fund doctrine in Illinois

2021Patrick Engineering, 2012 IL 113148, ¶ 31 . ¶ 21 A common fund doctrine claim is “a separate and distinct action [brought by an attorney] against [a third party] for unpaid fees.” (Emphasis added.) Scholtens v. Schneider, 173 Ill. 2d 375, 390 , 671 N.E.2d 657, 665 (1996).

2021Patrick Engineering, 2012 IL 113148, ¶ 31 . ¶ 21 A common fund doctrine claim is “a separate and distinct action [brought by an attorney] against [a third party] for unpaid fees.” (Emphasis added.) Scholtens v. Schneider, 173 Ill. 2d 375, 390 , 671 N.E.2d 657, 665 (1996).

2021Accordingly, the dismissal order is an appealable order that we have jurisdiction to review. ¶3 The common fund doctrine has been described as follows: “ ‘The common fund doctrine is an exception to the general American rule that, absent a statutory provision or an agreement between the parties, each party to litigation bears its own attorney fees and may not recover those fees from an adversary. [Citation.] The doctrine provides that “ ‘ a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from

2021Accordingly, the dismissal order is an appealable order that we have jurisdiction to review. ¶3 The common fund doctrine has been described as follows: “ ‘The common fund doctrine is an exception to the general American rule that, absent a statutory provision or an agreement between the parties, each party to litigation bears its own attorney fees and may not recover those fees from an adversary. [Citation.] The doctrine provides that “ ‘ a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from

2021Plaintiffs further contend that it is unnecessary for the taxpayers or collectors of the tax to receive anything in the litigation to trigger the common fund doctrine based on Bishop v. Burgard, which stated, “[f]or purposes of applying the common fund doctrine, it is irrelevant that the party who benefits from a lawyer’s services has a right to compensation, be it an undifferentiated right of reimbursement or subrogation as is asserted here, or a right to compensation under some other theory.” (Emphasis in original.) Bishop, 198 Ill. 2d at 510 . ¶ 25 We disagree with plaintiffs’ interpretatio

2021“To sustain a claim under the common fund doctrine, the attorney must show that (1) the fund was created as the result of the legal services performed by the attorney, (2) the subrogee or claimant did not participate in the creation of the fund, and (3) the subrogee or claimant benefited or will benefit from the fund that was created.” Bishop v. Burgard, 198 Ill. 2d 495, 508 (2002). ¶ 17 “Whether the doctrine applies in a particular case is not determined by a label, but rather by a proper understanding of the doctrine and its limitations.” Kitzman, 193 Ill. 2d at 573 .

2021In response, Herrin requests affirmation of the trial court’s motion to strike the attorney fee count relying on Hamer, stating there is no common fund in this case and that both the diversion of tax funds to pay attorney fees and payment of attorney fees under common fund doctrine for a pro se attorney were precluded. 6 ¶ 16 “ ‘Whether the common fund doctrine applies to any particular case is a question of law which we review de novo.’ ” Wajnberg v. Wunglueck, 2011 IL App (2d) 110190, ¶ 16 (quoting Linker v. Allstate Insurance Co., 342 Ill.

2020“Whether the common fund doctrine applies to any particular case is a question of law which we review de novo.” Linker v. Allstate Insurance Co., 342 Ill.

2021The well-established policy underlying the common fund doctrine, as enunciated by our supreme court, is “the prevention of unjust enrichment.” Kitzman, 193 Ill. 2d at 569 ; see also Baier v. State Farm Insurance Co., 66 Ill. 2d 119, 124 (1977); Scholtens, 173 Ill. 2d at 385 ; Wendling, 242 Ill. 2d at 265 .

2015Id. ¶ 24 Our supreme court recognized the attorney's right to rely upon the common fund doctrine in this factual context, after noting a number of other jurisdictions had come to a similar conclusion and recognizing the "equitable concept that an attorney who performs services in creating a fund should in equity and good conscience be allowed compensation out of the whole fund from all those who seek to benefit from it." (Emphasis added.) Id. at 124 .

2022In this appeal, defendants contend our supreme court settled the question in Chapman & Associates, Ltd. v. Kitzman, 193 Ill. 2d 560 (2000). ¶ 25 In Chapman, our supreme court found that: “The common fund doctrine does not authorize a party to shift fees to an adversary, but rather authorizes the spread of fees among those who benefitted from the litigation.

2022The doctrine permits a party who creates, preserves, or increases the value of a fund in which others have an ownership interest to be - 10 - 1-20-0845 reimbursed from that fund for litigation expenses incurred, including counsel fees. [Citation.] The litigant or lawyer who recovers a common fund for the benefit of others is entitled to a reasonable attorney fee from the fund as a whole. [Citations.] If the costs of litigation are not spread to the beneficiaries of the fund, they will be unjustly enriched by the attorney’s efforts. [Citation.]” Chapman & Assoc., 193 Ill. 2d at 572–73. ¶ 26 The

2020“The common fund doctrine rests upon the perception that persons who obtain the benefit of a lawsuit without contributing to its costs are unjustly enriched.” Bishop v. Burgard, 198 Ill. 2d 495, 508-09 (2002) (citing Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980)).

1996Our supreme court, in recently addressing the doctrine, stated: "The common fund doctrine permits a party who creates, preserves or increases the value of a fund in which others have an ownership interest to be reimbursed from that fund for litigation expenses incurred, including counsel fees. [Citation.] It is now well established that 'a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.’ Boeing Co. v. Van Gemert, 444 U.S. 472, 478 , 62 L.

2011Country Mutual Insurance Co. v. Birner, 293 Ill.App.3d 452, 456 , 228 Ill.

2000App. 3d 452 , 688 N.E.2d 859 (1997), in support of their contention that American Family’s actions failed to rise to the level of participation or intervention necessary to overcome the fund doctrine.

2021We note that neither case involved a monetary award or judgment. ¶ 21 Contrary to Herrin’s contentions, the issue of whether governmental funds can be diverted for attorney fees under the common fund doctrine was already decided in Flynn v. Kucharski, 59 Ill. 2d 61 (1974) (abrogated on other grounds by Brundidge, 168 Ill. 2d at 243-44 ), a case not cited by either party.

2016The parties had sufficient information to evaluate the merits of their respective positions and, therefore, this factor weighed in favor of approving the settlement. ¶ 24 Regarding the eighth factor, the amount of attorney fees, the trial court, citing Brundidge v. Glendale Federal Bank, F.S.B., 168 Ill. 2d 235, 238 (1995), stated that “[a]n award of fees under the common fund doctrine may be determined by the percentage-of-the-award method or by the [lodestar] method at the court’s discretion.

2011The case law on this issue holds that, under certain circumstances, "an insurance company's mere writing of a letter to the plaintiff's attorney expressing its desire to represent its own interests, without more, is not enough to overcome the fund doctrine." McGee v. Oldham, 267 Ill.App.3d 396, 401 , 204 Ill.Dec. 734 , 642 N.E.2d 196 (1994) (affirming equitable apportionment of fees where suit was filed 14 months before insurance company notified plaintiff's attorney of its intention to represent itself on its medical payments subrogation claim and where insurance company took passive position

2011The case law on this issue holds that, under certain circumstances, "an insurance company's mere writing of a letter to the plaintiff's attorney expressing its desire to represent its own interests, without more, is not enough to overcome the fund doctrine." McGee v. Oldham, 267 Ill.App.3d 396, 401 , 204 Ill.Dec. 734 , 642 N.E.2d 196 (1994) (affirming equitable apportionment of fees where suit was filed 14 months before insurance company notified plaintiff's attorney of its intention to represent itself on its medical payments subrogation claim and where insurance company took passive position

2015The court further noted that “[f]ollowing Scholtens, the appellate court has repeatedly concluded that an action to recover fees under the common fund doctrine is an independent action invoking the attorney’s right to the payment of fees for services rendered.” Id. at 504-05 (citing Hillenbrand v. Meyer Medical Group, S.C., 308 Ill.

2015The court further noted that "[f]ollowing Scholtens, the appellate court has repeatedly concluded that an action to recover fees under the common fund doctrine is an independent action invoking the attorney's right to the payment of fees for services rendered." Id. at 504-05 (citing Hillenbrand v. Meyer Medical Group, S.C., 308 Ill.

2011Read in context, it is clear that the ERISA Plan in Bishop benefitted from the fund by obtaining a reimbursement “ ‘which it would not have received absent the fund’s creation.’ ” Bishop, 198 Ill. 2d at 509 (quoting Taylor v. State Universities Retirement System, 203 Ill.

2011Read in context, it is clear that the ERISA Plan in Bishop benefitted from the fund by obtaining a reimbursement “ ‘which it would not have received absent the fund’s creation.’ ” Bishop, 198 Ill. 2d at 509 (quoting Taylor v. State Universities Retirement System, 203 Ill.

2011The case law on this issue holds that, under certain circumstances, "an insurance company's mere writing of a letter to the plaintiff's attorney expressing its desire to represent its own interests, without more, is not enough to overcome the fund doctrine." McGee v. Oldham, 267 Ill.App.3d 396, 401 , 204 Ill.Dec. 734 , 642 N.E.2d 196 (1994) (affirming equitable apportionment of fees where suit was filed 14 months before insurance company notified plaintiff's attorney of its intention to represent itself on its medical payments subrogation claim and where insurance company took passive position

2011The case law on this issue holds that, under certain circumstances, "an insurance company's mere writing of a letter to the plaintiff's attorney expressing its desire to represent its own interests, without more, is not enough to overcome the fund doctrine." McGee v. Oldham, 267 Ill.App.3d 396, 401 , 204 Ill.Dec. 734 , 642 N.E.2d 196 (1994) (affirming equitable apportionment of fees where suit was filed 14 months before insurance company notified plaintiff's attorney of its intention to represent itself on its medical payments subrogation claim and where insurance company took passive position

2000While Tenney stands for the proposition that a plaintiffs attorney may not recover attorney fees under the fund doctrine for rendering his or her services to an unwilling recipient, Tenney is not to be interpreted “to preclude application of the fund doctrine whenever an insurer notifies its insured or an attorney representing its insured of its intention to pursue its own subrogation interests.” Perez v. Kujawa, 234 Ill.

1994However, it has been said that Tenney is not to be interpreted "to preclude application of the fund doctrine whenever an insurer notifies its insured or an attorney representing its insured of its intention to pursue its own subrogation interests.” (Perez, 234 Ill.

2021In response, Herrin requests affirmation of the trial court’s motion to strike the attorney fee count relying on Hamer, stating there is no common fund in this case and that both the diversion of tax funds to pay attorney fees and payment of attorney fees under common fund doctrine for a pro se attorney were precluded. 6 ¶ 16 “ ‘Whether the common fund doctrine applies to any particular case is a question of law which we review de novo.’ ” Wajnberg v. Wunglueck, 2011 IL App (2d) 110190, ¶ 16 (quoting Linker v. Allstate Insurance Co., 342 Ill.

2015"The obligation to pay fees under the common fund doctrine, which is quasi-contractual, is independent of any insurance contract or subrogation agreement and is 'resting instead upon equitable considerations of quantum meruit and the prevention of unjust enrichment.' " Wajnberg v. Wunglueck, 2011 IL App (2d) 110190, ¶ 26 (quoting Scholtens v. Schneider, 173 Ill. 2d 375, 390 (1996)); see also Baier v. State Farm Insurance Co., 66 Ill. 2d 119, 122-26 (1977) (rejecting subrogee-insurer's argument that application of the common fund doctrine would violate the subrogation contract between itself an

2002App. 3d 381, 389 (1999) (a common fund claim, which is wholly independent of a benefit plan, is brought by a third party, the attorney who represents the participant, to enforce the attorney’s quasi-contractual right to payment for services rendered in recovering for the plan’s benefit); Health Cost Controls v. Sevilla , 307 Ill.

2002App. 3d 381, 389 (1999) (a common fund claim, which is wholly independent of a benefit plan, is brought by a third party, the attorney who represents the participant, to enforce the attorney’s quasi-contractual right to payment for services rendered in recovering for the plan’s benefit); Health Cost Controls v. Sevilla, 307 Ill.

2011Stated another way by the appellate court in Maynard: “[T]he benefit to the hospital resulting from [the attorney’s] services was merely incidental to the primary purpose of obtaining compensation for plaintiff’s injuries. *** We cannot justify extending the common fund doctrine to require a mortgagee or a furniture store or any other creditor of a plaintiff to contribute to the fees of the plaintiffs attorney if the funds recovered by litigation are used to satisfy the plaintiff’s obligations.” Maynard v. Parker, 54 Ill.

2011Stated another way by the appellate court in Maynard: “[T]he benefit to the hospital resulting from [the attorney’s] services was merely incidental to the primary purpose of obtaining compensation for plaintiff’s injuries.*** We cannot justify extending the common fund doctrine to require a mortgagee or a furniture store or any other creditor of a plaintiff to contribute to the fees of the plaintiff’s attorney if the funds recovered by litigation are used to satisfy the plaintiff’s obligations.” Maynard v. Parker, 54 Ill.

1995(Saltiel v. Olsen (1981), 85 Ill. 2d 484, 488 ; Hamer v. Kirk (1976), 64 Ill. 2d 434, 437 .) However, where the outcome of the litigation has created a common fund, this court has adopted the "common fund doctrine.” (Saltiel, 85 Ill. 2d at 489-91 ; Hamer, 64 Ill. 2d at 437 .) The common fund doctrine allows one who "creates, preserves, or increases the value of a fund in which others have an ownership interest to be reimbursed from that fund for litigation expenses incurred, including counsel fees.” (Swedish Hospital Corp. v. Shalala (D.C.

1995(Saltiel v. Olsen (1981), 85 Ill. 2d 484, 488 ; Hamer v. Kirk (1976), 64 Ill. 2d 434, 437 .) However, where the outcome of the litigation has created a common fund, this court has adopted the "common fund doctrine.” (Saltiel, 85 Ill. 2d at 489-91 ; Hamer, 64 Ill. 2d at 437 .) The common fund doctrine allows one who "creates, preserves, or increases the value of a fund in which others have an ownership interest to be reimbursed from that fund for litigation expenses incurred, including counsel fees.” (Swedish Hospital Corp. v. Shalala (D.C.

2021In Lemmer v. Karp, 56 Ill.

2021App. 3d 190, 192 , 371 N.E.2d 655, 657 (1977), an insured attempted to assert the common fund doctrine against its insurer.

1997"The common fund doctrine allows one who `creates, preserves, or increases the value of a fund in which others have an ownership interest to be reimbursed from that fund for litigation expenses incurred, including counsel fees.'" Brundidge v. Glendale Federal Bank, F.S.B., 168 Ill.2d 235, 238 , 213 Ill.Dec. 563 , 659 N.E.2d 909 (1995), quoting Swedish Hospital Corp. v. Shalala, 1 F.3d 1261, 1265 (D.C.Cir.1993).

1997"The common fund doctrine allows one who 'creates, preserves, or increases the value of a fund in which others have an ownership interest to be reimbursed from that fund for litigation expenses incurred, including counsel fees.’ ” Brundidge v. Glendale Federal Bank, F.S.B., 168 Ill. 2d 235, 238 (1995), quoting Swedish Hospital Corp. v. Shalala, 1 F.3d 1261, 1265 (D.C.

2022See DeFontaine v. Passalino, 222 Ill.

2022Caulfield v. Packer Group, Inc., 2016 IL App (1st) 151558, ¶ 69 (citing De Fontaine, 222 Ill.

2000A reading of this court's decision in Maynard , however, reveals the complete absence of any suggestion that the common fund doctrine is limited to only "class actions" and "insurance subrogation cases." See Maynard, 75 Ill.2d 73 , 25 Ill.Dec. 642 , 387 N.E.2d 298 .

2000A reading of this court’s decision in Maynard, however, reveals the complete absence of any suggestion that the common fund doctrine is limited to only “class actions” and “insurance subrogation cases.” See Maynard, 75 Ill. 2d 73 .

1994The fund doctrine is based on the equitable concept that an attorney who performs services in creating a fund should in equity and good conscience be allowed compensation out of the whole fund from those who seek to benefit from the creation of the fund. ( Baier v. State Farm Insurance Co. (1977), 66 Ill.2d 119 , 5 Ill.Dec. 572 , 361 N.E.2d 1100 .) In order to recover fees under the fund doctrine, the attorney must show (1) that the fund was created as the result of legal services performed by an attorney, (2) that the subrogee did not participate in the creation of the fund, and (3) that the

1994The fund doctrine is based on the equitable concept that an attorney who performs services in creating a fund should in equity and good conscience be allowed compensation out of the whole fund from those who seek to benefit from the creation of the fund. ( Baier v. State Farm Insurance Co. (1977), 66 Ill.2d 119 , 5 Ill.Dec. 572 , 361 N.E.2d 1100 .) In order to recover fees under the fund doctrine, the attorney must show (1) that the fund was created as the result of legal services performed by an attorney, (2) that the subrogee did not participate in the creation of the fund, and (3) that the

2003See, e.g. , Chapman , 193 Ill. 2d at 576-77 ; Hamer v. Kirk , 64 Ill. 2d 434, 436 , 356 N.E.2d 524 (1976); Rosemont Building Supply, Inc. v. Illinois Highway Trust Authority , 51 Ill. 2d 126, 128 , 281 N.E.2d 338 (1972). [NONPUBLISHABLE MATERIAL UNDER SUPREME COURT RULE 23 REMOVED HERE] Based on our finding that the common fund doctrine is inapplicable in this case, we need not determine whether a fund was, for all practical purposes, created.

2003See, e.g. , Chapman , 193 Ill. 2d at 576-77 ; Hamer v. Kirk , 64 Ill. 2d 434, 436 , 356 N.E.2d 524 (1976); Rosemont Building Supply, Inc. v. Illinois Highway Trust Authority , 51 Ill. 2d 126, 128 , 281 N.E.2d 338 (1972). [NONPUBLISHABLE MATERIAL UNDER SUPREME COURT RULE 23 REMOVED HERE] Based on our finding that the common fund doctrine is inapplicable in this case, we need not determine whether a fund was, for all practical purposes, created.

2000The Supreme Court of the United States rejected a similar requirement in a leading case applying the common fund doctrine, Sprague v. Ticonic National Bank, 307 U.S. 161 , 83 L.

2000The Supreme Court of the United States rejected a similar requirement in a leading case applying the common fund doctrine, Sprague v. Ticonic National Bank, 307 U.S. 161 , 83 L.