The left-hander's agent, Larry O'Brien, indicated that the offer is similar to the four-year, $37.5 million contract Jarrod Washburn signed with Seattle last offseason.
"We've had an offer [from Chicago], and we're considering coming back with another counter offer," O'Brien told MLB.com on Friday. "I'm planning on meeting with [Cubs general manager] Jim Hendry down at the winter meetings in Orlando next week, but we're also going to be meeting with [Toronto general manager] J.P. Ricciardi."
Ricciardi told the Web site that the Blue Jays offered Lilly arbitration on Friday. While the pitcher has until Dec. 7 to accept, the club can still negotiate with him, unlike past years when a player would have to wait until May 1 to sign with his old club if the deadline passed.
Lilly had a much-publicized run-in with manager Toronto manager John Gibbons in August, but the team still wants the 15-game winner back.
"Once again, it's just going to come down to, 'Does Ted want to stay here?' We'll see," Ricciardi told MLB.com. "He knows what he's got here. The Cubs' situation is different than our situation. We'll see how it plays out."
Lilly has a career record of 59-58 with a 4.60 ERA, but O'Brian thinks that in today's market, Washburn-type money is very possible.
"I've always pointed to that contract as something that I thought would be something that we should be able to achieve," O'Brien told MLB.com. "With what Chicago has offered us, and some other conversations that we're having with a few other clubs, I think that number is definitely achievable. Who knows, it might get richer than that."