with the law firm of Edward T. Joyce & Associates and several investors in the legal battle with another group of businessmen.
Cook County Circuit Judge Patrick Sherlock
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The appellate ruling comes as the latest step in the long court fight, which, on its face, involves a dispute between former investment partners over bond proceeds.
For the last few years, however, the court proceedings have centered on the efforts by the defendants in the case to prevent the Joyce firm and associated lawyers from collecting the fees, which the defendants have characterized as exorbitant and out of step with the real recovery generated.
The case first landed in Cook County court in 2001, when minority partners in the investment group accused the majority partners of improperly steering as much as $50 million to themselves from the proceeds of bonds purchased from the suburban communities of Broadview and Bedford Park in the 1990s.
The lawsuit included claims on behalf of the individual named plaintiffs and a so-called derivative claims, brought on behalf of the partnership's corporate entities.
Named defendants in the lawsuit included businessmen Dennis Hiffman, John Shaffer, E. Thomas Collins Jr. and Richard Hulina. In court documents, those defendants are known as "HCH."
The HCH partners have contested those claims ever since.
Much of the action in recent years has centered on arguments over whether the Joyce firm should be prevented from sharing any fees they receive with current Cook County Judge Patrick Sherlock and Sherlock's former law partner, Peter Carey.
Sherlock and Carey initially filed the case 20 years ago.
However, they withdrew from the case in 2003, purportedly in a dispute with one of the initial plaintiff investors over her desire to accept an "inadequate" settlement.
The Joyce firm, however, resumed the case against the HCH defendants, purportedly in the name of various limited partnership corporate entities, which the HCH defendants allegedly defrauded.
The Joyce firm has continued to represent the plaintiffs in the action, along with attorney Robert D. Carroll, who formerly worked with the Joyce firm, but is now a partner with the firm of Landsman Saldinger Carroll, of Chicago.
Joyce has since become Sherlock's father-in-law, after Sherlock married Joyce's daughter.
According to court documents, the Joyce firm has agreed to pay 7% of any fees they receive to Sherlock and Carey for work performed in the first two years of the lawsuits against HCH. As of 2021, that would have amounted to at least $1 million each.
In court, the HCH defendants unsuccessfully argued that case could not be heard by any judge in Cook County court, because any fee award for the Joyce lawyers would it would result in one Cook County judge awarding a colleague at least $1 million.
Judge Neil Cohen refused to recuse himself from hearing the case, saying he did not have any personal or close professional associations with Sherlock. He further said he would not attempt to dictate to the Joyce firm how it could divide and distribute the fees it may receive.
The HCH defendants, however, further argued the fee award is excessive. They noted that the corporate defendants ostensibly represented by the Joyce attorneys are actually 97% owned by the HCH defendants.
Cohen, however, rejected that request, as well.
After the court determined the HCH defendants didn't "post an appropriate appeal bond," the Joyce firm launched further proceedings against other corporate entities associated with the HCH defendants, and against the law firms who had represented HCH, including Thompson Coburn LLP, Ice Miller LLP, Locke Lord LLP and Tabet DiVito & Rothstein LLC, all of Chicago.
The Joyce firm filed so-called citations to discover assets, which would enable the Joyce firm to pursue those corporations and law firms for the money.
Cook County Judge John J. Curry Jr. initially batted those citations down, agreeing with the HCH defendants that the citations were not valid, because they were issued in the name of corporate entities that the HCH defendants controlled and which they did not agree to issue.
Following all of those decisions, the appellate court consolidated the various decisions from the same case for appeal.
The appellate decision sided largely with the Joyce firm.
In the ruling, the justices rejected arguments by the HCH defendants that sought to undermine the ability of the so-called "intervening plaintiffs," represented by the Joyce firm, to collect the judgment and the resulting attorney fees.
The justices ruled that "the intervening plaintiffs suffered financial loss solely due to defendants' wrongdoing" and "were entitled to an amount of damages sufficient to cover their losses."
They further ruled that Judge Cohen also did not err in calculating the Joyce firm's fee award.
"... This extensive litigation has been going on for more than two decades and involves complex facts and legal issues, which is evident by the record consisting of over 100,000 pages," Lavin wrote.
"The record reflects that the lower court considered those relevant factors, among others, in calculating derivative counsel’s fee award. Regardless, defendants have fallen manifestly short of meeting their burden of showing the circuit court abused its discretion in awarding derivative counsel roughly $15.8 million simply because they disagreed with the court’s chosen method for calculating fees."
The justices granted a win to the HCH defendants on an attempt by the Joyce firm to lock HCH out of the payment to the corporate entities nominally represented by the Joyce lawyers.
The Joyce lawyers had argued they should be cut off, because otherwise the defendants would "benefit from their own wrongdoing."
The justices, however, said to cut the HCH defendants from the proceeds of payments to the corporations in which they own a 97% stake would only result in a different injustice, "a windfall to intervening plaintiffs," the minority investor partners.
However, while upholding the other rulings of the Cook County judges, the appellate justices reinstated the Joyce firm's citations to discover assets against the other corporations associated with the HCH defendants and against their defense lawyers.
The justices agreed that HCH "failed post an appropriate appeal bond," leaving the Joyce lawyers to launch post-judgment proceedings to attempt to collect the funds the court had ordered to be paid.
Curry's ruling, they said, "misconstrue that intervening plaintiffs issued the citations to discover assets in the name of the Limited Partnerships, not themselves, and that derivative counsel's attorney fees were awarded under the common fund doctrine, which applies where, as here, an attorney recovers a common fund for the benefit of individuals other than himself or his client."
They agreed that blocking the collection action against the other corporations and the law firms would block the "creation of the common fund" and prevent the attorneys from collecting their fees.
If the Joyce lawyers are not able to collect their fees, the justices said, HCH "defendants would unfairly benefit from (the Joyce firm's) work since they share in the derivative recovery" as majority owners in the limited partnership entities to which the money is nominally being paid.
Representatives of the law firms targeted by the Joyce firm's citations to discover assets - Thompson Coburn, Ice Miller, Locke Lord and Tabet DiVito & Rothstein - did not respond to questions from The Cook County Record on Friday about the appellate decision.