Disgorgement: Leveling the Playing Field in A Divorce
April 1, 2022
750 ILCS 501 (c-1) of the Illinois Marriage and Dissolution of Marriage Act attempts to “level the playing field” between spouses during a divorce. In re Goesel, 102 N.E.3d 230, 235 (Ill. 2017). Under the Act, one spouse can ask the other spouse to pay all or some of their attorney’s fees. Through this process, referred to as disgorgement, the Act intends to “’equaliz[e] the parties’ litigation resources where it is shown that one party can pay and the other cannot.’” In re Earlywine, 996 N.E.2d 642, 649 (Ill. 2013) (quoting In re Marriage of Beyer, 753 N.E.2d 1032, 1041 (Ill. App., 1st Dist. 2001)).
Courts determine if a spouse is entitled to “interim attorney’s fees and costs” by analyzing a number of factors, including the income and property of each party, the complexity of the issues, and the earning capacity of the parties. 750 ILCS 501 (c-1)(1)(A–I). Where the court determines that one spouse is incapable of paying their attorney’s fees, but the other spouse has the financial means to do so, the court can order that party to contribute to the other party’s reasonable attorney’s fees. These interim fees include reasonable fees and costs that have been incurred or will likely be incurred that are assessed while a case is pending. 750 ILCS 501 (c-1).
In In re Marriage of Beyer, a wife brought suit alleging that the parties’ marital settlement agreement was obtained by fraud after a husband failed to disclose marital assets. In re Marriage of Beyer, 753 N.E.2d 1032, 1035 (Ill. App., 1st Dist. 2001). The wife sought interim attorney’s fees in an amount comparable to what the husband paid his attorney. In re Marriage of Beyer, 753 N.E.2d at 1035. The Illinois Court of Appeals determined that interim fees and costs can be awarded in both pre- and post-decree actions. In re Marriage of Beyer, 753 N.E.2d at 1040. The party seeking the interim fees must show their inability to pay and the ability of the other spouse to pay the fees. In re Marriage of Beyer, 753 N.E.2d at 1041. The award of fees is temporary and where the circumstances of a party change during the course of litigation, the amount of the award for interim fees and costs can be modified or revoked. In re Marriage of Beyer, 753 N.E.2d at 1042.
What if Neither Party Can Pay?
If the court finds that neither party has the financial means to pay attorney’s fees, the court can require a party’s attorney to disgorge fees held in their client’s advance payment retainer account by allocating “available funds.” 750 ILCS 501 (c-1)(3); In re Marriage of Earlywine 996 N.E.2d at 650. This prevents one spouse from keeping their money in an attorney’s retainer account in an effort to prevent the other spouse from accessing their assets for their own attorney’s fees. In re Marriage of Earlywine 996 N.E.2d at 650. It does not matter whether the advance retainer was paid for by marital or nonmarital assets. In re Marriage of Earlywine 996 N.E.2d at 650–651.
In In re Goesel, the Supreme Court of Illinois held that “available funds” under 750 ILCS 501 (c-1) only includes advance funds that an attorney is holding for a client, and, therefore, fees that were earned by an attorney are not subject to disgorgement. In re Goesel, 102 N.E.3d at 240.