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action. In a dissolution proceeding the court is a court of equity and has broad discretion to effectuate
equity between the parties.

Section 501(c-1)(3) of the Dissolution of Marriage Act, 750 ILCS
5/501(c-1)(3), allows for the court to assess an interim attorney’s fees
award against an opposing party in an amount to enable the petitioning
party to participate in the litigation effectively. The section states that “if the
court finds that both parties lack financial ability or access to assets or
income for reasonable attorney’s fees and costs, the court shall enter an
order that allocates available funds for each party’s counsel, including
retainers or interim payments, or both, previously paid, in a manner that achieves substantial parity
between the parties” (emphasis added).

In Earlywine, the husband and the wife were in significant debt. As a result, in order to proceed in
a dissolution action the husband borrowed $8,750 from family members. He then in turn provided the
funds to his attorney in the form of an advance payment retainer. Because the retainer was an
advanced payment retainer, the husband’s attorney obtained an immediate ownership interest in the
funds. The husband’s attorney then initiated dissolution-of-marriage proceedings. The wife
thereafter petitioned for an award of interim attorney’s fees. The circuit court, after finding that there
were no other funds available, ordered the husband’s attorney to turn over to the wife’s attorney
$4,000 of the retainer. The husband appealed.

The Appellate Court determined that because the legislature clearly
stated in the statutory language that previously paid retainers could be
utilized to achieve parity between the parties, the ownership interest in the
funds were irrelevant. The husband’s attorney was ordered to turn over $4,000
of the retainer paid by the husband to the wife’s attorney. The court also noted
that while it recognized the source of the funds were a loan from the husband’s
family members, who most likely had no intent of the funds being turned over to
the wife’s attorney, the public policy of parity between the parties outweighed this consideration.

While it appears from the facts in Earlywine that the retainer funds were still
available, the decision leaves open the issue of funds paid on retainer that have
been earned and expended by the attorney. As the court points out in Earlywine,
the Dissolution of Marriage Act does not distinguish between the forms of retainers
paid that are subject to turn over orders. This leads to a potential ethical
conundrum for attorneys. Ethically, client funds must be separated from the
attorney’s funds. Once earned, or in the form of an advance payment retainer, the
funds are generally placed in a firm operating account, and ethically may be spent
by the attorney. The treatment of the retainer as a security retainer may not
ultimately resolve the issue either, in that the Earlywine court disregarded that the
ownership interest in the funds rested with the husband’s attorney, not the husband.

John\Sharp Thinking\#70.doc
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