Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-13-02434/USCOURTS-ca7-13-02434-1/pdf.json

Nature of Suit Code: 365
Nature of Suit: Personal Injury - Product Liability
Cause of Action: 

---

In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 13-2434

ANDREW GOESEL and CHRISTINE GOESEL,

individually and as next friend to

COLE GOESEL, a minor,

Plaintiffs,

v.

BOLEY INTERNATIONAL (H.K.) LTD., et al.,

Defendants.

Appeal of: WILLIAMS, BAX & SALTZMAN, P.C.,

Appellant.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 09-cv-4595 — Milton I. Shadur, Judge.

____________________

ARGUED OCTOBER 29, 2014 — DECIDED NOVEMBER 5, 2015

____________________

Before RIPPLE, KANNE, and SYKES, Circuit Judges.

SYKES, Circuit Judge. The law firm of Williams, Bax & 

Saltzman, P.C., represented Cole Goesel and his parents in a 

personal-injury suit that settled prior to trial. Because Cole 

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was a minor, the law firm needed judicial approval to finalize the settlement. The parties’ contingent-fee agreement 

entitled the firm to one-third of the gross settlement, while 

all litigation expenses would be covered by the Goesels’

share.

The district court refused to approve the settlement unless litigation expenses were deducted off the top and onethird of the net settlement was allocated to the firm. The 

judge also rejected the firm’s attempt to count the cost of 

computerized legal research as a separately compensable 

litigation expense rather than rolling it into the fee recovery.

The firm appealed the judge’s order limiting its fees. The 

Goesels declined to participate, so we appointed an amicus 

to argue in support of the decision below.

We now reverse. Though the district court enjoys substantial discretion to safeguard the interests of minors in the 

settlement of litigation, this discretion is not boundless. 

Here, the judge criticized aspects of the firm’s contingent-fee

agreement that have received the express blessing of Illinois

courts. Once these improper reasons are stripped away, the 

only rationale that remains—namely, that “fairness and right 

reason” require that the Goesels receive 51% of the gross 

settlement amount rather than 42%—is insufficient to justify 

discarding a reasonable contingent-fee agreement. 

I. Background

In 2007 five-year-old Cole Goesel was injured when a toy 

robot shattered and punctured the lens of his right eye. 

Cole’s parents, Andrew and Christine Goesel, retained the 

law firm of Williams, Bax & Saltzman, P.C., to sue on Cole’s 

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No. 13-2434 3

behalf. The retainer agreement between the parties stipulated that the firm would receive one-third off the top of any 

gross settlement or judgment and the Goesels would be 

responsible for litigation expenses; but in the event of no 

recovery, the Goesels were off the hook for both expenses 

and attorney’s fees.

In 2009 the firm filed a lawsuit on the Goesels’ behalf in 

Illinois state court, which the defendants removed to federal 

court based on diversity jurisdiction. Nearly four years of 

contentious litigation ensued, ultimately focusing on two 

issues: (1) the appropriateness of the material used in the 

shattered part of the toy, and (2) the severity of Cole’s injuries. These questions necessitated the retention of multiple 

expert witnesses, including chemists, toy-safety specialists, 

ophthalmologists, and rehabilitation counselors. The litigants also conducted extensive discovery, including depositions in seven states and a videoconference with deponents 

in Hong Kong.

The parties settled on the eve of trial. The defendants 

agreed to pay $687,500. Under the retainer agreement, the 

firm’s one-third of the gross settlement amount was 

$229,166.67, and litigation expenses totaled $172,949.19, 

leaving the Goesels with $285,384.14, or roughly 42% of the 

total recovery.

Because Cole was a minor at the time of the litigation, the 

federal court’s local rules and the Illinois Probate Act required court approval before the settlement could be finalized. N.D. ILL. L.R. 17.1; 755 ILL. COMP. STAT. 5/19-8. At a 

hearing to determine whether to place the settlement details 

under seal, the district judge launched sua sponte into his

objections to the contingent-fee agreement. He noted first

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that the case required “a very large amount of out-of-pocket 

expenditure,” and those costs were “certainly expended 

reasonably here.” He also acknowledged that the firm had 

done “a terrific job for the client.” But the judge was “very 

troubled” by the clients’ bottom line—specifically, that the 

Goesels would “end[] up with something like 40 percent of 

the total recovery,” the rest having been eaten up by litigation costs and the law firm’s fee.

The judge asked the firm whether the approach of deducting the contingent fee prior to expenses comported with 

industry practice. In response the firm amended its initial 

submission to address the judge’s inquiry as well as to argue 

more vigorously that Cole’s ultimate recovery was “sufficient to not only cover any future medical needs but ... also 

sufficient to compensate him for his pain and suffering.” The 

judge bristled at this, calling it a “subjective comment on the 

asserted value of the minor child’s pain and suffering.” But 

the judge acknowledged “that the terms in contingent fee 

agreements are not of a one-size-fits-all nature.” He also 

noted that Rule 1.5(c) of the Illinois Rules of Professional 

Conduct expressly permits “litigation and other expenses to 

be deducted from the recovery” and expenses may be “deducted before or after the contingent fee is calculated.” 

Accordingly, the judge concluded that “counsel’s request ... 

certainly cannot be characterized as per se unreasonable.”

Still, the judge remained concerned about the child’s recovery. Invoking “fairness and right reason,” the judge

modified the fee structure so that the litigation expenses 

were deducted off the top, prior to the one-third allocation to 

the law firm. He also excluded the firm’s Westlaw charges

from reimbursable litigation expenses. The judge accordingCase: 13-2434 Document: 54 Filed: 11/05/2015 Pages: 19
No. 13-2434 5

ly authorized fees in the amount of $174,730.47; reimbursement of litigation expenses in the amount of $163,308.59; and 

disbursement of $349,460.94 to Cole.

The law firm appealed in its own right, as it is entitled to 

do. See In re Trans Union Corp. Privacy Litig., 629 F.3d 741, 743 

(7th Cir. 2011). Though informed of their pecuniary stake in 

this appeal, the Goesels declined to participate. We appointed an amicus to argue in support of the district court’s 

decision.1

II. Discussion

A. Applicable Law

A threshold question is whether state or federal law governs this appeal. The district court cited both Local Rule 17.1 

and the Illinois Probate Act as controlling authority. Local 

Rule 17.1 requires “written approval by the court” before a 

“proposed settlement of an action brought by or on behalf of 

an infant or incompetent ... become[s] final.” The rule also 

states that the district court may “authorize payment of 

reasonable attorney’s fees and expenses from the amount 

realized in such an action.” But the rule is silent as to the 

substantive criteria governing the reasonableness inquiry.

Under Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938),

and its progeny, federal courts sitting in diversity apply state 

substantive law using federal procedural rules. For federal 

rules to apply, “[t]he test must be whether a rule really 

 1 The court thanks Thomas L. Shriner, Jr., and Eric G. Pearson of Foley & 

Lardner LLP for their amicus curiae brief in support of affirmance.

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regulates procedure—the judicial process for enforcing 

rights and duties recognized by substantive law and for 

justly administering remedy and redress for disregard or 

infraction of them.” Sibbach v. Wilson & Co., 312 U.S. 1, 14 

(1941). This approach serves “the twin aims of the Erie rule: 

discouragement of forum-shopping and avoidance of inequitable administration of the laws.” Hanna v. Plumer, 380 U.S. 

460, 468 (1965).

“[I]n a diversity suit, the damages rules of the state 

whose law governs the substantive issues in the case bind 

the federal court; damages law is substantive law.” Arpin v. 

United States, 521 F.3d 769, 776 (7th Cir. 2008). Since a contingent fee is calculated as a proportion of the damages to 

which successful plaintiffs are entitled—or, here, a portion of 

a settlement meant to preempt a jury’s award of damages—

we see no reason why laws permitting the modification of 

this payment should be considered merely procedural rather 

than substantive. We join our colleagues in other federal 

courts in characterizing judicial approval of settlements 

involving minors as a matter of substantive law. See, e.g.,

Burke v. Smith, 252 F.3d 1260, 1265–66 (11th Cir. 2001); Eagan 

v. Jackson, 855 F. Supp. 765, 775 (E.D. Pa. 1994). Local 

Rule 17.1 applies to require the district court’s review, but 

the substantive standard for that review is informed by 

Illinois law.

B. Guideposts for the Exercise of Discretion

Less clear-cut is what exactly Illinois law prescribes as 

the appropriate analytical framework in the minorsettlement context. We review a court’s award of attorney’s 

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fees under a “highly deferential abuse of discretion standard,” but even this “‘wide latitude’ is not unlimited latitude, 

and the district court still bears the responsibility of justifying its conclusions.” Pickett v. Sheridan Health Care Ctr., 

664 F.3d 632, 639 (7th Cir. 2011) (quoting Sottoriva v. Claps, 

617 F.3d 971, 975 (7th Cir. 2010)). The Illinois Probate Act 

does not expressly channel the trial court’s discretion. Rather 

it simply requires that the minor’s representative obtain 

“leave of court” before “compound[ing] or compromis[ing] 

any claim or any interest of the ward.” 755 ILL. COMP. STAT.

5/19-8.

Even though the statute itself doesn’t specify limits on 

the court’s discretion, “[w]e have it on good authority that ‘a 

motion to [a court’s] discretion is a motion, not to its inclination, but to its judgment; and its judgment is to be guided by 

sound legal principles.’” Martin v. Franklin Capital Corp. 

546 U.S. 132, 139 (2005) (quoting United States v. Burr, 

25 F. Cas. 30, 35 (No. 14692D) (C.C. Va. 1807)) (second alteration in original). “Discretion is not whim, and limiting 

discretion according to legal standards helps promote the 

basic principle of justice that like cases should be decided 

alike.” Id. Although “the text of the provision does not 

specify any limits [on] the district court[’s] discretion to 

allow or disallow fees, in a system of laws discretion is 

rarely without limits.” Indep. Fed'n of Flight Attendants v. 

Zipes, 491 U.S. 754, 758 (1989). Our challenge is determining 

where those limits lie.

The law firm contends that any judicial review of attorney’s fees begins and ends with reasonableness, which 

should be determined by reference either to the market rate 

for the services rendered or to the factors enumerated in the 

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Illinois Rules of Professional Conduct. However, at oral 

argument the firm conceded that it was unable to locate any 

Illinois cases applying these tests to litigation involving 

minors. The amicus argues that the trial judge enjoys broad 

discretion to safeguard the interests of minors but likewise 

acknowledges that Illinois caselaw offers no “detailed 

instructions” to structure this discretion.

Neither approach in isolation provides an appropriate

framework for the trial judge’s determination, much less for 

appellate review. But reading Illinois caselaw on attorney’s 

fees together with cases involving minor settlements yields 

some appropriate criteria. There’s no dispute that minors 

receive at least as much protection as adult litigants, so the 

court’s review of attorney’s fees in minor-settlement cases 

can be no less searching than in cases involving adults. Thus, 

the reasonableness of the fee structure serves as the floor for 

judicial review of minor settlements—and the appropriate

starting point for our inquiry.

1. Reasonableness

The first measure of the objective reasonableness of an 

arrangement for attorney’s fees is its consistency with the 

prevailing market rate. See Palm v. 2800 Lake Shore Drive 

Condo. Ass'n, 988 N.E.2d 75, 86 (Ill. 2013) (“The phrase 

‘reasonable attorney fees’ has generally been interpreted to 

require use of the prevailing market rate in calculating a fee 

award.”). In the contingent-fee context, this inquiry can take 

the form of a side-by-side comparison between the fee 

ultimately recovered and the lodestar, or what the client 

would have been charged under a fixed hourly billing 

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arrangement. Watson v. S. Shore Nursing & Rehab. Ctr., LLC, 

965 N.E.2d 1200, 1213 (Ill. App. Ct. 2012) (“Under the lodestar approach, the starting point for calculating the amount 

of a reasonable attorney fee is the number of hours reasonably expended on the litigation multiplied by a reasonable 

hourly rate.” (citing Hensley v. Eckerhart, 461 U.S. 424, 433 

(1983))).

No one contends that the firm’s fee exceeded the market 

value of its services. Before the district court intervened, the 

firm would have been entitled to $229,166.67. The firm pegs 

the relevant lodestar comparator at $283,554, calculated by 

multiplying the 1,194.9 hours billed at a rate of $300 for 

partners and $180 for associates. The amicus did not contest 

this figure, which the firm asserts is actually “below the 

market for Chicago.” The judge acknowledged that he had 

“looked at the lodestar” and on that basis concluded that the 

attorney’s fee “would be justified in ordinary terms.” Thus, 

as a purely empirical matter, there was nothing unreasonable about the fee as calculated under the terms of the retainer 

agreement.

Nor was the fee excessive under the second, more qualitative test of reasonableness. Rule 1.5 of the Illinois Rules of 

Professional Conduct lists eight “factors to be considered in 

determining the reasonableness of a fee”:

(1) the time and labor required, the novelty and 

difficulty of the questions involved, and the 

skill requisite to perform the legal service 

properly;

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(2) the likelihood, if apparent to the client, that 

the acceptance of the particular employment 

will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality 

for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or 

by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the 

lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.

The Illinois courts have largely incorporated these factors 

into their reasonableness analysis, suggesting on multiple 

occasions that 

the trial court should consider a variety of additional factors such as the skill and standing 

of the attorneys, the nature of the case, the 

novelty and/or difficulty of the issues and 

work involved, the importance of the matter, 

the degree of responsibility required, the usual 

and customary charges for comparable services, the benefit to the client, and whether 

there is a reasonable connection between the 

fees and the amount involved in the litigation.

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LaHood v. Couri, 603 N.E.2d 1165, 1171 (Ill. App. Ct. 1992)

(citations omitted); accord 1010 Lake Shore Ass'n v. Deutsche 

Bank Nat’l Trust Co., 19 N.E.3d 1, 9 (Ill. App. Ct. 2014); Jacobs 

v. James, 574 N.E.2d 1292, 1296 (Ill. App. Ct. 1991).

On this analysis, the firm’s fee easily passes muster. At

the initial hearing regarding the settlement, the judge 

acknowledged that the firm “did a terrific job for the client.”

In his final order, the judge took note of “the extensive time 

spent by plaintiffs’ counsel in the hard-fought battle.” There 

is no disagreement about the complexity of the litigation, 

which necessitated expansive discovery and the retention of 

numerous expert witnesses. After all, it was this degree of 

time-consuming and labor-intensive preparation that drove 

the litigation expenses deeply (in the district court’s view, too 

deeply) into the Goesels’ share of the recovery. It’s ironic, 

then, that the “difficulty of the question[] involved”—which 

should work in the firm’s favor here—served as a basis for 

the judge to reduce the firm’s fee. 

Without either a quantitative or qualitative basis for objection, the firm’s bargained-for compensation cannot be 

called unreasonable.

2. Interests of the Minor

Having cleared the standard hurdle for judicial review of 

attorney’s fees, the firm must now contend with Illinois’s 

“strong public policy of protecting the interests of [the] 

minor.” First Nat’l Bank of LaGrange v. Lowrey, 872 N.E.2d 447, 

486 (Ill. App. Ct. 2007). As relevant here, Illinois courts

conceptualize the interests of minor litigants in two ways.

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The first is the tangible well-being of the particular minor 

involved in the litigation. Leonard C. Arnold, Ltd. v. N. Trust 

Co., 506 N.E.2d 1279, 1281, 1283 (Ill. 1987) (“Courts are 

imbued with both the power and the duty to protect minors 

involved in litigation. ... Simply because an attorney may 

not be subject to discipline for entering into a contingent 

agreement for a particular fee, it does not follow that the 

courts—which have a special duty to protect minors—must 

permit him to enforce an agreement for representing a minor 

in that amount.”). To that end, the firm advised the court 

that “the portion of the settlement proceeds which Cole will 

receive after payment of attorney’s fees and expenses ... is 

sufficient to not only cover any future medical needs but is 

also sufficient to compensate him for his pain and suffering.” 

Rather than addressing whether the sum was inadequate as 

a factual matter, the judge seemed offended that the firm 

even offered an opinion on this point. He speculated that in 

the event of a trial, “plaintiffs’ counsel would have been 

arguing strenuously for a big-ticket figure for that intangible 

component of a damages award.” He also criticized the 

firm’s “subjective comment on the asserted value of the 

minor’s pain and suffering” as “inappropriate[].”

The degree of vexation here is puzzling given that the 

judge inquired about this factor in the first place. During the 

initial hearing on the settlement, the judge expressed concern about Cole’s “reasonable prospect of having continuing 

problems as a result of this terrible accident.” That the firm

addressed this concern in its amended submission is not 

only unobjectionable but fully consistent with its responsibility to advise the court on issues touching the minor’s interests. It makes little sense to criticize the firm’s opinion 

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No. 13-2434 13

regarding the settlement’s sufficiency to protect the child 

when that’s the very issue at the heart of the court’s inquiry.

Lost in the kerfuffle was any attempt by the judge to engage 

substantively with the factual question of the adequacy of 

the settlement to protect the child’s interests—which, of 

course, leaves it beyond our grasp as a basis for affirmance.

The second, perhaps less obvious consideration is the 

court’s duty to safeguard prospectively the interests of minor 

litigants as a class; that is to say, the incentives communicated to the bar by the court’s rewriting of a private contract for 

legal representation of a minor. Noting that “[c]ontingent fee 

contracts ... are the poor man’s key to the courthouse door,” 

the Illinois Supreme Court has held that the “duty to protect 

minors is consistent with the policy of promoting access to 

the courts through reasonable contingent-fee agreements.” 

Leonard C. Arnold, Ltd., 506 N.E.2d at 1281 (internal quotation 

marks omitted). If these contracts were categorically unavailable to minor litigants—or the risk of retrospective

judicial abrogation rendered them so unappealing that the 

plaintiffs’ bar would be wary of representing children—then 

“the likely result would be to deprive many minors of 

quality legal representation.” Id. That outcome would conflict with Illinois public policy “that the rights of minors be 

guarded carefully.” Villalobos v. Cicero Sch. Dist. 99, 

841 N.E.2d 87, 93 (Ill. App. Ct. 2005). Those rights cannot be 

safeguarded if minor litigants can’t make it into court in the 

first place. 

Accordingly, a court should depart from the terms of a 

retainer agreement only when it has a good reason for doing 

so. Here, the firm’s representation was competent, conscientious, and ultimately successful; the judge made no factual 

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findings that the minor’s recovery was inadequate; and the 

fee was unquestionably reasonable under both the marketcomparison and professional-responsibility rubrics. Among

the criteria that Illinois courts have enumerated to govern 

attorney’s fees in general and minor settlements in particular, none support abrogating the retainer agreement and 

rewriting the terms of the representation after the fact. 

C. Improper Bases

The judge relied on additional factors outside the appropriate scope of its inquiry. To the extent the judge’s umbrage 

at the firm’s pain-and-suffering comment undergirded the

decision, we find that basis neither logically nor legally 

compelling. And the judge’s generalized reliance on “fairness and right reason” appears to be a rhetorical flourish.

More problematic, though, is the judge’s apparent assumption that the retainer agreement was essentially a 

contract of adhesion. The judge recognized that “under 

ordinary circumstances ... the sanctity of contracts calls for 

approval of [the] outcome.” But this case was not out of the 

ordinary; as we’ve explained, the fee structure was not 

unreasonable, and nothing suggests that the minor’s recovery was inadequate. Rather, the judge was disquieted by 

“the inherent inequality of bargaining power as between 

lawyer and client in the initial discussion in which fees are 

agreed upon.” 

This overlooks the reality that contingent-fee contracts 

play a vital role in our legal system. Declining to enforce 

these arrangements because they are “inherent[ly]” unequal 

would uproot the contingent-fee mechanism with disastrous 

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consequences for those unable to pay lawyers upfront. And 

even if attorney-client bargaining may be unconscionable

under certain circumstances, there is no indication that the 

Goesels felt that they could not negotiate the terms of their 

contract with the law firm or shop their case to other firms in

search of a better deal. 

Finally, to the extent that the judge classified the retainer 

agreement as a contract of adhesion and on that basis declined to enforce it, this reasoning was unsound. The Illinois 

Supreme Court has recognized that “contract[s] of adhesion,” whose “terms ... are nonnegotiable and presented in 

fine print in language that the average consumer might not 

fully understand, ... are a fact of modern life.” Kinkel v. 

Cingular Wireless LLC, 857 N.E.2d 250, 266 (Ill. 2006). Nothing 

suggests that the retainer agreement even fits this description. Moreover, the fact that an agreement is a contract of 

adhesion does not automatically defeat enforceability. 

Phoenix Ins. Co. v. Rosen, 949 N.E.2d 639, 654 (Ill. 2011) 

(“[E]ven if we accept ... that [an] ... agreement is a contract 

of adhesion, such a finding does not render the agreement 

unenforceable.”).

Rather, Illinois courts have required “[s]ome added coercion or overreaching” before they will hold a contract of 

adhesion unenforceable. Tortoriello v. Gerald Nissan of N. 

Aurora, Inc., 882 N.E.2d 157, 175 (Ill. App. Ct. 2008); see also 

Abbott v. Amoco Oil Co., 619 N.E.2d 789, 795 (Ill. App. Ct. 

1993) (“[U]nfair advantage is the key to differentiating 

between the types of adhesion contracts ... .”). There’s no 

indication here that the retainer agreement was the product 

of such gross inequity that it qualifies as procedurally unconscionable, which is the standard for non-enforcement 

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under Illinois law.2 See Razor v. Hyundai Motor Am., 

854 N.E.2d 607, 622 (Ill. 2006) (“Procedural unconscionability 

refers to a situation where a term is so difficult to find, read, 

or understand that the plaintiff cannot fairly be said to have 

been aware he was agreeing to it, and also takes into account 

a lack of bargaining power.”).

Aside from unconscionability, a contract’s adhesive nature is relevant only in construing its ambiguous terms. 

Abbott, 619 N.E.2d at 798. Clauses susceptible of more than 

one meaning, particularly those that may prove “onerous” to 

one of the parties, should be “construed against the party 

with superior bargaining power.” Methodist Med. Ctr. of Ill. v. 

Taylor, 489 N.E.2d 351, 356 (Ill. App. Ct. 1986). But the record 

is bereft of any suggestion that this retainer agreement was 

ambiguous or that the Goesels were hoodwinked into a 

compensation arrangement that was unclear on its face. The 

judge’s concern that the firm had drawn up a contract of 

adhesion was unwarranted.

The core problem with the judge’s ruling in this case is 

that it rests on nothing more than a series of unwarranted 

criticisms. Had the judge expressed all the same concerns 

over adhesive contracts and the lawyers’ subjective views

while still rooting his decision in some genuinely unreasonable or objectionable aspect of the agreement, the deferential 

 

2 The judge appeared more concerned with substantive unconscionability, 

which “refers to those terms which are inordinately one-sided in one 

party’s favor.” Razor v. Hyundai Motor Am., 854 N.E.2d 607, 622 (Ill. 2006). 

But the substantive inquiry is directed to the operation of the contract, 

not the process by which it was negotiated and entered; whether an 

agreement is an adhesion contract is immaterial to the question of 

substantive unconscionability.

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standard of review would require us to affirm on the legitimate ground alone. What we’re left with, however, is the 

judge’s invocation of “fairness and right reason,” and that 

incantation cannot support an exercise of discretion where 

no argument for unfairness or wrong reason survives. The 

district court abused its discretion not by relying on several 

bad reasons but by relying on no good one.

D. Computerized Research

The firm sought to include as a recoverable litigation expense nearly $10,000 for computerized legal research. The 

judge excluded this expense from the firm’s recovery, holding that electronic research merely “cuts down on a lawyer’s 

expenditure of his or her more tedious research time” for 

which the firm was already compensated as part of the 

contingent fee. 

Whether computerized legal-research expenses are recoverable is a question relevant to the calculation of damages. As we’ve explained, this is a matter of substantive law

and thus is governed by state law. Conveniently, on this 

question the Illinois courts have adopted our rule. Guerrant 

v. Roth, 777 N.E.2d 499, 506 (Ill. App. Ct. 2002) (“[F]ederal 

courts in Illinois have more thoroughly addressed the issue 

of reimbursement of computer-assisted legal research charges.”).

The firm argues that there is tension in our caselaw on 

the question whether these research expenses should be 

separately recoverable. That’s not accurate. Our circuit’s rule 

is straightforward: In fixed-fee cases, these charges are not 

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separately recoverable; in lodestar cases, they are.3 See, e.g., 

Montgomery v. Aetna Plywood, Inc., 231 F.3d 399, 409, n.3 (7th 

Cir. 2000) (“When a court uses the percentage-of-recovery 

method of calculating attorney’s fees, such charges are 

simply subsumed in the award of attorneys’ fees. ... When a 

court uses the lodestar method of calculating attorney’s fees, 

computer research charges are separately recoverable, but 

(and this is the important point) only as a type of attorneys’

fee, not as an expense.”). 

Here is how the Illinois Appellate Court has explained 

the rationale for treating computerized research differently 

in fixed-fee and lodestar cases: 

 3 That our caselaw is consistent is not to say that the distinction we’ve 

drawn continues to make sense. The background assumption is that 

lawyers are mainly reliant on non-computerized research methods—or, 

at the very least, that an entirely offline research system remains a viable 

option for practicing law in 2015. It strikes us as anachronistic to conceptualize computerized legal research as a mere time-saving shortcut 

deviating from the standard practice of leafing through copies of caselaw 

reporters. To the extent this logic was ever compelling, it has long since 

fallen out of step with prevailing legal practice. 

However, this case is not the proper vehicle for revisiting our rule on 

the separate recoverability of these expenses. The retainer agreement was 

concluded under the rule distinguishing between lodestar and fixed-fee 

arrangements; abruptly shifting the legal landscape now would have the 

collateral effect of disrupting one of the presumptions that may have 

guided the contracting parties (if only marginally). And as a procedural 

matter, we are sitting in diversity and applying Illinois law. Consequently, we leave for another day the question whether, decades into the 

digital age, there remains any logical rationale for treating computerized 

legal research as a novel indulgence.

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Where the attorney’s fee is a contingent one or 

is otherwise fixed so as not to reflect the actual 

time spent on a cause of action, the rationale 

that the computer expense is counter-balanced 

by a benefit to the attorney in saving time 

holds water because the fee remains unchanged, while the time expended on research 

is reduced. On the other hand, where an attorney works on a per diem basis, the time he saves 

does not inure to his economic benefit because 

he will simply be paid for fewer hours, while 

nevertheless incurring the expense of computer 

assistance. Under these circumstances, the rationale for attorney advantage falls away, and 

the attorney should not be required to absorb 

the additional expense engendered by computer research fees in light of the diminished billable hours that result from such computer assistance. 

Johnson v. Thomas, 794 N.E.2d 919, 935 (Ill. App. Ct. 2003) 

(internal citations and quotation marks omitted). Applying

this rule here, it was not error to exclude the firm’s computerized-research costs from the recoverable litigation expenses.

For the foregoing reasons, the district court’s judgment is 

REVERSED, and the case is REMANDED for further proceedings 

consistent with this opinion.

Case: 13-2434 Document: 54 Filed: 11/05/2015 Pages: 19