United States Court of Appeals For the Seventh Circuit ____________________ No. 20‐2012 UFT COMMERCIAL FINANCE, LLC, and JOANNE M. NOREN, also known as Joanne Marlowe, individually, Plaintiffs‐Appellants,

v. RICHARD A. FISHER, Defendant‐Appellee. ____________________

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:19‐CV‐07669 — Charles P. Kocoras, Judge. ____________________

ARGUED JANUARY 15, 2021 — DECIDED MARCH 23, 2021 ____________________

Before SYKES, Chief Judge, and WOOD and HAMILTON, Cir‐ cuit Judges. HAMILTON, Circuit Judge. This is a legal malpractice case. Plaintiffs are a start‐up company and its founder. They have sued the company’s former chief legal officer, Richard Fisher, to recover losses from an arbitration award that held them li‐ able for years of unpaid wages owed to Fisher himself. The plaintiffs’ core allegation is that they would not have been 2 No. 20‐2012 found liable to Fisher if he had not advised them to enter into what they now say was an illegal agreement to defer Fisher’s own compensation until the company was able to secure more funding. The district court granted Fisher’s motion to dismiss for a variety of reasons that together foreclosed the plaintiffs’ malpractice claims. On appeal, the plaintiffs challenge only two of the district court’s reasons. We affirm. Even if the plain‐ tiffs were correct on both issues, their claims still could not survive the motion to dismiss. I. Factual and Procedural Background Since this appeal is from a grant of a motion to dismiss for failure to state a claim, we present the following facts as they are pled in the complaint. Plaintiff UFT is a commercial fi‐ nance company founded by plaintiff Joanne Marlowe in 2008. Defendant Richard Fisher worked as a consultant with UFT from February 2013 to September 2013 and then became em‐ ployed by UFT as its chief legal officer in October 2013. Throughout his employment, Fisher was the sole source of legal counsel to UFT and Marlowe regarding the company’s operations. Among other duties, Fisher drafted the employ‐ ment agreements between UFT and its employees, including both Marlowe’s and his own. These employment agreements included mandatory arbitration clauses. During Fisher’s time at UFT, the company’s revenues were inconsistent, coming in “fits and starts,” so that the company failed to pay Marlowe, Fisher, and all other employees their agreed salaries when they were due. Fisher and other employ‐ ees continued to work at the company because they believed in its potential. Still, at various times, Fisher recommended and drafted “supplemental agreements” allowing for the No. 20‐2012 3 accrual of wages owed to various employees who could not be paid on schedule due to UFT’s revenue patterns. Following Fisher’s advice, even Marlowe herself entered into one of these supplemental agreements with UFT in 2014. And Fisher signed one in January 2016. Fisher’s supplemental agreement said he was owed $330,000, which was to “be paid in full from any subsequent first closing of any permanent equity/debt placement by [UFT] in an amount greater than US $1,000,000, if not paid earlier from any other source.” Fisher did not ad‐ vise UFT to consult independent counsel when negotiating his own supplemental and employment agreements. Plain‐ tiffs also allege that when UFT was considering buying Direc‐ tors and Officers (D&O) liability insurance in 2014, Fisher ad‐ vised Marlowe against it and did not fully inform Marlowe or UFT of the liability protections afforded by D&O insurance. In August 2016, Fisher left UFT on bad t