On February 21, 1997, Governor Edgar signed into law House Bill 365 which is commonly referred to as "The Leveling of the Playing Field Law". This Act, which amends Sections 102, 501, 503 and 508 of the Illinois Marriage and Dissolution of Marriage Act, became effective on June 1, 1997.
In an attempt to achieve parity in the parties’ access to funds for litigation, this legislation provides for an award of interim fees without an evidentiary hearing when supported by a financial affidavit. The Act also requires that a Petition for Financial Contribution, if not filed before the final hearing, shall be filed no later than 30 days after the close of the proofs. Contribution awards are to be based upon the criteria for proper division; and, if maintenance has been awarded, on the criteria for an award of maintenance.
The new act substantially modifies Section 508 of the Illinois Marriage and Dissolution of Marriage Act by creating new supervisory rules for attorneys who seek fees from their own clients. These rules include providing detailed time records on at least a quarterly basis, a written engagement agreement which must contain a statement of client’s rights and responsibilities and that any final hearing for assessing fees from one’s own client must proceed only after all claims of the clients have been resolved and even then only after the attorney has withdrawn.
To further complicate an attorney’s attempts to collect fees from their client, Section 508 also provides, inter alia:
"(C)(4)) No final hearing under this subsection (c) is permitted unless any controversy over fees and costs (that is not otherwise subject to some form of alternative dispute resolution) has first been submitted to mediation, arbitration, or any other Court approved alternative dispute resolution procedure, except as follows: (A) In any Circuit Court for a single county with a population in excess of 1,000,000, the requirement of the controversy being submitted to an alternative dispute resolution procedure is mandatory unless the client and the counsel both affirmatively opt out of such procedures; or (B) In any other Circuit Court, the requirement of the controversy being submitted to an alternative dispute resolution procedure is mandatory only if neither the client nor the counsel affirmatively opts out of such procedures."
The concept of resolving fee disputes through a process of alternate dispute resolution appears, at first glance, to be just another step to postpone and frustrate the matrimonial practitioner’s abilities to obtain the fees they have earned during the course of representation.
However, fee arbitration, though new to Illinois, is not new to the legal system. In 1978, California adopted a statute (California Business Professional Code Section 6200 et. seq.) and the New Jersey Supreme Court adopted a Court Rule (New Jersey Court Rule 1:20 et. seq.) which established the first two mandatory fee arbitration programs in the country. Currently, six states have adopted mandatory fee arbitration and the American Bar Association Center for Professional Responsibility has now adopted proposed "model Rules for Fee Arbitration".
In California, the fee arbitration program has been successful. The program is supervised by the California State Bar Association which is a mandatory bar association and is implemented by the local bar associations. A decision is rendered within a reasonable time and both parties have the right to reject the award within 30 days after the decision is rendered, otherwise it is binding on the parties. The parties also have the opportunity to elect binding arbitration. Fee arbitration filing fees vary among local bar associations but the norm appears to be 5% of the amount in controversy; not to be less than $50.00 or more than $3,500.00.
Each panel consists of three arbitrators, one of whom is a lay person. The lay arbitrator is appointed by the bar association and is usually a professional. The arbitrators are not paid for their time and services. Lay persons on fee arbitration panels are utilized in other jurisdictions as well, and their decision usually concurs with the decisions rendered by the attorney arbitrators.
In San Francisco County, the satisfaction rate among attorneys and clients who have participated in fee arbitration has been as high as 90%, and a 1992 California Fee Arbitration study showed that approximately 70% of clients and approximately 80% of attorneys expressed satisfaction at the conclusion of the fee arbitration process.
In order to comply with the Alternative Dispute Resolution provisions of the new law, the Eighteenth Judicial Circuit adopted Local Court Rule 15.19 which is the first mandatory fee arbitration program in the State of Illinois. The program, which became effective on June 1, 1997, establishes an expedited fee arbitration program utilizing 15 court appointed arbitrators who will convene in panels of three on a set date each month. Each panel includes a retired judge or an attorney who has specialized in matrimonial law for not less than 5 years who will act as chairperson, a lay person, and an attorney who does not necessarily concentrate in the field of family law. The lay arbitrators were selected based upon their reputation in the community for fairness and impartiality.
Unlike the California program, the Eighteenth Judicial Circuit has adopted a program which provides for binding arbitration only. On the date in which the Petition for Setting Final Fees and Costs pursuant to Section 508 is presented to the Court, the dispute will be assigned to fee arbitration unless one or both of the parties opts out of the arbitration program. Neither party can withdraw from arbitration after both parties have agreed to arbitration.
On the initial court date, the arbitration case will be assigned both an arbitration hearing date and a status date. After entry of the Arbitration Order, the Respondent will have 15 days within which to file a reply or other response to the Petition, and a proof of service shall be filed with the Clerk of the Court and delivered to the other party by mail or by hand delivery. Hearing dates are scheduled no later than 30 days after the due date for the response or as soon as practical.
The parties are limited to the attorney and the client. For example, a parent who has agreed to pay the attorney’s fees for their daughter’s representation in a dissolution of marriage case will not be a proper party to fee arbitration.
Pre-hearing discovery is not permitted for purposes of arbitration. The intent of the fee arbitration program is to be user friendly and to expedite and resolve the dispute. The client can participate in the process without the assistance of counsel.
Fee arbitration hearings will be less formal than civil arbitrations and are far less formal than judicial trials. The rules of evidence need not be followed and hearsay is permitted. The chairperson will maintain order and rule on any evidentiary issues.
Section .11 of the local rules waives the attorney-client privilege and disclosure of work product for the arbitration hearing and post arbitration proceedings, but for no other purpose. All fee arbitration hearings are closed except for witnesses while testifying. Witnesses are excluded while the parties or other witnesses are testifying. Handwritten notes or other materials prepared by any arbitrator for use in the hearing are to remain with the arbitrator or be destroyed.
Testimony of witnesses and parties shall be under oath, which will be administered by the chairperson. The attorney has the burden of proving that the fees charged were reasonable and necessary. Decisions will be based on preponderance of the evidence. The proceedings shall not be recorded or reported in any manner. All arbitration cases will require no more than 60 minutes for presentation, decision and panel deliberation.
The arbitration award shall be final and any party thereafter may file a motion with the Court seeking entry of judgment on the award. The panel shall issue its decision in writing. The decision will include a clear statement of the amount in dispute, whether and to whom monies are due, and in what amount. The decision will not include a basis or a rationale for the panel’s ruling.
The court scheduler will send the panel’s written decision to the parties within a reasonable time after the hearing. However, a party may contact the court scheduler after 9:00 a.m. the day after the hearing in order to obtain the panel’s decision.
Where the award discloses an obvious and unambiguous error in mathematics or language, the panel on application of a party within the 30 day period after the entry of the award, may correct the award. The filing of such an application shall stay any collection proceedings.
The arbitration hearing shall proceed in the absence of any party who, after due notice, fails to be present. The panel shall require the other party or parties to submit such evidence as the panel may require for the making of an award. The failure of a party to be present, either in person or by counsel, at an arbitration hearing shall constitute a consent to the entry by the Court of a judgment on the award. In the event the party who fails to be present thereafter moves or files a petition to the Court to vacate the judgment as provided therefor under the provisions of the Code of Civil Procedure for the vacation of judgments by default, Sections 2-1301 and 2-1401, the Court, in its discretion, in addition to vacating the judgment, may order the matter for rehearing in arbitration, and may also impose the sanction of costs and fees as a condition for granting such relief.
Requests for continuances of the arbitration hearing are not favored. Whether or not to grant a continuance is within the chairperson’s discretion and shall be granted for statutory purposes only. Even if both parties agree to continue the arbitration hearing, the hearing cannot be continued unless the chairperson grants a continuance.
The conduct of an arbitrator and the arbitration panel as a whole is governed and regulated by the Illinois Code of Judicial Conduct. Code Canons 2 and 3 establishes the duties of fairness and impartiality and requires disqualification in the event of a conflict. Section .16B of the Local Rules requires arbitrators to disqualify themselves on any of the grounds specified in the Judicial Code of Ethics. The parties, though, do not have the right to request disqualification of an arbitrator, and no ex-parte contact with arbitrators shall be permitted.
The Fee Arbitration Program established by the Eighteenth Judicial Circuit, utilizes the best qualities of the California Fee Arbitration Statute and the ABA Model Rules for Fee Arbitration and incorporates provisions from the Supreme Court Rules relating to Arbitration.
The DuPage County program has the potential to be as successful as the San Francisco program because it not only utilizes a similar program model, but also San Francisco County shares socio-economic similarity with DuPage County. The unusual success of the San Francisco program is attributed to the inordinately high percentage of professional individuals who participate in the fee arbitration process as clients. These individuals are usually knowledgeable on fee issues and understand professional billing practices.
Unlike the San Francisco County fee arbitration program, DuPage County’s program requires no filing fee and has adopted an expedited schedule. It is anticipated that the entire process will be completed within 45 days and the hearing shall take no more than one hour. Because the arbitration is binding upon the parties, an arbitration award shall be final and any party thereafter may file a motion with the Court seeking entry of a judgment on the award.
Jurisdictions that have enacted mandatory fee arbitration have met with great success. There is no question that DuPage’s Expedited Matrimonial Fee Arbitration Program will be a benefit to the matrimonial practitioner by removing fee disputes from the already over crowded Court dockets and by expediting the attorney’s means of obtaining a judgment for fees. In addition, this program will provide an impartial user-friendly and non-threatening forum for clients to voice their concerns, thereby promoting positive public opinion of the matrimonial legal system and decreasing the contentiousness between clients and attorneys.
Margaret A. Bennett is the Principal of the Law Offices of Margaret A. Bennett, P.C., Oak Brook. She is the current Chair of the DCBA’s Family Law Committee. She received her Undergraduate Degree in 1972 from the University of California-Berkeley and her Law Degree in 1976 from Loyola University-Chicago.