Illinois Appellate Court Allows Attorneys’ Fees Against Defendants in LLC Member Dispute

In Tsai v. Karlik, 2022 IL App (1st) 2008845-U, the First District confronted the issue of whether a court could award attorneys’ fees in a dispute among LLC members.  Certain LLC members brought suit alleging oppressive and fraudulent behavior from other members and the manager of the LLC. The trial court found 45 distinct actions of the Defendants that were “fraudulent and/or oppressive.” The plaintiffs sought attorneys’ fees, and as the case was a derivative action, the defendants argued that the fees must come from the common fund of recovery rather than the defendants individually. In this case, the fees would have largely taken up the recovery. The First District found that not only were fees appropriately assessed but they were appropriately assessed against the defendants rather than out of the fund. The First District looked to equitable principles (particularly unjust enrichment), and determined that recovery from the common fund would be inequitable, noting that it was not automatic that fees would be assessed against the defendants in such cases. In a shareholder or LLC member dispute, the fees of uncovering oppressive and fraudulent conduct can often be extensive. This provides an important tool in certain situations in business divorces to permit the recovery of these fees.  If you have a question about LLC member or shareholder disputes, contact Michael Haeberle at

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