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Illinois Supreme Court says law firm can't collect fees in My Pillow case for work it did itself

By Chandra Lye | Oct 2, 2018

SPRINGFIELD, Ill. (Legal Newsline) – The Supreme Court of Illinois has declined a law firm’s request to collect legal fees for work it did for itself.

In an opinion filed Sept. 20, Chief Justice Lloyd Karmeier wrote the court had affirmed an appellate court decision that reversed a lower court ruling allowing the law firm to collect legal fees on work it conducted for itself. 

“To the extent that (Schad, Diamond and Shedden) retained outside counsel to assist it in bringing the case, it had every right to petition for fees to pay those lawyers. To the extent it decided to do the work itself, however, the same considerations were at work here as with any other pro se litigant, and Illinois’s long-standing bar against awards of attorney fees to lawyers who represent themselves was fully applicable,” the court decision stated. 

“Having elected to assume the dual role of litigant and lawyer, Diamond must be content with the percentage share of the award it was granted by the circuit court to compensate it for its efforts in collecting that sum,” Karmeier wrote.

The issue stems from a qui tam action filed against My Pillow Inc. in July 2013 by the law firm of Schad, Diamond and Shedden.

“The gist of this claim was that My Pillow had ‘knowingly conceal[ed] or knowingly and improperly avoid[ed] or decrease[d] an obligation to pay or transmit money or Perot to the State’ in violation of section 3(a)(1)(G) of the Act,” the court decision stated. 

Diamond claimed that the company had not paid taxes due under the Retailers’ Occupation Tax Act or the Use Tax Act, “and had knowingly made false statements, kept false records and avoided obligations in violated of both statutes,” the ruling states.

The issue was a result of sales made by the defendant at craft shows, online or over the telephone. 

A circuit court found in favor of My Pillow on the claims of the Occupation Tax but ruled in favor of Diamond in claims of the Use Tax Act.

“The circuit court ordered My Pillow to pay $343,227 in damages and $225,500 in statutory penalties, for a total of $568,727,” the ruling states.

Diamond made a request of $697,760 in attorney fees but My Pillow objected to paying “for work done by the firm’s own attorneys on the grounds that the firm had proceeded pro se and that lawyers representing themselves are not entitled to statutory fee awards,” the ruling states.

The ruling states the company said that Diamond’s fees were “excessive and unreasonable.”

However, the circuit court found that Diamond was entitled to some fees for attorney fees, costs and expenses and allowed $600,960 to be awarded to Diamond. 

My Pillow appealed.

“The appellate court affirmed in part, reversed in part and remanded for further proceedings. It upheld the damage award in full and ruled that the circuit court had not erred in awarding attorney fees for work related to the firm’s craft fair claims,” the ruling states.

The court also said the only fees Diamond could collect were for those they paid to outside counsel they hired.

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