The Illinois Supreme Court holds that a financially strapped divorcing wife can require her husband's lawyer to turn over already-paid fees to help finance her own legal expenses.
In a ruling that emphasizes the importance of a "level playing field" in dissolution of marriage proceedings, the Illinois Supreme Court held that a wife could disgorge earned fees from her husband's divorce lawyer in order to pay her own legal expenses.
Both spouses had virtually no access to money, but the husband's family loaned him $8,750 to pay legal fees related to the divorce. He paid the money to his lawyer as an advanced payment retainer that, pursuant to the prior supreme court decision in Dowling v. Chicago Options Associates, Inc., 226 Ill. 2d 277 (2007), was earned by the lawyer upon receipt.
In the case of In re Marriage of Earlywine, 2013 IL 114779, a unanimous supreme court ruled that the public policy behind the "leveling of the playing field" provisions of the Illinois Marriage and Dissolution of Marriage Act require the husband's lawyer to give up about half of his earned fees despite the provisions stated in Dowling that allow for advanced payment retainers.
The supreme court had previously incorporated the Dowling decision into Illinois Professional Conduct Rule 1.15, which expressly allows advanced payment retainers in limited situations. Yet in a divorce case like Earlywine, where one spouse received a cash loan that gave him an advantage over the other spouse, section 501(c-1)(3) of the Marriage and Dissolution of Marriage Act requires the spouses to share the funds for legal fees so as to keep both parties on equal footing.
"In Dowling, we held that advanced payment retainers should be used 'sparingly' and only when necessary to accomplish a special purpose for the client which could not be accomplished with a security retainer," Justice Anne M. Burke wrote in the Earlywine opinion. "In divorce cases, however, there are two clients, both of whom require access to legal counsel. Shielding assets so that one spouse may easily hire an attorney has the direct effect of making it difficult for the other spouse to hire his or her own attorney. This would defeat the purpose and goals of the Act, which is to enable parties to have equitable access to representation."
A win for underdog spouses
Chicago attorney Pamela J. Kuzniar, who chairs the ISBA Family Law Section Council, said the Earlywine decision is a big win for underdog spouses who have less access to financial means than the other spouse in the divorce proceedings.
She pointed out that unequal access to finances is a common problem in divorce and child-custody cases, which prompted the legislature to enact the "leveling of the playing field" provisions of the Act.
"Earlywine is a case that's good for resolving litigation equitably because it sometimes feels like it's the people with the most money who always win," Kuzniar said. "If you want to borrow money to litigate a case, I guess that's what you can do. But if one person has the creditworthiness to get a loan, and the other person doesn't, that's not a level playing field."
The underlying section of the Act allows a court, after consideration of the relevant factors, to order a party to pay the petitioning party's interim attorney fees "in an amount necessary to enable the petitioning party to participate adequately in the litigation."
According to the supreme court opinion, prior to issuing such an order, "the court must find that the petitioning party lacks sufficient access to assets or income to pay reasonable attorney fees, and that the other party has the ability to pay the fees of the petitioning party."
Despite the fact that Mr. Earlywine's attorney earned the fees upon receipt pursuant to a written advanced payment retainer agreement that the court determined was otherwise in compliance with Rule 1.15, Mrs. Earlywine lacked sufficient access to assets or income and the court therefore ordered disgorgement of approximately half of the fees earned by the husband's lawyer.
'[W]e can't really count on the money we've received'
Highland Park-based attorney Nancy Chausow Shafer, a member of the Family Law Section and immediate past president of the Illinois chapter of the American Academy of Matrimonial Lawyers, said she generally agrees with the result of the Earlywine case, but is concerned about what it could mean in the future in regards to fees that she has rightfully earned and has already moved from her client trust account into her operating account.
"What concerns me about Earlywine is that it's one thing to have unpaid retainer funds disgorged, but if I've been paid $10,000 and have done $20,000 worth of work,...I've earned that money and paid my bills for office rent and whatnot, and the statute doesn't draw that distinction," Shafer said. "I'm afraid that really hurts us [family law attorneys] because we can't really count on the money we've received - because people often do run out of money in marriage dissolutions.... This disgorgement of earned fees could become a real problem because I might not always have that $10,000 sitting in my bank account."
To protect her own interests, Shafer said it is her standard practice to inform clients at the beginning of her representation that the law requires attorney fees to be paid by marital assets for both of the divorcing spouses. She encourages her clients not to fight over who will be paying attorney fees, because such efforts just rack up more legal bills and, as the Earlywine decision shows, there is usually no likelihood of success with such disputes.
"It's really necessary to change the mindset of, 'I'm going to outspend you, I'm going to litigate you to death,' and that's what the statute tries to prevent," Shafer said. "I make it clear that the [marital] estate has to provide funds for both of the parties to hire representation...[and] it's in the client's best interests to make sure the spouse is adequately represented to get the job done more efficiently on both sides."