Opinion filed January 24, 2017 _____________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

2017

In re MARRIAGE OF ) ) Appeal from the Circuit Court CHRISTINE GOESEL, ) of the 12th Judicial Circuit, ) Will County, Illinois. Petitioner-Appellee, ) ) and ) Appeal No. 3-15-0101 ) Circuit No. 13-D-107 ANDREW GOESEL, ) ) Respondent, ) Honorable ) Dinah L. Archambeault, (Laura A. Holwell, Contemnor-Appellant). ) Judge, presiding. _____________________________________________________________________________

JUSTICE CARTER delivered the judgment of the court, with opinion. Presiding Justice Holdridge and Justice Schmidt concurred in the judgment and opinion. _____________________________________________________________________________

OPINION

¶1 This appeal arises from the dissolution of marriage proceedings between petitioner,

Christine Goesel, and respondent, Andrew Goesel. Contemnor, Laura Holwell, served as an

attorney for Andrew. After Christine filed a petition for interim attorney fees, the trial court

found that neither Andrew nor Christine had the current ability to pay attorney fees and ordered

Holwell to disgorge $40,952.61 of attorney fees that Andrew had paid to her. Holwell did not

pay the disgorgement amount, and the trial court held her in contempt. On appeal, Holwell argues that the trial court erred in ordering the disgorgement of fees from her, finding the

disgorgement order was a judgment, and holding Holwell in indirect civil contempt. Holwell also

argues that the contempt orders and sanctions entered against her should be vacated because her

refusal to comply with the disgorgement order constituted a good-faith effort to determine if the

disgorgement was proper. We reverse the disgorgement order and vacate the trial court’s order

finding Holwell in contempt of court.

¶2 FACTS

¶3 Christine and Andrew were married on March 4, 1995. On January 18, 2013, Christine

filed for divorce. Christine was represented by the firm Goldstine, Skrodzki, Russian, Nemec and

Hoff, Ltd. (Goldstine), and Andrew was represented by Janice Boback of Anderson & Boback,

LLC (Boback). During the dissolution proceedings, Christine lived in the marital home.

Christine’s attorneys instructed her to provide them Andrew’s mail that arrived at the marital

home. Goldstine then opened and viewed Andrew’s mail.

¶4 On October 10, 2013, Laura Holwell, the contemnor in this matter, filed her appearance

as Andrew’s counsel, and Boback was granted leave to withdraw. Prior to withdrawing, Boback

filed a motion to disqualify Goldstine as Christine’s counsel because the firm had obtained

privileged information about Andrew by viewing his mail. The trial court eventually disqualified

Goldstine on March 4, 2014. Holwell billed $37,094.49 to Andrew for work related to the

disqualification of Goldstine. Goldstine did not charge Christine for its defense of the motion to

disqualify.

¶5 On March 10, 2014, the Law Offices of Edward R. Jaquays (Jaquays) appeared on behalf

of Christine. On June 6, 2014, Howard LeVine of LeVine, Wittenberg, Shugan and Schatz, Ltd.

(LeVine), appeared on behalf of Andrew. On June 12, 2014, Christine filed a petition for interim

2 attorney fees, which she later amended. Within the amended petition, Christine indicated that she

paid Jaquays an initial retainer of $5000, currently owed Jacquays $27,142.60, and lacked

sufficient funds to pay the outstanding fees. Christine requested that the trial court either order

Andrew to pay her attorney fees or, if the court found that Andrew lacked the ability to do so,

enter an order disgorging the necessary amount from the money that Andrew had already paid to

Holwell. Andrew also filed a petition for attorney fees, indicating that he did not have the ability

to pay his attorney fees.

¶6 On June 20, 2014, Holwell filed a motion to withdraw as Andrew’s counsel. In response,

Christine requested that the trial court condition its grant of Holwell’s leave to withdraw upon

the disgorgement of attorney fees. On June 27, 2014, the trial court issued an order allowing

Holwell to withdraw but retained jurisdiction over Holwell should the court find disgorgement to

be an issue, with Holwell to be notified of future dates pertaining to the disgorgement issue.

¶7 From July 29 to July 31, 2014, at the hearing on Christine and Andrew’s petitions for

attorney fees, Holwell provided testimony, and the parties provided financial disclosures. With

regard to real estate, the financial disclosures indicated that (1) the parties’ marital residence was

valued at $440,000, and there was a mortgage balance of $350,000 that was four months in

arrears; (2) the parties’ investment real estate in Florida had approximately $60,000 in equity;

(3) Christine had a Michigan home with an unknown value that Andrew “gifted” to her; and

(4) there was investment or business real estate valued at $150,000 that was in arrears in

association dues and property taxes. The financial disclosures also indicated that the parties

owned four motor vehicles, with a total value of $30,500. Christine had a checking account with

a balance of $4610.99, and Andrew had two checking accounts with a combined balance of $50.

The financial disclosures further indicated Andrew had an individual retirement account (IRA)

3 with a fair market value between $2000 and $4000 and a health savings account (HSA) with a

fair market value of $12,000. Christine had multiple retirement accounts including (1) a Roth

IRA with an unknown fair market value, (2) an IRA with a fair market value of $32,819.88, (3) a

403(b) plan with a fair market value of $42,498.86, (4) a 401(a) plan with a fair market value of

$13,292.21, (5) a rollover plan with a fair market value of $3838.04, (6) a 403(b) plan with a fair

market value of $27,954.71, and (7) a retirement and savings plan with a fair market value of

$17,356.23. Christine had $16,339.12 in credit card debt and owed $34,560.86 in attorney fees.

After expenses, Christine’s net monthly income was $362.94. Her monthly income included a

court-ordered support payment of $3500, but her expenses did not reflect the monthly mortgage

payment for the marital home or the Florida rental home’s expenses. Andrew owed creditors

approximately $17,150, and his business, Goesel Chiropractic, owed creditors approximately

$69,180. The amount he owed to his attorneys was “unknown.” The difference between

Andrew’s monthly income and expenses was a negative amount of $3318.44.

¶8 At the outset of the hearing for interim attorney fees, the parties stipulated to the

attorneys’ rates and that the work performed by the attorneys was reasonable and necessary.

Holwell testified she was holding approximately $13,000 that Andrew had previously paid to

Boback and Boback then paid to Holwell because there was a dispute as to which party owned

the money. Copies of Holwell’s invoices were entered into evidence and indicated that all money

she had received was for work already performed. Andrew still owed Holwell $17,500.38 and

owed Levine $26,000. Levine was holding $10,000 received for work already performed because

there was a question as to whether the money was paid from a proper source.

¶9 On September 29, 2014, the trial court found that both parties currently lacked the

financial ability to pay reasonable attorney fees. The trial court determined that the total attorney

4 fees paid by the parties, as of September 29, 2014, was $118,193.31 and each party should be

allotted $59,069.65 for their attorney fees. To achieve parity, the trial court ordered that Holwell

disgorge $40,952.61 of fees paid to her by Andrew, which were to be tendered to Christine’s

attorneys within 14 days of the order.

¶ 10 On October 24, 2014, Christine filed a petition for the trial court to enter an order of

indirect civil contempt with sanctions against Holwell because Holwell had not paid any money

toward the disgorgement order. On December 18, 2014, in response to the petition, the trial court

clarified that the disgorgement order was a judgment and held Holwell in “friendly” contempt of

court. On January 13, 2015, Christine filed a motion for sanctions to be imposed against Holwell

because the contempt order was not immediately appealable without a penalty. On January 16,

2015, the trial court found Holwell to be in indirect civil contempt and sentenced her to an

indeterminate jail sentence, which was to be stayed for 30 days during the pendency of an

appeal. A fine of $10 per day was to be imposed for each day the jail time was stayed. The trial

court also indicated that Holwell could purge the contempt by paying $40,952.61 to Christine’s

attorneys by January 21, 2015. On January 21, 2015, the trial court found that Holwell failed to

purge herself of contempt, and the order of contempt was found to be final and appealable.

Holwell appealed.

¶ 11 ANALYSIS

¶ 12 On appeal, Holwell argues that the trial court erred in (1) ordering disgorgement of her

fees because it failed to make a specific finding with respect to Christine’s ability to pay, the

evidence showed Christine had the ability to pay, and Holwell was deprived of notice and an

opportunity to be heard; (2) finding the disgorgement order was a judgment because

disgorgement orders are temporary advances against the marital estate; and (3) holding Holwell

5 in indirect civil contempt because it deprived Holwell of her right to notice and a hearing and the

trial court failed to inquire into Holwell’s ability to comply with the disgorgement order. Holwell

also argues that the contempt orders and sanctions entered against her should be vacated because

her refusal to comply with the disgorgement order constituted a good-faith effort to determine if

the disgorgement was proper.

¶ 13 A court order granting interim attorney fees is not an appealable interlocutory order. In re

Marriage of Radzik,

. However, when the trial court has issued a

contempt sanction for violating an interim fees order, the contempt finding is final and

appealable.

In this case, Holwell timely appealed from the trial court’s order finding her in

contempt, which was a final and appealable order.

¶ 14 A. The Parties’ Inability to Pay Attorney Fees

¶ 15 On appeal, Holwell contends that the trial court erred in ordering disgorgement of

attorney fees from her, which had been paid to her by Andrew, because the trial court failed to

make a specific finding with respect to Christine’s ability to pay and the evidence showed

Christine had the ability to pay. The record shows that after a three-day hearing, the trial court

specifically indicated in its order of September 29, 2014, that it found neither party had the

current ability to pay attorney fees. Thus, we find Holwell’s argument that there was no specific

finding of Christine’s inability to pay attorney fees to be without merit. We, thus, turn our

attention to a review of the trial court’s finding that neither party had a current ability to pay

attorney fees and its award of interim attorney fees by way of disgorgement.

¶ 16 The standard for reviewing a trial court’s award of attorney fees is for an abuse of

discretion. In re Marriage of Beyer,

(2001). An abuse of discretion

occurs “only when no reasonable person would take the view adopted by the court.” In re

6 Marriage of Benkendorf,

(1993). This court will not overturn the trial

court’s decision merely because it may have reached a different decision. In re Marriage of

Pratt,

. The “ ‘trial court is in a superior position to assess the

credibility of witnesses and weigh the evidence.’ ”

(quoting In re April C.,

(2001)).

¶ 17 It is well settled that financial inability to pay attorney fees is not equivalent to having no

assets or no income available. See In re Marriage of Schneider,

(2005)

(“[f]inancial inability exists where requiring payment of fees would strip that party of her means

of support or undermine her financial stability”); In re Marriage of Marthens,

(1991) (“it [is not] necessary for a spouse seeking such [attorney] fees to divest herself

of capital assets or deplete her means of support and thereby undermine her economic stability”);

In re Marriage of Vance,

(“ ‘financial inability does not mean

destitution; the spouse need not exhaust his or her own estate’ ” (quoting In re Marriage of Los,

(1985))).

¶ 18 In this case, the only evidence of Andrew and Christine’s assets, income, and expenses

was their financial disclosure statements, which neither party disputed. Christine’s financial

disclosure statement indicated a net monthly income of $7658.38 and monthly expenses of

$7295.44 (not including a mortgage payment for the marital residence). Andrew’s financial

disclosure statement indicated a net monthly income of $3343.56 and monthly expenses of

$4166.66. Thus, the record supports the trial court’s finding that neither Andrew nor Christine

had access to income for payment of reasonable attorney fees.

¶ 19 Holwell argues that Christine had access to retirement accounts and real estate as a means

for paying attorney fees. Section 12-1006 of the Code of Civil Procedure (Code) provides that a

7 debtor’s interest in or right to the assets in a retirement plan is exempt from judgment. 735 ILCS

5/12-1006 (West 2014). Section 15(d) of the Income Withholding for Support Act provides an

exception to section 12-1006 of the Code for the collection of child support or spousal

maintenance, but there is no such exception for interim attorney fees. 750 ILCS 28/15(d) (West

2014); Jakubik v. Jakubik,

(1991) (holding “only support

obligations enjoy the exception from property exemption,” and explaining that “Illinois’ public

policy favors the payment of child support and maintenance obligations from exempt property to

promote the support of the family, not the support of the attorneys”); Radzik,

(concluding that the 1997 “leveling of the playing field” amendments to the

Illinois Marriage and Dissolution of Marriage Act (Act) (750 ILCS 5/101 et seq. (West 2008))

“merely overhauled the methods by which and timing of when attorneys may obtain fees” but

did not alter the rule that section 12-1006 of the Code exempts retirement accounts from the

being used for collection of judgments). We, therefore, find that the trial court did not have

discretion to consider Christine’s retirement assets when determining her ability to pay attorney

fees.

¶ 20 We also find Holwell’s argument that the trial court should have ordered Christine to sell

real estate assets to pay attorney fees to be without merit. A spouse requesting interim attorney

fees does not need to be destitute, and “neither party’s estate should be exhausted, nor their

economic stability undermined.” Radzik,

, ¶ 51 n.4; Schneider,

(finding that “[f]inancial inability exists where requiring payment of fees would strip

that party of her means of support or undermine her financial stability”). An inability to pay is

determined “relative to the party’s standard of living, employment abilities, allocated capital

assets, existing indebtedness, and income available from investments and maintenance.” In re

8 Marriage of Carr,

(1991). Inability to pay “does not require a showing

of destitution nor does it require the fee-seeking spouse to divest himself or herself of capital

assets.” In re Marriage of Kennedy,

(1991); In re Marriage of

Pond,

(2008) (finding that the spouse clearly demonstrated that she

was “unable to pay her attorney fees without invading her capital assets or undermining her

financial stability”). Additionally, the trial court may not order a marital asset sold to directly

satisfy an obligation for attorney fees. See In re Marriage of Walsh,

(1982); In re Marriage of Shen,

(providing “a court may

not order payment of attorney fees directly from the marital estate” and finding that the trial

court’s order for the husband’s 401(k) to be liquidated to pay for interim attorney fees was “in

contravention of Radzik and section 12-1006 of the Code”). Based upon our review of the record,

the trial court did not abuse its discretion in finding that Christine did not have the ability to pay

attorney fees.

¶ 21 Holwell argues that the parties had an ability to pay their attorney fees as of the date of

the hearing because the trial court subsequently issued an order allowing the parties to pay their

attorneys from a source other than the home equity line of credit. The order provided that by

agreement of the parties, Christine and Andrew could pay their attorneys from funds other than

the line of credit, with authorization to do so retroactively to August 15, 2014. However, nothing

in the order indicated that either party had the ability to pay attorney fees as of the July hearing

dates or that the trial court had made a specific finding as to available income or assets. Thus, we

find that the trial court did not abuse its discretion in finding that neither party had the ability to

pay attorney fees.

¶ 22 B. Disgorgement of Earned Attorney fees

9 ¶ 23 On appeal, Holwell also argues that the trial court did not have the authority to order

disgorgement of attorney fees that were previously paid to her by Andrew for services already

rendered. The award of interim attorney fees is governed by section 501(c-1)(3) of the Act. 750

ILCS 5/501(c-1)(3) (West 2014). Pursuant to section 501(c-1)(3), an attorney may only be

required to disgorge his or her fees if both parties “lack financial ability or access to assets or

income for reasonable attorney[ ] fees and costs.” 750 ILCS 5/501(c-1)(3) (West 2014). Where

there is a lack of financial ability of both parties to pay reasonable attorney fees, the trial 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.” 750 ILCS 5/501(c-1)(3) (West 2014). For purposes of disgorgement, it does not

matter whether the retainer or interim fees came for the marital estate, from parents, or from

others. In re Marriage of Earlywine,

, ¶¶ 30-31. By analogy to section 510(a) of

the Act, any order with respect to disgorgement can only impact available retainer or interim fee

funds subsequent to due notice by the moving party of the filing of the petition for interim fees.

See 750 ILCS 5/510(a) (West 2014) (providing that a judgment regarding a maintenance or

support obligation may be modified only as to “installments accruing subsequent to due notice

by the moving party of the filing of the motion for modification”).

¶ 24 Here, the trial court’s order for the disgorgement of funds paid to Holwell by Andrew for

legal services and for Holwell to tender those funds to Christine’s attorney was made pursuant to

section 501(c-1)(3) of the Act. See 750 ILCS 5/501(c-1)(3) (West 2014). We review the appeal

from the award of attorney fees that hinges on the interpretation of a statute de novo. See In re

Marriage of Nash,

(finding that the standard of review for the

award of attorney fees is de novo when the award hinges on issues of statutory construction). As

10 set forth by the Illinois Supreme Court, the primary objective of statutory interpretation is to give

effect to the intent of the legislature, and the most reliable indicator of intent is the language of

the statute given its plain, ordinary, and popularly understood meaning. In re Marriage of

Rogers,

(2004). To this end, a court may consider the reason and necessity

for the statute and the evils it was intended to remedy, and the court will assume the legislature

did not intend an absurd or unjust result. People v. Pullen,

(2000).

¶ 25 Looking to the plain language of section 501(c-1)(3) of the Act, trial courts have the

authority to “enter an order that allocates available funds for each party’s counsel, including

retainers or interim payments, or both, previously paid.” (Emphasis added.) 750 ILCS 5/501(c-

1)(3) (West 2014). The legislature’s use of the term “available” implies that some funds may be

“unavailable.” 1010 Lake Shore Ass’n v. Deutsche Bank National Trust Co.,

(“reasonable construction must be given to each word, clause, and sentence of a statute, and

no term should be rendered superfluous”). We find the most reasonable interpretation of the term

“available funds,” as that term relates to previously paid “retainers or interim payments” to an

attorney as used in section 501(c-1)(3) of the Act, are those funds that are currently being held

for a client that have not yet been earned by the attorney at the time the attorney is given notice

of the petition for interim attorney fees and would be “available” to be returned to the client if

the attorney was to immediately cease services. Finding otherwise would render the term

“available” superfluous because earned funds paid to the attorney may have already been

lawfully spent by the attorney and, thus, not “available” due to no fault of the attorney.

¶ 26 We acknowledge that the purpose of interim attorney fees is “to achieve substantial parity

in parties’ access to funds.” 750 ILCS 5/102(8), 501(c-1)(3) (West 2014). The interim fee system

was created to address the problem of the “ ‘economically disadvantaged spouse,’ ” where one

11 spouse uses his or her greater control of assets or income as a litigation tool, making it difficult

for the disadvantaged spouse to adequately participate in the litigation. Earlywine,

(quoting In re Minor Child Stella,

(2004), citing A

General Explanation of the “Leveling of the Playing Field” in Divorce Litigation Amendments,

11 CBA Rec. 32 (1997)). The timely filing of a petition for interim fees would significantly

advance the attempt to achieve parity in the parties’ access to funds.

¶ 27 Additionally, Illinois Rule of Professional Conduct 1.15 (eff. July 1, 2015), which

governs an attorney’s receipt of advance payment of attorney fees, supports our conclusion that

attorney fees that have already been earned are not “available” for disgorgement under section

501(c-1)(3) of the Code. Illinois Rule of Professional Conduct 1.15(a) requires that an attorney

hold a client’s property that is in the attorney’s possession in connection with the representation

of that client separate from the attorney’s own property. Ill. R. Prof’l Conduct (2010) R. 1.15(a)

(eff. July 1, 2015); Kauffman v. Wrenn,

. Illinois Rule of

Professional Conduct 1.15(a) requires attorneys to deposit client funds in a separate interest-

bearing or dividend-bearing client trust account and keep “[c]omplete records” of the client’s

trust account for seven years after termination of the attorney’s representation of the client. Ill. R.

Prof’l Conduct (2010) R. 1.15(a) (eff. July 1, 2015). Illinois Rule of Professional Conduct

1.15(c) mandates that an attorney deposit into a client trust account those funds received by the

attorney to secure payment of legal fees and expenses, with those funds to be withdrawn by the

lawyer “only as fees are earned and expenses incurred.” Ill. R. Prof’l Conduct (2010) R. 1.15(c)

(eff. July 1, 2015). “Funds received as a fixed fee, a general retainer, or an advance payment

retainer shall be deposited in the lawyer’s general account or other account belonging to the

lawyer.”

12 ¶ 28 Thus, Illinois Rule of Professional Conduct 1.15(c) contemplates various types of

“retainers”—legal fees and expenses paid in advance for work that a lawyer will perform in the

future. A “general” retainer—paid by a client to the lawyer to ensure the lawyer’s availability

during a specific period or for a specific matter—is earned when paid, so that it becomes the

property of the lawyer immediately upon payment regardless of whether the lawyer ever actually

performs any services for the client. A “security” retainer—paid in advance of services

rendered—must be deposited into a client trust account and remains the property of the client

until those funds are applied to services rendered or expenses incurred, with any unapplied funds

refunded to the client. An “advance payment” retainer is payment to the lawyer for the

commitment to provide legal services in the future, with ownership of the funds passing

immediately to the lawyer (so that the funds may not be deposited into a client trust account) and

with any portion of the advance payment retainer not earned by the lawyer to be refunded to the

client upon termination of services. Ill. R. Prof’l Conduct (2010) R. 1.15(c), cmt. 3A-C (eff. July

1, 2015); Dowling v. Chicago Options Associates, Inc.,

(2007). A “fixed

fee” (or lump-sum fee) is a fee charged where the lawyer agrees to provide a specific service

(e.g., defense of a criminal charge, a real estate closing, or preparation of a will) for a fixed

amount and is generally not subject to the obligation to refund any portion to the client, although

the lawyer may not charge or collect an unreasonable amount in a fixed fee, as with all fees. Ill.

R. Prof’l Conduct (2010) R. 1.15(c), cmt. 3C (eff. July 1, 2015). It is not uncommon for a fixed

fee retainer to be utilized in some uncontested prove-ups where there is an agreed settlement.

General retainers are unlikely to be utilized for matters under the Act. In the majority of

contested proceedings under the Act, a security retainer would likely be the most common type

of retainer.

13 ¶ 29 “An advance payment retainer should be used sparingly, only when necessary to

accomplish a purpose for the client that cannot be accomplished by using a security retainer.” Ill.

R. Prof’l Conduct (2010) R. 1.15(c), cmt. 3C (eff. July 1, 2015). For example, an advance

payment retainer is appropriate where the client wishes to hire counsel to represent him against

judgment creditors, where paying a security retainer with the funds remaining the property of the

client would subject those funds to the claims of creditors and could make it difficult for the

client to hire legal counsel. Dowling,

. Both advance payment retainers and

security retainers are subject to a lawyer’s duty to refund any unearned fees, with the client

having an unqualified right to discharge the lawyer.

If discharged, the lawyer may only retain

the amount of money that is reasonable in light of the services performed prior to discharge.

¶ 30 Any written retainer agreement should clearly define the kind of retainer being paid.

If

the agreement is for a security retainer, the term “security retainer” should be used in the

agreement, and the agreement should state that the funds remain the property of the client until

used to pay for services rendered and that the funds will be deposited in a client trust account.

Similarly, an agreement for an advance payment retainer “shall be in a writing signed by the

client that uses the term ‘advance payment retainer’ to describe the retainer.” Ill. R. Prof’l

Conduct (2010) R. 1.15(c) (eff. July 1, 2015). A written agreement for an advance payment

retainer should state (1) the special purpose for the advance payment retainer and an explanation

why it is advantageous to the client, (2) that the retainer will not be held in a client trust account

and will become the property of the lawyer upon payment and that the funds will be deposited

into the lawyer’s general account, (3) the manner in which the retainer will be applied for

services rendered and expenses incurred, (4) that any portion of the retainer not earned or

required for expenses will be refunded to the client, and (5) that the client has the option of

14 employing a “security” retainer, but if the lawyer is unwilling to represent the client without

receiving an advance payment retainer, the agreement must so state and provide the lawyer’s

reasons for that condition. Ill. R. Prof’l Conduct (2010) R. 1.15(c) (eff. July 1, 2015). If the

parties’ intent is not evidenced from the retainer agreement, the agreement for a retainer will be

construed as providing for a security retainer. Ill. R. Prof’l Conduct (2010) R. 1.15, cmt. 3B (eff.

July 1, 2015). In the instant case, it appears the retainer fee paid was a security retainer.

¶ 31 In reviewing the various types of retainers, we find that when retainer money is available

to be refunded to the client under a retainer agreement in accordance with Illinois Rule of

Professional Conduct 1.15 as of the time of due notice by the moving party of the motion for

interim attorney fees, those funds are also “available” for disgorgement under section 501(c-

1)(3) of the Act. We acknowledge that there is a current conflict among the appellate court

districts in Illinois as to how section 501(c-1)(3) of the Act should be interpreted for the purpose

of disgorging fees already paid to and earned by the attorney. Compare In re Marriage of Squire,

(payments made to attorneys for services already rendered may be

ordered disgorged), with In re Marriage of Altman,

(payments made

to attorneys for services already rendered may not be ordered disgorged). For the reasons stated

in the analysis, we agree with the Altman conclusion as to this issue. In Squire,

, the Second District held that payments made to attorneys for services already

rendered may be ordered disgorged. In Altman,

, the First District, with

one justice dissenting, refused to follow Squire and held that payments made to attorneys for

services already rendered may not be ordered disgorged. Prior to those opinions, the Illinois

Supreme Court held that “advance payment retainers” were subject to disgorgement, with no

discussion of whether the disgorged payments were from unearned or earned fees paid to the

15 attorney for work already completed. Earlywine,

(holding that “advance

payment retainers” in dissolution cases are subject to disgorgement pursuant to section 501(c-

1)(3) of the Act).

¶ 32 In Squire, the husband petitioned for interim attorney fees. Squire,

. The husband was employed, but his monthly expenses exceeded his monthly

income. Id. ¶ 3. The wife was unemployed but had paid her attorney a $120,000 retainer with

money borrowed from her mother. Id. ¶ 4. The wife’s counsel argued that the money could not

be disgorged because the money had already been earned and deposited into counsel’s general

account. Id. ¶ 5. The trial court ordered the wife’s attorney to pay the husband’s attorney

$60,000. Id. ¶¶ 6-7. On appeal, the wife’s attorney argued that section 503 of Act referred to

“available” funds and the $120,000 was not “available” for disgorgement because it had been

earned and deposited into counsel’s general account. Id. ¶ 9. The Second District appellate court

affirmed the trial court’s finding that the funds were available, reasoning that the purpose of the

Act was to achieve substantial parity between the parties. Id. ¶¶ 20-23. The Squire court also

reasoned that if it held that earned fees are not subject to disgorgement, the attorney of the

financially advantaged spouse could “file voluminous pleadings and motions early in the case,

thus ‘earning’ the retainer, while leaving the other spouse to respond to a mountain of paperwork

with little chance of obtaining resources to do so properly.” Id. ¶ 21. It further found that the

Illinois Supreme Court in Earlywine had determined that retainers were subject to disgorgement

because retainers became a law firm’s property immediately upon payment, so that the term

“available” funds as used in section 501(c-1)(3) simply meant that the “funds exist somewhere.”

Id. ¶ 22. There was no discussion by the Squire court of the ethical obligation to refund the

unearned portion of the retainer in either a security retainer or advanced payment retainer.

16 ¶ 33 In Altman, the wife petitioned for interim attorney fees for $54,098.68 of already incurred

fees and $25,000 for prospective fees. Altman,

. The trial court found

that “both parties lacked sufficient access to assets or income to pay reasonable attorney fees and

costs and that the case presented a classic scenario for invocation of the Act’s ‘leveling of the

playing field’ provisions.” Id. ¶ 10. The trial court, along with other allocations of marital

money, ordered the husband’s attorney to disgorge $16,000 in fees paid by the husband for

services already rendered. Id. The husband’s attorney appealed the subsequent contempt order

after he failed to comply with the disgorgement order. Id. ¶ 11. On appeal, the First District

noted that some lawyers may be unable to comply with orders to disgorge funds that they have

already earned over the past several months without serious financial hardship and that “it would

be an anomaly” for a lawyer who had been granted leave to withdraw from a case to be called

upon months or years later to write a check to the opposing party’s counsel. Id. ¶¶ 34-35. “It is

just such an absurd result that our construction of the statute avoids.” Id. ¶ 34. The Altman court

held that funds earned by and paid to a party’s lawyer for services rendered were not “available

funds” within the meaning of section 501(c-1)(3), reasoning that it was not the legislature’s

intent “that the financial burden of leveling the playing field should be borne, in substantial part,

by lawyers who must refund, under pain of contempt, fees they have earned.” Id. ¶ 36.

¶ 34 In the current matter, pursuant to our analysis, there was no portion of the retainer paid by

Andrew that was “available” for disgorgement because the entirety of the retainer had been

applied to services rendered or expenses incurred and had already been earned by Holwell. The

parties stipulated that the funds paid or owed to the attorneys were reasonable and necessary.

Under our interpretation of section 501(c-1)(3) of the Act, at the time of the notice of the petition

for interim attorney fees, there were no unapplied funds in Holwell’s possession that were

17 “available” to be refunded to Andrew and, therefore, no funds were “available” for

disgorgement. 1 As to the determination of whether disgorgement of attorney fees pursuant to

section 501(c-1)(3) of the Act was proper, we hold that a trial court may not require payment of

interim attorney fees by way of disgorgement of retainer funds previously paid to an attorney

when, prior to the attorney receiving notice of the petition for interim fees, the attorney has

already earned those funds and the attorney is under no obligation to otherwise return those

funds to the client. Thus, we conclude that the Holwell’s earned attorney fees, which the parties

had stipulated were reasonable and necessary, were not “available funds” within the meaning of

section 501(c-1)(3) of the Act. Accordingly, we reverse the trial court’s disgorgement order.

¶ 35 C. Contempt Order

¶ 36 Because the disgorgement order was invalid and was the underlying basis for the trial

court finding Holwell in contempt, we vacate the contempt finding. See Radzik,

(“[i]t is appropriate to vacate a contempt finding on appeal where the refusal to

comply with the court’s order constitutes a good-faith effort to secure an interpretation of an

issue without direct precedent”).

¶ 37 CONCLUSION

¶ 38 Due to our resolution of the foregoing issues, we need not address the other arguments by

the parties on appeal. For the foregoing reasons, we reverse the disgorgement order and vacate

the contempt orders of the circuit court of Will County and remand for further proceedings.

¶ 39 Disgorgement order reversed; contempt orders vacated; cause remanded.

1 Due to the lack of clarity and certainty in the record, we are not addressing the disputed

$13,000 previously paid to Boback that was being held by Holwell where there was a dispute as

to which party owned the money.

18