Illinois Supreme Court Reaffirms Disgorgement of Advance Payment Retainers Under the Dissolution of Marriage Act

more+
less-

This morning, a unanimous Illinois Supreme Court strongly reaffirmed the "leveling the playing field" rules of the Marriage and Dissolution of Marriage Act in In re Marriage of EarlywineThe Act provides that a court can order disgorgement of one party's attorneys fees in order to enable the other party to pay his or her attorney. A unanimous Court held that courts were free to order disgorgement of an advance payment retainer paid by one party to his or her atttorney in order to facilitate an interim attorneys' fees award to the other party.

The ex-husband filed a petition for dissolution of marriage in August 2010. Not long after, the ex-wife filed a petition for an award of interim attorney's fees, asking that the Court order disgorgement of fees previously paid to the ex-husband's attorney in order to finance the award. In response, ex-husband showed that his parents had paid his legal bills; the money had not come from marital assets. Both parties claimed to be unable to pay their attorneys themselves. Following a hearing, the trial court ordered disgorgement by the ex-husband of a portion of the fees paid by his parents. The ex-husband sought reconsideration, attaching an a copy of his agreement with his counsel providing that counsel would be paid via an advance payment retainer, which would become the attorney's property immediately upon payment. The agreement identified the "special purpose" for the advance payment retainer as avoiding the possibility of a fee allocation order requiring that funds be returned to the client's ex-wife. The ex-husband filed an affidavit stating that his mother, her fiancé, his father and his father's wife had paid all of the attorney's fees on his behalf. The trial court denied reconsideration.

The trial court entered an order of "friendly contempt" in order to enable the ex-husband's attorney to seek appellate review of the disgorgement order. On appeal, the Appellate Court affirmed the order of disgorgement, but the Court vacated the contempt finding on the grounds that the petitioner had refused to comply with the disgorgement order in good faith in order to seek review of unresolved questions of law.

The Supreme Court unanimously affirmed. The appellant attorney argued that the advance payment retainer was not subject to disgorgement because it became his property upon payment. The appellant argued that the "leveling the playing field" rules of the Marriage Act, pursuant to which the two parties are to be put on approximately equal footing as far as legal representation, make it difficult for a client to secure legal representation. Therefore, parties should be able to use an advance payment retainer to shelter attorneys fees from the opposite party.

The Court found that the legislature had enacted Section 501(c-1) of the Act - the leveling the playing field rules - in order to equalize litigation resources where it was shown that one party could pay and the other could not. Prior to the amendments, the Court wrote, divorce cases frequently involved attempts by one party to block access by the other side to litigation funds. Holding that advance payment retainers were effective to shield funds from such orders, the Court found, would "strip the statute of its power." If the Court were to accept counsel's argument, an economically advantaged spouse could "stockpil[e] funds in an advance payment retainer held by his or her attorney." The Court held that nothing in the statute distinguished between marital and nonmarital property, so it made no difference that the advance payment retainer was allegedly financed by the ex-husband's family, as opposed to by his own funds. Finally, the Court rejected the petitioner's argument that the disgorgement order violated his First Amendment right of access to the courts and right to retain counsel, finding that counsel lacked standing to make the argument.

 

Topics:  Advance-Payment Retainers, Attorney's Fees, Disgorgement, Divorce

Published In: Civil Procedure Updates, Civil Remedies Updates, Constitutional Law Updates, Family Law Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sedgwick LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »