In re: Luis E. Solis

In the
United States Court of Appeals
For the Seventh Circuit
No. 09-4075
IN THE MATTER OF:
LUIS E. SOLIS, et al.,
Debtors.
APPEAL OF:
JOSEPH M. O’CALLAGHAN.
Appeal from the United States District Court
for the Northern District of Illinois, Western Division.
No. 3:09-cv-50164—Philip G. Reinhard, Judge.
ARGUED MAY 28, 2010—DECIDED JULY 9, 2010
Before MANION, WILLIAMS, and HAMILTON, Circuit Judges.
HAMILTON, Circuit Judge. The legal profession has not
treated debtor Luis Solis well. The secretary of an
attorney who settled Solis’ workers’ compensation claim
stole nearly half of the amount he was owed. Then a
second attorney whom Solis had hired to recover
the rest of the stolen settlement—appellant Joseph
O’Callaghan—asserted an attorney fee claim for a per-
centage of the entire amount of the settlement, including
the portion that Solis had already been paid before he
hired that second attorney. The legal issue in this appeal

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2 No. 09-4075
Mora stole approximately $1.5 million dollars from her 1
employers’ clients. She was convicted of 15 counts of theft
and is now in a state prison.
is whether the second attorney “recovered” money for
his client when he established the client’s entitlement to
the sum of money already in the client’s possession.
Appellant O’Callaghan insists that the answer is yes. We
disagree. Under the terms of the contingent fee agree-
ment in this case, O’Callaghan is entitled to a percentage
of only the money he actually recovered from other
parties, not a percentage of the money Solis had received
earlier. We affirm the judgment of the district court.
This appeal comes to us from a bankruptcy proceeding
in which the court resolved O’Callaghan’s claim for an
attorney fee and costs on cross-motions for summary
judgment. The relevant facts are not in dispute. Luis
Solis suffered substantial spinal injuries on the job in 2001
and 2002. He hired an attorney to assert a workers’ com-
pensation claim. That claim was eventually settled in
2004 for a net payment to Solis of $107,980 after attorney
fees and costs. Solis’ attorney issued him a check in that
amount, but that check was stolen by the attorney’s
secretary, Maura Mora, and deposited into her personal
bank account. In February 2005, after Solis asked about
his money, Mora caused a cashier’s check to be issued
to Solis in the amount of $62,410. She told Solis the cash-
ier’s check was a partial payment of the settlement pro-
ceeds. Solis never received the remainder of the settle-
ment funds.1

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No. 09-4075 3
After he received the check from Mora, Solis retained a
second attorney, appellant O’Callaghan, to recover the
rest of the settlement that was owed to him. O’Callaghan
took the case on a contingent fee basis. Under the written
contingent fee agreement, O’Callaghan would receive
40 percent of “any gross amount recovered in the event
of suit being filed.” “Gross amount” was defined as “the
total amount of money received on [the] case before
deduction of any expenses.” O’Callaghan filed suit in
Illinois circuit court against a number of named and
unnamed defendants. In that suit, he requested money
damages for the unpaid portion of the settlement and a
declaration that Solis was legally entitled to retain the
$62,410 he had already received. In 2007, the parties to
that state court action settled the case for a new pay-
ment of $60,000 in cash to Solis and an agreement by
the defendants to relinquish any claims they might have
had to the sum of $62,410 already in Solis’ possession.
Before the settlement funds were transferred to Solis,
however, he filed for Chapter 7 bankruptcy protection.
The bankruptcy trustee stepped into Solis’ shoes and re-
covered the promised settlement payment of $60,000
in cash. O’Callaghan then filed a claim against the bank-
ruptcy estate for $49,719.63 in attorney fees and costs. His
claim seeks 40 percent not only of the new $60,000 cash
that was obtained, but also of the $62,410 that Solis had
received before he even contacted O’Callaghan (plus
$755.63 in expenses). The bankruptcy trustee objected
that O’Callaghan was entitled at most to $24,755.63—
equal to 40 percent of the $60,000 cash actually received

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4 No. 09-4075
under the settlement, plus the same expenses. The parties
filed cross-motions for summary judgment.
The bankruptcy court denied O’Callaghan’s motion,
granted the trustee’s motion in part, and allowed
O’Callaghan’s claim in the amount of $24,755.63. The
district court affirmed on appeal, and O’Callaghan has
filed this further appeal. We have jurisdiction because
the bankruptcy court’s decision and the district court’s
decision were both appealable final decisions that com-
pletely resolved O’Callaghan’s claim. See, e.g., Zedan v.
Habash, 529 F.3d 398, 402 (7th Cir. 2008); In re Golant,
239 F.3d 931, 934-35 (7th Cir. 2001). We review the bank-
ruptcy court’s grant of summary judgment de novo. In re
Midway Airlines, Inc., 383 F.3d 663, 668 (7th Cir. 2004).
We first address O’Callaghan’s misplaced argument that
the trustee lacked standing to challenge his claim because
(1) the trustee was not a party to the fee agreement; and
(2) the $62,410 on which the disputed portion of the fee
was based was not part of the bankruptcy estate. Under
O’Callaghan’s theory, apparently no one would have
standing to object to his claim, which would certainly
make it easier for the claim to be approved. But it is
irrelevant that the trustee was not personally a party to
the fee agreement. A bankruptcy trustee acts as the
debtor’s representative regarding such claims. See In re
New Era, Inc., 135 F.3d 1206, 1209 (7th Cir. 1998) (noting
that a trustee has the nearly exclusive right to represent
the debtor in court, and that it was “sanctionably clear”
that another lawyer had no right to appeal in debtor’s
name). It is also irrelevant whether the first $62,410

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No. 09-4075 5
The circumstances of this case are consistent with the con- 2
cerns raised in Guerrant. Solis is a non-native English speaker
who may have been unusually susceptible to any manipula-
tion of a fee agreement’s language.
was part of the bankruptcy estate. The $60,000 against
which O’Callaghan asserted his claim is of course part
of the estate. The trustee had standing to contest
O’Callaghan’s claim.
O’Callaghan’s claim turns on the interpretation of a
contract for fees, so we look to Illinois contract law. See
Grogan v. Garner, 498 U.S. 279, 283-84 & n.9 (1991). In
Illinois (as in all states), a court gives contract terms their
“common and generally accepted meaning,” as informed
by the “context of the contract as a whole.” Krilich v.
American National Bank & Trust Co. of Chicago, 778
N.E.2d 1153, 1164 (Ill. App. 2002). Illinois construes
attorney contingent fee agreements strictly in favor of
clients in order to protect them from unscrupulous at-
torneys who might manipulate the agreement terms
in their favor. See Guerrant v. Roth, 777 N.E.2d 499, 504-05
(Ill. App. 2002).2
Under his agreement with Solis, O’Callaghan was to
receive a percentage of the money “recovered.” The bank-
ruptcy court held that O’Callaghan “recovered” only the
$60,000 in cash obtained after Solis hired O’Callaghan,
and that he at most “clarified title” to the earlier pay-
ment of $62,410. The district court agreed: “Construing
the fee agreement to include this sum as an amount
recovered stretches the terms of the agreement too far.

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6 No. 09-4075
The language of the agreement makes no mention of
calculating the fee based on losses avoided. Appellant’s
efforts as to the $62,410 did not result in a recovery but
at best a loss avoidance.” Judge Reinhard also wrote: “The
ordinary meaning of ‘recover’ is to get something back
that is not currently in one’s possession. The ordinary
meaning of ‘recovered’ would not encompass retaining
something already in one’s possession.”
We agree with the bankruptcy and district courts. Read
in context—as part of a contingent fee agreement—the
term “recovered” most naturally encompasses situations
in which the client actually receives cash or property
from some other parties as a result of the attorney’s
efforts. That the Illinois courts read contingent fee agree-
ments strictly in favor of the client supports this inter-
pretation. This contingent fee agreement cannot fairly
be read as an agreement by Solis to pay O’Callaghan
40 percent of the $62,410 that Solis had already received.
Nor can it fairly be read as a promise to pay O’Callaghan
40 percent of that sum for securing Solis’ title to the
money or for defending him against any claims for that
money. The agreement makes no mention of any such
claims having been asserted against Solis at the time
he and O’Callaghan entered the agreement.
For purposes of this argument, we may assume with-
out deciding that attorney fee agreements for defense
of claims or counterclaims could have some contingent
element that would depend on the ultimate outcome of
the case. We are confident that if such agreements are
permissible (for example, in commercial litigation in

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No. 09-4075 7
The trustee suggests that In re Doyle, 581 N.E.2d 669 (Ill. 1991), 3
may be read as prohibiting contingent fees for attorneys
defending against monetary claims. The Doyle court disap-
proved of contingent fee agreements where there is no
genuine dispute or controversy, as where an attorney merely
submitted an uncontested claim on behalf of a client seeking
proceeds from a life insurance policy. See 581 N.E.2d at 675,
discussing In re Teichner, 470 N.E.2d 972 (Ill. 1984). The Doyle
court made clear that a contingent fee for recovering proceeds
of an insurance policy was not reasonable where there would
be concern only about the speculative possibility of adverse
claims. 581 N.E.2d at 676. We do not read Doyle, which dealt
with a different sort of problem, as flatly prohibiting con-
tingent fee agreements for defense of monetary claims against
the client. To the extent that Doyle disapproves of contingent
fee agreements based on the defense of speculative future
claims, the claims here were not speculative. The trustee
admitted for purposes of the bankruptcy proceeding that at
least some claims had been asserted by others against Solis
seeking the money he had received from Mora.
which the client is a sophisticated consumer of legal
services), they would still require clear and explicit lan-
guage that the client fully understands. In this case,
there was certainly no clear or explicit indication to Solis
that he was agreeing to pay O’Callaghan 40 percent of
the $62,410 that Solis had already received on his own.3
Accordingly, like the bankruptcy court and district
court, we read the agreement to entitle O’Callaghan
only to his costs and 40 percent of the $60,000 in cash he
actually obtained from the defendants on behalf of Solis.
See In re Gerard, 548 N.E.2d 1051, 1056-57 (Ill. 1989) (inter-

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8 No. 09-4075
preting term “recovered” in fee agreement to suggest
“reobtaining [property] from somewhere outside of [the
client’s] sphere of control”). The trustee conceded
O’Callaghan’s entitlement to this amount, so we have
no occasion to examine whether this amount was rea-
sonable.
The cases O’Callaghan cites for a broader definition of
“recover” interpreted the Illinois Attorney’s Lien Act,
which is not subject to the same interpretive rules as a
fee arrangement between attorney and client. See, e.g.,
Standidge v. Chicago Rys. Co., 98 N.E. 963, 966 (Ill. 1912);
Reed Yates Farms, Inc. v. Yates, 526 N.E.2d 1115, 1121-22 (Ill.
App. 1988). Even if these cases were relevant, they are
consistent with our analysis. In Reed Yates Farms, the
court found a “recovery” where the attorney’s representa-
tion had resulted in cash payments to the client and
effectively increased those payments’ amount above
what they would have been otherwise. Id. at 1122. In this
case, O’Callaghan’s later representation neither caused
the earlier payment of $62,410 to Solis nor increased
the amount of that payment. In Standidge, the Illinois
Supreme Court held that a formal judgment or decree
was not necessary for a recovery under the Lien Act,
noting that the word “recover” in the Act meant “receive,”
so that a settlement payment would be “recovered” despite
the absence of a judgment. 98 N.E. at 966. Standidge had
represented his client for a year. The client and opposing
party then settled the case by bypassing attorney
Standidge, and the client received cash. Id. at 964. Read
in light of the specific issue addressed and its factual
context—money received after and because of an at-
torney’s lengthy representation—Standidge cannot be

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No. 09-4075 9
stretched to cover this entirely different case, in which
the client received the money before and independent of
the attorney’s representation.
O’Callaghan insists that it was necessary and appro-
priate to establish Solis’ right to the $62,410 that he had
already received. We assume for purposes of argument
that Solis (or at least his creditors) benefitted from the
surrender of all possible claims against the $62,410 he
had received from Mora. We will even assume for argu-
ment’s sake that Solis was not a holder in due course of
the check and therefore possibly subject to third-party
claims against that money. But these assumptions are
relevant only to the reasonableness of the increased fee
claimed—if Solis was never at risk of any colorable
claim against the $62,410, it would have been even more
unreasonable for O’Callaghan to seek so much for his
efforts. The problem here is that O’Callaghan did not
actually recover that money for Solis, as required by
the fee agreement. Rather, as the bankruptcy court ob-
served, O’Callaghan at best clarified Solis’ title to that
money through a binding legal judgment.
Under O’Callaghan’s broader interpretation of the
word, an attorney would “recover” funds or property
any time she successfully defends a client against others’
claims. That approach stretches the word too far
and would make unsophisticated clients vulnerable to
unanticipated fee demands whenever counterclaims are
asserted against them. We recognize that potential and
actual counterclaims can pose serious complications
when an attorney represents a claimant under a con-
tingent fee agreement. Attorneys are entitled to protect

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10 No. 09-4075
O’Callaghan has offered no evidence to show what a reason- 4
able fee might have been for his defense against the asserted
claims. He has argued this appeal on an all-or-nothing basis,
stating that 40 percent of the entire settlement is a reasonable
contingent fee for his work. He admits not keeping time
records, but see Ill. R. Prof’l Conduct 1.5(a)(1) (making time
expended relevant to the reasonableness of a fee), and tells us
little about the defendants’ claims. Thus, even if we were to
reach the reasonableness of his claimed fee on a quantum
meruit basis, our judgment would be the same.
both themselves and their clients in such cases. The onus
is on the attorney to recognize the risks and to draft fee
agreements that clearly indicate the client’s fee responsi-
bilities. The later attempt here to stretch the definition
of “recover” to include the successful defense of claims
against funds already in the client’s possession does not
meet that test.
O’Callaghan’s remaining arguments are also unpersua-
sive. He argues that he is entitled to a reasonable fee
for obtaining a declaration of Solis’ rights, but the
sources he cites are inapposite because they concerned
fee disputes in the absence of enforceable fee agree-
ments. See, e.g., 770 ILCS 5/1 (allowing liens for a rea-
sonable fee absent a fee agreement); Rhoades v. Norfolk &
W. Ry. Co., 399 N.E.2d 969, 974-75 (Ill. 1979) (allowing
quantum meruit recovery because fee agreement was
unenforceable). The fee agreement here specified
O’Callaghan’s fee regardless of how much or how little
work he performed. His dissatisfaction with his bargain
is no reason to set it aside. O’Callaghan also argues that4
he had a valid attorneys’ lien. The existence of that lien

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No. 09-4075 11
is not contested. The issue is the amount of that lien
under the terms of the agreement. See 770 ILCS 5/1
(“Attorneys at law shall have a lien . . . for the amount of
any fee which may have been agreed upon . . . .”).
O’Callaghan was entitled only to 40 percent of the
$60,000 cash he recovered, plus expenses, the amount of
the claim that the trustee agrees is valid. We agree that
that is the correct amount of O’Callaghan’s valid lien.
The judgment of the district court, affirming in turn
the decision of the bankruptcy court, is AFFIRMED.
7-9-10

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