### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 19-2241

M ERLE L. R OYCE , Plaintiff ,

v.

M ICHAEL R. N EEDLE P.C., Defendant-Appellant,

v.

C OZEN O’C ONNOR, Appellee

.

____________________ Appeal from the United States District Court for the Northern District of Il linois, Eastern Division. No. 15-cv-00259 — Rebecca R. Pallmeyer , Chief Judge

.

____________________
A RGUED J ANUARY 14, 2020

— D ECIDED F EBRUARY 20, 2020

____________________

Before W OOD , Chief Judge , and R OVNERand S T

. E VE , Circuit Judges

. S T

. E VE , Circuit Judge . After Michael R. Needle P.C. (“Needle P.C.”) went months withou t counsel in a fee dispute2 No. 19-2241

action and was on the verge of a default judgment, three partners from the law fi rm Cozen O’Connor stepped in to represent Needle P.C. Their representation successfully staved o ff the pending default motion but was otherwise short-lived. Less than three months after appearing as counsel, Cozen O’Connor understandably withdrew due to irreconcilable di ff erences and a total breakdown of the a tt orney–client relationship. Cozen O’Connor sought to be compensated for its work, though, under a quantum meruittheory and perfected

an a tt orney’s lien. The district court then granted CozenO’Connor’s petition to adjudicate and enforce the lien. Because Cozen O’Connor is entitled to recover in quantum meruit and the district court properly concluded that the petitioned fees were reasonable, we a ffi rm. I. BackgroundThis appeal represents just a small, discrete slice of the underlying litigation—the activities at issue here span only three months out of a three-and-a-half-year row. 1 That action is a dispute over a tt orney’s fees between an a tt orney, Michael R.Needle of Needle P.C., on the one side, and his former cocounsel, Merle L. Royce, and thei r former clients on the other. In short, after Needle and Royce se tt led a lawsuit on behalf of their clients for $4.2 million, Needle argued the a tt orneys (i.e., he and Royce) were en titled to $2.5 million—or about sixty percent—of the se tt lement as a tt orney’s fees. But the parties’ contingent fee agreement plainly provided, and the district court held, that the a tt orneys were entitled only to onethird of the se tt lement as their fee. Needle and Royce also

1 This is one of two appeals that we decided today regarding Needle’s efforts to obtain a larger portion of the settlement.No. 19-2241 3

disagreed over the appropriate split of the aggregate a tt orney’s fee pursuant to a co-counsel agreement, which the district court also determined. We a ffi rmed both of those decisions in a separate appeal. During the course of the fee dispute, however, Needle P.C. went long stretches of time without an a tt orney of record. The court intermi tt ently permi tt ed Needle to appear pro hac viceand represent Needle P.C., but Needle invariably failed to adhere to deadlines, disobeyed court orders, and generally engaged in “obstructionist” and vexatious tactics that delayed the case. So Needle’s admission pro hac vice was revoked, on more than one occasion, and the district court numeroustimes ordered Needle to retain independent counsel to represent Needle P.C. Finally, with no clear end in sight and Needle’s refusal to obtain counsel for Needle P.C. bringing the case to a standstill, Royce fi led a motion for default on account of Needle P.C.’s failure to defend. Needle was again ordered to fi nd an

a tt orney for Needle P.C. and was given thirty days to do so. On the last day of the deadline, three partners from Cozen O’Connor fi led appearances for Needle P.C.
When Cozen O’Connor fi rst entered the case, it had been going on for more than two-an d-a-half years and had over seven hundred docket entries. Cozen O’Connor, predictably, spent a great deal of time famili arizing itself with the massive record to even take on the representation. The a tt orneys also engaged Royce in se tt lement discussions, which included participating in se tt lement conferences. Cozen O’Connor then sought and was granted leave to fi le a sur-reply in opposition to the motion for default. As a result of Cozen O’Connor4 No. 19-2241

appearing and fi ling the sur-reply, Needle P.C. avoided default judgment. But less than three months after first appearing, Cozen O’Connor moved to withdraw as counsel for Needle P.C., citing irreconcilable differences. No small part of those differences was the fact that Needle had given another law firm, Mayer Brown—who represented one of the former clients—a lien on any Needle P.C. recovery from the underlying lawsuit so that Mayer Brown would continue to represent that client. It is not clear why Needle did this, and the district court too was “puzzled” by it, but the reason makes no difference here. The bottom line is that Mayer Br own asserted a priority interest in the same source of fun ds that Cozen O’Connor sought to be paid out of under a co ntingent fee arrangement. Therefore, before Cozen O’Connor withdrew from the case, it served a Notice of Attorneys’ Li en pursuant to the Illinois Attorneys Lien Act via certified mail. See 770 ILCS 5/1. After it withdrew, Cozen O’Connor fi led a petition to adjudicate and enforce its a tt orney’s lien and for an award of its fees and costs. The petition sought a tt orney’s fees in the amount of $124,458.00, which was broken down by hours and rates, and costs in the amou nt of $2,205.66, for an aggregate amount of $126,663.66 in fees and costs. Both Needle P.C. and Mayer Brown fi led objections to Cozen O’Connor’s petition.The district court overruled Needle P.C.’s objections and speci fi cally found that, contrary to N eedle P.C.’s claims, even after Cozen O’Connor gave notice of its intent to withdraw, the fi rm “continued vigorous e ff orts on [Needle P.C.’s] behalf— drafting pleadings, appearing in court, engaging in se tt lement

e ff orts, and communicating with the client—until the court granted leave to withdraw.” And as to Mayer Brown’sNo. 19-2241 5

objection, the court found, in a well-reasoned opinion, thatMayer Brown’s prior perfected lien was superior and enforceable against Cozen O’Connor’s later- fi led lien. The priority of the liens was also later separately and extensively briefed by Cozen O’Connor and Mayer Brown, and Cozen O’Connor does not appeal the district court’s determination that Mayer Brown’s lien was superior to its a tt orney’s lien.

II. DiscussionNeedle P.C. haphazardly challenges the district court’s determination that Cozen O’Connor is entitled to an a tt orney’s lien and the award of fees and costs without an evidentiaryhearing. After wading through a sea of factual misrepresentations, we conclude that none of the legal arguments have merit.
A. Cozen O’Connor’s quantum meruit claimNeedle P.C. retained Cozen O’Connor pursuant to a contingent fee agreement, but Co zen O’Connor withdrew before any contingency came to pass. Th e contract stated that if Needle P.C. terminates the repres entation then Cozen O’Connor will have a claim for quantum meruit but was silent on any potential fee in the event Cozen O’Connor withdraws. Thus Needle P.C. argues—without citation to authority—Cozen O’Connor cannot recover any fee. But after Cozen O’Connor terminated the representation, the agreement was no longer operative here. “When an attorney-client relati onship that was originally established under a contingent fee contract terminates, the contract no longer exists and neither party can therefore seek to enforce the terms of the nonexistent contract.” Forest Pres. Dist. of Cook Cty. v. Cont’l Cmty. Bank & Tr. Co. , 98 N.E.3d 459,6 No. 19-2241

472 (Ill. App. Ct. 2017). Instead, “when the attorney has withdrawn and the court finds the attorney justifiably withdrew from the case, then the attorney is entitled to proceed on a claim to recover fees based on quantum meruit .” Id .; Kannewurf v. Johns , 632 N.E.2d 711, 716 (Ill. App. Ct. 1994) (holding attorney that withdrew from case “was entitled to the reasonable value of his services up to the date of withdrawal”); Leoris & Cohen, P.C. v. McNiece , 589 N.E.2d 1060, 1065 (Ill. App. Ct. 1992) (“If the court finds that th e plaintiff justifiably withdrew from the case, then the plaintiff will be allowed to proceed on its claim for fees on a quantum meruitbasis.”); Reed Yates Farms, Inc. v. Yates , 526 N.E.2d 1115, 1124–25 (Ill. App. Ct. 1988) (“We perceive no reason why the quantum meruit standard should not also apply in situations where an attorney withdraws from representation of a client for good cause.”). Under a quantum meruit theory, the trial court is to award, as the term literally means, “as much as he deserves.” Lee v. Ingalls Mem’l Hosp. , 597 N.E.2d 747, 749 (Ill. App. Ct. 1992). Cozen O’Connor’s withdrawal was justifiable under the circumstances and it is, therefor e, entitled to recover on a quantum meruit basis. Needle P.C. retained Cozen O’Connor on a contingency arrangement whereby Cozen O’Connor’s fees were to come solely from an y Needle P.C. recovery in the fee action. Unbeknownst to Cozen O’Connor at the time,however, Needle P.C. had already given Mayer Brown a secured interest in any recovery from that action. Thus, Cozen O’Connor faced the stark reality that it would not be paid for its continued legal services even if Needle P.C. recovered money. In Reed Yates Farms , the Illinois Appellate Court held that a client’s refusal to pay attorney fees during the course of litigation was good cause to withdraw and the attorney was entitled to compensation on a quantum meruitbasis.No. 19-2241 7

526 N.E.2d at 1120–21. We see no practical difference here. Needle P.C. effectively refused to pay any attorney’s fee to Cozen O’Connor, just without Cozen O’Connor knowing it. Additionally, in its motion to withdraw, Cozen O’Connorcited irreconcilable differences that prevented it from continuing its representation. Needle P.C. has never contested this assertion, either in the district court or even now on appeal. Irreconcilable differences and a breakdown of the attorney– client relationship provide good cause to withdraw that allows the attorney to recover the value of his or her services in quantum meruit

. McGill v. Garza , 881 N.E.2d 419, 421, 423 (Ill. App. Ct. 2007); Leoris & Cohen , 589 N.E.2d at 1065.
B. Illinois’s a tt orneys lien statute Needle P.C. next asserts that, even if Cozen O’Connor can

recover quantum meruit fees, Cozen O’Connor cannot have an enforceable a tt orney’s lien at all because its actions did not “result in recovery” as Needle P.C. contends is required by the Illinois lien statute.The Illinois Attorneys Lien Act creates a “means of enforcing the right of a lawyer to his fee” in the form of “a lien in favor of the lawyer on the proc eeds of the litigation or its settlement.” Anastos v. O’Brien , 279 N.E.2d 759, 763 (Ill. App. Ct. 1972). The statute provides thatattorneys “shall have a lien upon all claims, demands and causes of action ... which may be placed in their hands by thei r clients for suit or collection, or upon which suit or action has been instituted, for the amount of any fee” for the services rendered. 770 ILCS 5/1. Such lien attaches “to any money or property which may be recovered, on account of such suits, claims, demands or causes of action, from and afte r the time of service of the8 No. 19-2241

notice.” Id . Because the Illinois a tt orneys lien is a statutory creature, a tt orneys must strictly comply with that statute’s requirements for perfecting a lien. People v. Philip Morris, Inc. , 759 N.E.2d 906, 911 (Ill. 2001). Needle P.C. does not challenge Cozen O’Connor’s compliance with the A tt orneys Lien Act to perfect its lien. And “[o]nce the a tt orney’s lien is perfected,upon petition ‘any court of competent jurisdiction’ may adjudicate the lien.” Id . (quoting 770 ILCS 5/1). Needle P.C. nevertheless argues that the district court erred because it enforced Cozen O’Connor’s lien without fi rst fi nding that the fi rm’s actions resulted in any recovery. It relies on Robert S. Pinzur, Ltd. v. The Hartford, 511 N.E.2d 1281(Ill. App. Ct. 1987), to support its so-called resulted-in-recovery test. As pertinent here, the Pinzurcourt interpreted the Act’s phrase that an a tt orney’s lien shall a tt ach to any money or property “recovered, on account of such suits, claims, demands or causes of action.” Id . at 1288. “[W]hen the Act says the recovery is to be ‘on accoun t’ of various actions,” the court “believe[d] it means the recovery must be a result of action taken by the a tt orney.” Id . “To construe the statutory language otherwise would result in unjust windfalls for a tt orneys in cases where a defendan t acts wholly on its own and

no a tt orney services were rendered.” Id . In other words, there must be some relation between the a tt orney’s activities for which the a tt orney seeks a fee and the suit in which the money or property is recovered.

But Needle P.C. takes Pinzur ’s “result of action” language in isolation and morphs it into a requirement that the attorney’s actions must have “resulted in recovery,” or “substantially or primarily produced” the recovery. First, “result of action” is not synonymous with “resulted in recovery,” whichNo. 19-2241 9

implies a but-for causation stand ard. Needle P.C. does not offer any support for such a stand ard. And as we just explained, the Pinzurcourt was concerned with a situation in which an attorney rendered absolutely no services in the case, not where an attorney in fact rendered services.Second, and more fundamentally, Needle P.C. is conflating the requirements for an atto rney’s lien under Illinois law and a charging lien under Pennsylvania law. In determining the priority between Cozen O’Connor’s lien and Mayer Brown’s lien, the district court also discussed whether Cozen O’Connor had an enforceable charging lien under Pennsylvania law (because Needle P.C. is located in Pennsylvania). The court stated that Cozen O’Connor had failed to establish that its services “substantially or primarily secured the fund out of which it sought to be paid,” which is a requirement of Pennsylvania charging lien law. So Needle P.C. attempts to take this finding and graft it on to Illinois law. It cannot do that. These are two different types of liens under two different states’ laws. Finally, not only is Needle P. C.’s argument flawed legally, it is flawed factually as well. Th ere is no question that Needle P.C.’s ultimate recovery was in no small part a result of Cozen O’Connor’s actions in the matter. Recall, Needle P.C. was on the verge of default judgment and was down to its final day to retain counsel—Cozen O’Conno r’s representation alone let Needle P.C. stay in the game. The district court found that Cozen O’Connor “invested substant ial time and effort in representing [Needle P.C.] and succ essfully defending it againstRoyce’s default motion,” which allowed Needle P.C. “to continue pressing its claim that it was entitled to more than fifty percent of the fund.” More specif ically, the district court also10 No. 19-2241

found that Cozen O’Connor’s “s ervices were substantially related to the court’s determination of the share of those funds ultimately awarded to [Needle P. C.], and in this sense, resulted in a significant award for Needle.” Cozen O’Connor has a valid attorney’s lien.
C. Reasonableness of Cozen O’Connor’s fees

Because Cozen O’Connor is entitled to recover its fees in quantum meruit, Needle P.C. seeks an evidentiary hearing on the reasonableness and amount of the claimed services. We review a district court’s decisionnot to hold an evidentiary hearing on attorney’s fees for an abuse of discretion. Pickett v. Sheridan Health Care Ctr. , 664 F.3d 632, 652 (7th Cir. 2011); Small v. Richard Wolf Med. Instruments Corp. , 264 F.3d 702, 709 (7th Cir. 2001). Further, it is no t an abuse of discretion to decline to conduct an evidentiary hearing “that would only address arguments and materials al ready presented to the court in the parties’ briefings.” Pickett, 664 F.3d at 652. Under Illinois law, the trial court has “broad discretion in matters of attorney fees due to the advantage of close observation of the attorney’s work and the trial judge’s deeper understanding of the skill and time required in the case.” Kannewurf , 632 N.E.2d at 716; see also Kovitz Shifrin Nesbit, P.C. v. Rossiello , 911 N.E.2d 1180, 1187 (Ill. App. Ct. 2009) (“Thetrial court has broad discretionary powers in awarding reasonable attorney fees and its determination is based on theevidence presented by the parties.”). The relevant factors include “the time and labor requ ired, the attorney’s skill and standing, the nature of the caus e, the novelty and difficulty of the subject matter, the attorney’s degree of responsibility in managing the case, the usual and customary charge for thatNo. 19-2241 11

type of work in the community, and the benefits resulting to the clients.” Kannewurf , 632 N.E.2d at 717 (emphasis omitted).

The district court was intimate ly familiar with the unique difficulties this case presented and the work that Cozen O’Connor did in the short time th at it represented Needle P.C.The court noted Cozen O’Connor’s “vigorous efforts on [Needle P.C.’s] behalf—drafting pleadi ngs, appearing in court, engaging in settlement efforts, and communicating with the client”—continued even after it moved to withdraw and until the court granted the motion. And, in several other instances, the district court remarked that Cozen O’Connor “worked diligently” for Needle P.C., “eng aged in substantial efforts reviewing the file and preparing pleadings,” “made a meaningful effort to analyze [Needle’s reconstructed time records] andpresent them to the court,” and even recognized that “the representation was a challenging one.”Further, Cozen O’Connor submitted detailed billing records along with an affidavit explaining the requested fees. And Needle P.C. filed objectio ns to the reasonableness of those fees, which the district court considered and rejected. A district court is not required to hold an evidentiary hearing on attorney’s fees where a party has an opportunity to respond and make specific objections to the fee petition. See Small , 264 F.3d at 709. Here, the only purpose a hearing would haveserved would be for Needle P.C. to simply reargue its objections. Based on its deep unders tanding of the case and the materials submitted by the parties, the district court appropriately determined the reasonableness of Cozen O’Connor’s fees without an evidentiary hearing.12 No. 19-2241

III. Conclusion Cozen O’Connor withdrew from the representation of Needle P.C. for good cause and is therefore entitled to quantum meruitrecovery. The district court correctly granted Cozen O’Connor’s petition to enforce its attorney’s lien and properly awarded the firm its re asonable fees. We affirm the district court’s judgment.