Hedlund & Hanley, LLC v. Board of Trustees of Community College District No. 508

876 N.E.2d 1, 376 Ill. App. 3d 200, 315 Ill. Dec. 1, 2007 Ill. App. LEXIS 297
CourtAppellate Court of Illinois
DecidedMarch 27, 2007
Docket1-06-1200
StatusPublished
Cited by35 cases

This text of 876 N.E.2d 1 (Hedlund & Hanley, LLC v. Board of Trustees of Community College District No. 508) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hedlund & Hanley, LLC v. Board of Trustees of Community College District No. 508, 876 N.E.2d 1, 376 Ill. App. 3d 200, 315 Ill. Dec. 1, 2007 Ill. App. LEXIS 297 (Ill. Ct. App. 2007).

Opinion

JUSTICE SOUTH

delivered the opinion of the court:

Plaintiffs, Hedlund & Hanley, LLC (H&H), and Reuben Hedlund (Hedlund), appeal from the trial court’s entry of summary judgment in favor of defendants, the Board of Trustees of Community College District No. 508, the County of Cook and the State of Illinois (collectively, City Colleges).

The facts as stated in the trial court’s written memorandum decision 1 are as follows: prior to August 19, 1994, City Colleges retained the law firm of Hedlund, Hanley & John (HH&J) to represent it in litigation arising from accounting malpractice. Reuben Hedlund was the principal attorney at HH&J. After recovering over $4 million from Prudential Securities, City Colleges asked HH&J to provide further representation in the prosecution of its claims against other parties. A letter from Hedlund dated August 19, 1994, provided that HH&J would he paid at 20% less than its “standard rates,” and if City Colleges recovered “an amount greater than $1 million more than the HH&J fees at 100% of its standard rates,” HH&J would be paid at its full standard rate. Further, the letter provided that if City Colleges recovered “an amount greater than $5 million more than HH&J fees over standard rates,” City Colleges would “consider a bonus request-...based upon results achieved, efficiency of our work, the prior discount provided and overall reasonableness.” The letter further provided that there was “no commitment by [City Colleges] to favorably consider any such request, if made, or any obligation to honor such request.”

In 2000, the law firm of HH&J dissolved, and Hedlund continued in the practice of law as the senior partner in a law firm then named Hedlund, Hanley and Trafelet (HH&T). Subsequently, a new fee arrangement was negotiated between City Colleges and HH&T. That arrangement was set forth in a letter which was drafted and signed by Reuben Hedlund and sent to James D. Shepherd, counsel for City Colleges, on August 11, 2000. In that letter, Hedlund stated that: “Specifically, my time will be billed at $304 per hour and that of Steve Ma at $136 per hour.” This letter also sets forth the following provision, which is central to the dispute in the instant case: “While there would be no commitment to do so, we would hope that, at the conclusion of the litigation, City Colleges would give favorable consideration to a bonus request from my firm based upon results achieved, efficiency of our work at the hourly rates approved, and overall reasonableness.” The letter concludes, “Please confirm your agreement with the arrangements described herein by signing below and returning this letter to me.” Below was a single signature line for Mr. Shepherd and the notation “cc: Mr. James C. Tyree, Wayne Watson, Ph.D., Terry E. Newman, Esq.” These three persons were on the board of directors for City Colleges at the time the letter was written. No signed copy of the letter was ever returned to Hedlund.

From August 2000 to February 2004, Hedlund sent invoices to City Colleges reflecting the hourly rates set forth in the August 2000 letter, as well as the expenses incurred and time billed. Each invoice was reviewed, approved, and signed off on by the City Colleges’ general counsel and submitted to and approved by the City Colleges’ board of trustees. City Colleges issued checks to Hedlund that were signed by James Tyree, the chairman of the board, for the hourly fees and expenses set forth in each invoice.

On the eve of trial in the underlying matter in November 2000, Hedlund was able to obtain a settlement of City Colleges’ claim against the accounting firm of Arthur Anderson for a substantial but confidential amount, and the claims against Anderson were dismissed. The case proceeded against Coopers, another accounting firm. At the end of the five-week trial, the jury awarded City Colleges $13,028,000 against Coopers, and a judgment was entered on December 7, 2000, by the trial court in the full amount of the jury’s award. Defendant’s posttrial motions were all denied by the trial court, and the judgment was affirmed by this court in July 2002.

On April 1, 2002, HH&T, then known as Hedlund, Hanley, Koenigsknecht & Trafelet (HHK&T), ceased to exist. Hedlund, who became managing director of the new firm of Hedlund & Hanley (H&H), continued to represent City Colleges in the litigation. On December 18, 2003, the supreme court affirmed this court’s decision in the underlying litigation, with the direction that the amount of the settlement made with defendant Anderson be deducted from the judgment against Coopers.

Thereafter, in subsequent settlement negotiations, City Colleges accepted Coopers’ offer to settle for an amount that brought City Colleges’ total recovery in the litigation to over $15 million. By the conclusion of the litigation in January 2004 and before a final order or judgment was entered in this action, the total net amount recovered by City Colleges since the commencement of Hedlund’s representation was in excess of $19 million. Hedlund met with Chairman Tyree on January 29, 2004, to review and explain the terms and implications of the final draft of the settlement agreement as proposed by Coopers’ counsel. At the meeting, Hedlund submitted a written request for an “efficiency bonus” in the amount of $281,606.89 based upon the August 11, 2000, agreement. As the meeting concluded, Chairman Tyree stated that the bonus request would be granted if “logic dictated.” Subsequently, the bonus request was denied.

On February 24, 2004, Chairman Tyree again met with Hedlund, and again denied the bonus request but accepted Hedlund’s suggestion of presenting City Colleges with an invoice covering the bonus. On the same day, that invoice was submitted to the City Colleges’ general counsel and denied. Hedlund then filed a petition for attorney fees in the underlying litigation on April 7, 2004. In that petition, Hedlund alleged that “in August 2000, City Colleges requested that it pay the new firm, HH&T, at preset rates, which, in fact, were substantially below the then standard hourly rates of Mr. Hedlund and the other lawyers at HH&T and, because they were preset, would not increase as the firm’s rates increased over the next three years that the case continued to pend.” Further, City Colleges declined to continue with its 1994 agreement that it would pay the firm’s full hourly rate in the event it recovered an amount greater that $1 million more than the HH&J fees at 100% of its standard rates. Hedlund also alleged the following: “Accordingly, on August 11, 2000, a new fee agreement, stating the above provisions, was confirmed in a letter from Hedlund to James D. Shepherd, acting General Counsel of City Colleges, with copies to James C. Tyree, the new Chairman of the Board, Wayne Watson, Ph.D., the new Chancellor, and Terry Newman, a member of the Board and a lawyer licensed to practice in Illinois.” Hedlund further alleged that “petitioners are presently unable to locate a [signed] copy of the August 11, 2000, letter. However, performance by City Colleges and Hedlund and HH&T was thereafter in accordance with the terms in the letter.”

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Bluebook (online)
876 N.E.2d 1, 376 Ill. App. 3d 200, 315 Ill. Dec. 1, 2007 Ill. App. LEXIS 297, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hedlund-hanley-llc-v-board-of-trustees-of-community-college-district-illappct-2007.