|
|
|
Fees From Legal Services Contracted Treated as Marital Asset - Deferred Compensation
© 2003 National Legal Research Group, Inc.
INDIANA: Benjamin v. Benjamin, 798 N.E.2d 881 (Ind. Ct. App. 2003).
The trial court properly treated fees from legal services contracts as a divisible asset in the divorce of the rendering attorney. The attorney had resigned from the bar, and the fees were the only asset remaining from his law practice. An award labeled as rehabilitative maintenance was affirmed, even though such support had never been requested, on the basis that it was actually a monetary award rendered as part of the court's property division.
In October 2000, the husband, a lawyer licensed to practice in the State of Indiana, tendered his resignation from the bar of the State of Indiana after a disciplinary action had been filed against him by the Indiana Supreme Court Disciplinary Commission. He did so upon advice of counsel. As consideration for representing him, the husband's counsel agreed to accept an assignment of fees from several of the husband's existing legal services contracts.
In a subsequent divorce action, the trial court awarded the wife a one-half interest in the legal fees that the husband's law practice had expected to receive. The husband appealed, arguing that the trial court erred by designating as a marital asset the legal fees he earned from particular legal cases which he had assigned to his own legal counsel for services rendered to him. He acknowledged that it would have been proper for the trial court to consider for purposes of marital asset distribution the value of his law practice but argued that the court below misinterpreted the law when it awarded the wife an equal share of the fees that he was entitled to receive from specific legal cases, and that, in doing so, the lower court essentially considered the wife, a nonlawyer, a partner in his firm, thereby violating the prohibition in Ind. Rules of Professional Conduct Rule 5.4(a), (b).
The appellate court disagreed. It recognized that a professional practice may have value for purposes of marital asset distribution. Where a professional corporation has an economic value, it is subject to equal distribution as a marital asset. Here, the economic value of the husband's law practice, and the only part which remained, was embodied within the legal fees he was entitled to receive. Thus, in assigning the fees to his own counsel as payment for representing him in another matter, he encumbered a marital asset. At the final hearing, the trial court explained that, as a marital asset, the wife was entitled to one-half of the fees, and that such an award was necessary to help compensate her for money and other assets that the husband had dissipated. The court of appeals concluded that this award was proper.
Upon the granting of the divorce, the trial court also awarded the wife $400,000 in what it designated as "rehabilitative maintenance." The husband argued that the wife had never requested rehabilitative alimony in her pleadings nor presented evidence to justify such an award. The wife admitted that the $400,000 might not be deemed rehabilitative maintenance but could be sustained as a valid property division. Again, the appellate court agreed with the wife's assertions.
The court first noted that characterizing an award as maintenance does not make it so. Here, notwithstanding the label, it was clear to the appellate court from the record that the award was intended to be an award representing the wife's distribution of the marital estate. Prior to her petition for dissolution, there was evidence valuing the marital estate at $1.2 million. Assuming an equal distribution, the wife would have been entitled to $600,000. In addition to the $400,000 designated as "rehabilitative maintenance," the wife was granted $150,000 remaining in the husband's and wife's various accounts, as well as unspecified amounts left in bank and credit union accounts and the personal property in her possession. The husband was ordered to be responsible for any marital debts and tax and credit-card liabilities. To the extent that the distribution was in favor of the wife, the trial court stated that the husband's dissipation of marital assets justified its distribution. The court, on appeal, agreed with this reasoning and upheld the lower court's award and reasoning. Moreover, stated the appellate court, there was no need to remand the matter as the court held the authority to reclassify the award as a marital asset distribution rather than a rehabilitative maintenance award.
Go to: Attorney's Fees Category
Go to: Cases of Interest by Category
Go to: Previous Page
| Featured Services | |
|
| The Research Center: (Divorce Cases of Interest) | Research Home | ||||
Find Case Law, Case Analysis, and Divorce Information...
| |||||
Copyright© 1996-2009. All rights reserved by Divorce Source, Inc.
Comments & Suggestions? or Recommend This Page to a Friend!