In Illinois, during a divorce, either party can ask the court to order the other party to pay some or all of his or her attorney fees while the case is pending. Section 501(c-1) of the Illinois Marriage and Dissolution of Marriage Act provides in pre-judgment (pre-decree) divorce cases, the court can assess attorney fees in favor of the petitioning party and against the other party. The purpose of these interim attorney fee awards is to “level the playing field” and allow an economically disadvantaged spouse to participate adequately in the litigation. See, Marriage of Rosenbaum-Golden. This may be necessary where one spouse uses his or her greater control of assets or income as a litigation tool, making it difficult for the disadvantaged spouse.
If the court decides that one party cannot pay his or her attorney fees but the other party can, it can order that the party able to contribute pay some attorney fees to the other party. However, if the court determines that both parties do not have sufficient financial ability or access to funds with which to pay, the court will allocate available funds for each party’s attorneys, including any retainers or interim payments previously paid.
In an important case, Marriage of Earlywine, it was established that if neither party is able to pay interim attorney fees, the non-petitioning party’s attorney could be required to disgorge some of the fees held by the attorney in his retainer account. By allowing funds held on retainer by either party’s attorney to be disgorged, the court prevents one spouse from paying exceptionally large retainers to his or her attorney in order to shield assets and make it difficult for the other spouse to obtain and pay for an attorney. The Earlywine case stands for proposition that no matter what form the retainer takes, it is subject to allocation for interim attorney fees and disgorgement.
In a recent Second District Appellate case, Marriage of Squire, the court held that even earned retainer fees are subject to disgorgement. This means that even after the fees have been incurred and the funds have been applied to the client’s bill, the court can still award that those fees be turned over to the other party.
In Marriage of Altman & Block, the First District recently issued a ruling to the contrary, which provides that funds earned by a party’s attorney were not “available” for disgorgement. In that case, the court was asked to decide the following issues:
1) whether, in cases where both parties lack the financial ability or access to assets or income to pay for reasonable attorney fees and costs, one party can be forced to use a non-marital retirement account to pay the other’s attorney fees, and;
2) whether the funds already paid to a party’s attorney for past services rendered are “available” to be allocated between the parties.
The facts of the Altman case are as follows: In a divorce proceeding, both the husband and wife were represented by attorneys. The divorce was highly contentious and both parties incurred significant attorney fees. Nine months after the case began, the wife filed a petition for interim attorney fees seeking approximately $37,000 in fees she already incurred with her lawyer as well as $25,000 for anticipated fees. She filed an amended petition shortly thereafter, which stated she had incurred fees of approximately $64,000, and had only paid $9,500. The wife asked that her husband be ordered to pay her interim attorney fees or, alternatively, that husband’s attorney be required to disgorge the sums that her husband had already paid him. Throughout the litigation it was determined that the wife had access to a vested, non-marital retirement account worth $100,000.
The husband responded to her petition, stating that the wife should pay her fees from the retirement funds. The trial court determined that both parties lacked sufficient access to assets or income to pay their attorney fees and costs. The court divided Husband’s retirement account that was already being held in wife’s attorney’s trust account, giving some to wife’s attorney for fees, and then ordered husband’s current attorney to turn over $16,000 in fees paid for services which he had already rendered on behalf of the husband.
In response to the first issue presented in this case, the court stated that generally, retirement plans are protected from judgment (including judgments for attorney fees) by the Illinois Code of Civil Procedure; and a spouse cannot be forced to liquidate a non-marital retirement account to pay interim attorney fees in a divorce. The court also stated that, under the particular set of facts presented in the case, the wife’s retirement account could not be considered an asset available to her with which to pay her fees. The court discussed the particular facts of the case saying that wife never touched the account for litigation purposes so she should not be ordered to do so. Further, it was a non-marital asset that would have been awarded to her in the eventual divorce. Whereas in other cases, and in the husband’s case, when a party used his retirement account to fund the litigation, he could be ordered to use it for fees.
In response to the second issue presented in this case, the court reviewed the history of the “disgorgement” of attorney fees in divorce cases. As stated above, the Court decided that, when an attorney has already worked on the case, earned fees for work completed, transferred earned fees from the retainer payment into his or her general operating account, and has paid expenses from it, those earned funds are not able to be disgorged to pay the petitioning party’s attorney fees. Funds earned by and paid to a person’s attorney in the normal course of representation for past services rendered are not considered “available” funds within the meaning on 501(c-1)(3).
Thus, the Altman & Block decision directly conflicts with the decision in Marriage of Squire. The Illinois Supreme Court is currently reviewing the Appellate Court decisions and has yet to rule on the ultimate issue.