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The court held in Scholtens v Schneider 24 that the common fund doctrine allows 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 attorney fees.
The common fund doctrine is based upon the equitable concept that an attorney who performs services in creating a fund should be compensated out of the whole fund from those who seek to benefit from its creation. To recover under this doctrine, an attorney must show that 1 the fund was created as the result of legal services performed by the attorney, 2 the subrogee did not participate in the creation of the fund, and 3 the subrogee benefited from the fund.
In Scholtens, the court found that the common fund doctrine generally applies to ERISA liens except where the plan explicitly provides otherwise. The court rejected this argument. In Bishop , the court reasoned that an action for attorney fees, even in the form of a motion for adjudication of lien, is an independent action by the attorney that is not related to the benefit plan and does not alter the contractual relationship of the party to the plan.
Likewise, the court found in Taylor v American Family Ins. Not limited to insurance subrogation. The common fund doctrine is not limited to insurance subrogation cases and class actions. Rather, the doctrine may be applied where a fund has been created for the benefit of others for practical purposes.
This is true even when the court does not have the fund under its control. Attorney fee claims. The Kitzman court also found that an attorney may assert a claim for attorney fees under the common fund doctrine.
The fifth district held that the plaintiff, the attorney who created the settlement fund, was entitled to maintain a cause of action under the common fund doctrine. Not applicable to statutory healthcare provider liens. The common fund doctrine does not apply to statutory healthcare provider liens. Arbitration awards. Therefore, the attorney was not entitled to recover fees under the common fund doctrine.
An attorney lien includes litigation costs and expenses. Suing a new attorney. A discharged attorney cannot recover for tortious interference with contract against a referring attorney and a new attorney, but may retain an action for tortious interference with prospective economic advantage. In Canel and Hale, Ltd. The court stated that the appropriate cause of action would be tortious interference with prospective economic advantage.
Moreover, the discharged attorney could not maintain his claim for breach of a fiduciary relationship because a mere fee-sharing agreement did not amount to a joint venture that would give rise to a fiduciary relationship.
Retaining liens over client files. The court held in Twin Sewer and Water, Inc. The former applies when the prior attorney retains the file of the client, and it only attaches to the file.
The latter attaches only to the proceeds of a recovery from a suit, claim, demand, or cause of action. In addition, the court stated in dicta that a retaining lien is extinguished if the attorney surrenders possession of the file or property. Equitable liens. The most common type of lien filed is a mechanic's lien, which is filed by a contractor that did work on a property but has not yet received compensation.
When a contractor or subcontractor has not received payment and wants to file a lien, Illinois law requires that the lien be created at a county recorder's office. Once the appropriate paperwork has been filled out, the lien is created. This does not mean the property owner is automatically informed about the lien. If the contractor does not inform the owner of the lien, the owner will not realize the lien exists until it comes up during a transaction or property finance process.
On Jan. The court directed that the lien be reduced to zero and dismissed the suit with prejudice. The Circuit Court ordered Tap and Universal to issue the settlement check to Brown and not to his former attorneys.
On appeal, the former lawyers argued that they could not have served the lien directly on the defendants as it would have violated the rule about attorneys contacting the defendant directly when representation is available. However, the lien statute authorizes such a lien explicitly in that it requires that the lien service be made on the parties against whom the claims are filed.
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