Opinion ID: 2709668
Heading Depth: 2
Heading Rank: 2

Heading: The Motion to Quash the Lien

Text: We review de novo the district court’s interpretation of the written retainer agreement as precluding No. 12-3756 9 Gomberg’s lien. BKCAP, LLC v. CAPTEC Franchise Trust 2000-1, 572 F.3d 353, 358 (7th Cir. 2009). Goyal and Gomberg executed the retainer agreement in Illinois for services in Illinois, so we apply the laws of that state in analyzing whether the agreement gave rise to a valid equitable lien. See In re Motorola Securities Litig., 644 F.3d 511, 517 (7th Cir. 2011). “In Illinois, an attorney acquires an equitable lien on a judgment if the agreement between attorney and client makes an equitable assignment of a portion of the recovery, as opposed to a mere promise to pay. To make this determination requires an examination of the exact language of the contract.” Home Fed. Sav. & Loan Ass’n, 525 N.E.2d at 153. We consider first the parties’ retainer agreement and then Gomberg’s extra-contractual theories.
Like Judge Pallmeyer, we agree with Judge Keys’ well reasoned opinion that Gomberg does not hold a valid lien on Goyal’s settlement. The retainer agreement authorized an equitable lien on only the funds “secured by us.” Gomberg’s representation put no cash in Goyal’s hands. Gomberg argues, though, that GTI’s offer of $375,000 in early 2004 constituted funds that he “secured” for Goyal. In support he cites a dictionary’s definition of “secure” as “to give a pledge of a payment to (a creditor) or of (an obligation); to bring about, effect.” Gomberg seems to be relying on the part of the definition that refers to securing repayment of a debt 10 No. 12-3756 with a promise to pay, but such “security” requires an agreement between the relevant parties. That portion of the definition has no application here, of course, for the parties (GTI and Goyal) simply never reached an agreement while Gomberg was involved. Gomberg argues further that he “secured” $375,000 for Goyal when GTI made the offer: “If Mr. Goyal had accepted the settlement offer of $375,000.00, GTI would have paid it. The offer was on the table. All it required was Mr. Goyal’s agreement.” That’s true but legally irrelevant. In our legal system, it is axiomatic that there is no contract (and no settlement) without both offer and acceptance. This is a fundamental principle of contract law. See 2 Williston on Contracts § 6:1 (4th ed.) (“Acceptance of an offer is necessary to create a simple contract, since it takes two to make a bargain.”); Restatement (Second) of Contracts § 3 (1981) (“An agreement is a manifestation of mutual assent on the part of two or more persons.”). GTI’s offer, alone, in no way “secured” funds for Goyal and thus no funds were “se- cured” by Gomberg. Another fundamental principle of contract law dictates that an offer, once rejected, no longer exists. See Minneapolis & St. Louis Ry. Co. v. Columbus Rolling-Mill Co., 119 U.S. 149, 151 (1886) (“[N]o contract is complete without the mutual consent of the parties, an offer to sell imposes no obligation until it is accepted according to its terms. . . . [A]nd either rejection or withdrawal leaves the matter as if no offer had ever been made.”). GTI’s offer of $375,000 was extinguished once Goyal rejected it. No. 12-3756 11 To illustrate how unreasonable Gomberg’s position is, suppose that one condition of GTI’s offer had been Goyal’s agreement never to work in the industry again. Receiving an offer with such an onerous condition would not have meant that his attorney had “secured” the offered funds. And Goyal retained the right to reject any conditions of a proposed settlement, including even the mutual releases that would be customary. Or suppose that GTI and Goyal had actually agreed to settle for $375,000, with a written and signed settlement agreement with mutual releases. And then suppose that GTI had reneged on the agreement and refused to pay. No attorney in his right mind would claim that he had then “secured” $375,000 for Goyal and was then entitled to immediate payment of a percentage of the unpaid settlement. See Restatement (Third) of Law Governing Lawyers § 35(2) (2000) (“Unless the contract construed in the circumstances indicates otherwise, when a lawyer has contracted for a contingent fee, the lawyer is entitled to receive the specified fee only when and to the extent the client receives payment.”). Gomberg did not take Goyal even as far as an agreement, and yet he still claims a right to a fee based on having obtained an unacceptable offer. The retainer agreement’s term “secured by us” is not ambiguous as applied to the unaccepted offer. Gomberg is not entitled to an equitable lien on funds that were merely offered to Goyal on terms that were not ac- ceptable to him. 12 No. 12-3756
In the alternative, Gomberg attempts to establish a legal right to a portion of Goyal’s settlement funds under either Illinois’ statutory lien provision or the equitable remedy of quantum meruit. Neither entitles Gomberg to any of Goyal’s settlement funds. The Illinois Attorney’s Lien Act, 770 Ill. Comp. Stat. 5/1, grants an attorney a lien “for the amount of any fee which may have been agreed upon by and between such attorneys and their clients.” Id. For the reasons explained above, Goyal and Gomberg’s retainer agreement did not provide for a lien on ten percent of the settlement offer GTI made during Gomberg’s representation. If the attorney and client have not made a fee agreement, the Act provides for reasonable fees and costs, but that provision is not available when the attorney and client entered into a fee agreement. 770 ILCS 5/1; In re Solis, 610 F.3d 969, 974 (7th Cir. 2010) (attorney could not rely on Illinois lien statute to increase fee above amount under valid fee agreement). As to quantum meruit, Illinois law provides an equitable remedy for attorneys retained on a contingent fee basis to “recover on a quantum meruit basis a reasonable fee for services rendered before discharge.” Leoris and Cohen, P.C. v. McNiece, 589 N.E.2d 1060, 1063-64 (Ill. App. 1992), citing Rhoades v. Norfolk & W. Ry. Co., 399 N.E.2d 969 (Ill. 1979). This mechanism protects attorneys from the unfairness of being fired by a client on the brink of settlement or victory. It permits attorneys to recover reasonable fees even when clients inexplicably terNo. 12-3756 13 minate their representation shortly before realizing the financial benefit of their work. See Kannewurf v. Johns, 632 N.E.2d 711, 714-16 (Ill. App. 1994). Although Gomberg requested this relief in con- clusory terms, he has not argued why the circumstances of the termination of his representation of Goyal should actually entitle him to such compensation. See id. at 71516 (quantum meruit compensation is available only to attorneys who are discharged or who justifiably withdraw from representation). He failed to develop the argument before the magistrate judge and made no argument on the point before the district judge. We thus deem the argument waived.3 3 We are also confident that any such claim would have no merit. The factors to consider in determining reasonable value of services under quantum meruit include the difficulty of the work and the benefit to the client. See Ashby v. Price, 445 N.E.2d 438, 444 (Ill. App. 1983). Here, the terms of retainer agreement limited the scope and complexity of Gomberg’s representation so as not to include litigation. Gomberg himself appears to have believed that his responsibilities under the retainer agreement required minimal time and effort. In two emails Gomberg said that his services under the retainer agreement did not even include legal research — he wanted extra payment for research. Judge Keys aptly pointed out that this raised the question whether legal representation that does not include legal research is legal representation at all. Goyal also received no visible benefit from Gomberg’s representation. Gomberg represented him in a brief course of negotiations that produced only an unsatisfactory settlement offer that was (continued...) 14 No. 12-3756