State ex rel. Schad, Diamond and Shedden, P.C. v. My Pillow, Inc., 115 N.E.3d 923

Diamond (a law firm organized as a professional corporation) filed a qui tam action under the Illinois False Claims Act (740 ILCS 175/1 et seq.) alleging My Pillow failed to collect/remit use and retailers’ occupation taxes.
The State declined to intervene; Diamond conducted the litigation and prosecuted the action while the same lawyers at the firm both represented Diamond and in some instances testified as witnesses.
The trial court awarded damages, statutory penalties, and additional tax payments, yielding total proceeds of $889,637; the court awarded Diamond 30% of proceeds ($266,891) under section 4(d)(2) plus $600,960 in attorney fees, costs, and expenses.
Diamond’s fee petition sought large attorney-fee awards that included fees for work performed by the firm’s own lawyers (billing records showed no separation between firm-as-relator and firm-as-counsel work).
The appellate court affirmed liability and damages but held Diamond could not recover fees for work performed by its own attorneys (only fees for outside counsel) and remanded for recalculation; the Illinois Supreme Court affirmed the appellate court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a relator law firm may recover statutory "reasonable attorneys’ fees" under 740 ILCS 175/4(d)(2) for work performed by the firm’s own lawyers while prosecuting its qui tam action	Diamond: the statute permits recovery of attorneys’ fees and costs; a corporate relator should be able to recover fees for in-house work; otherwise relators will be undercompensated compared to State prosecutions	My Pillow: awarding fees for the firm’s own work would double-recover (fees plus the 25–30% share), and attorneys representing themselves are not entitled to statutory fee awards	Held: A relator that effectively proceeds pro se (here, the law firm and its lawyers were one and the same) may not recover attorney fees for work performed by its own lawyers; fees only allowed for outside counsel

Willard v. Bassett, 27 Ill. 37 (1861) (attorney representing self cannot charge for professional services in own cause)
Cheney v. Ricks, 168 Ill. 533 (1897) (continued rule against self-represented attorneys recovering fees)
Stein v. Kaun, 244 Ill. 32 (1910) (rule extends to law partners sharing fee recovery)
Hamer v. Lentz, 132 Ill. 2d 49 (1989) (lawyers who represent themselves do not incur compensable legal fees under fee-shifting statutes)
Kay v. Ehrler, 499 U.S. 432 (1991) (federal counterpart: pro se attorneys generally may not recover attorney fees)
Scachitti v. UBS Fin. Servs., 215 Ill. 2d 484 (2005) (discusses attorney general’s intervention role in qui tam actions)