Divorce, Illinois Attorney Style

The Illinois Administrator has filed a complaint alleging that an attorney engaged in ethical violations designed to cheat his spouse-law partner in their divorce.

During the events alleged in Counts I and II of this complaint, Respondent and his then-spouse (“Mrs. Popovich”) practiced together in McHenry County in a law firm that concentrated in the representation of claimants in personal-injury, wrongful death, medical malpractice, workers compensation and other matters. In 2007, Mrs. Popovich initiated a proceeding to dissolve the couple’s marriage. The couple later made efforts to reconcile, but, during the events described in paragraphs two through 18, below, Respondent engaged in activities that were motivated, at least in part, to reduce the amount he might be required to pay Mrs. Popovich in a future dissolution proceeding, by concealing from her the amounts recovered by the firm on behalf of its clients, and (because most of those clients were represented on a contingent-fee basis) the amounts received by the firm as its fees. In 2011, Mrs. Popovich initiated a second dissolution of marriage proceeding.

The divorce case led to an adjudication of contempt affirmed by the Second District Appellate Court of Illinois.

Following a hearing on the contempt petition, the court found respondent in contempt and sentenced respondent to jail until he paid [his wife’s attorney] Schwarz his fees. Respondent moved to stay his jail sentence, and the trial court denied that motion. Respondent appealed pursuant to Illinois Supreme Court Rule 304(b)(5) (eff. Feb. 26, 2010), and this court stayed respondent’s jail sentence after respondent posted in the trial court a bond totaling $7,000. At issue in this appeal is whether respondent should have been held in contempt of court for failing to pay Schwarz his fees. For the reasons that follow, we determine 1 that respondent was properly found in contempt. Thus, we affirm.

The divorce trial court noted

Although [respondent] is a seasoned attorney and possesses an undergraduate accounting degree, he claims an astounding lack of knowledge concerning any financial reporting requirements for his own law firm or his related intertwined set of real estate and restaurant businesses. He testified that he ‘doesn’t know’ personally if his tax returns are accurate, he merely relies on the work of others to accurately report. The children’s care provider refused to answer questions of payment pursuant to the Fifth Amendment.

The court notes that both parties apparently signed their personal tax returns. Still, the court believes that there is a strong possibility that questionable, negligent, or irregular financial practices may have led to an under reporting of income both for tax purposes and for the purpose of determining [respondent’s] current support ‘income.’

…Evidence presented at the hearing on that petition revealed that respondent has received multimillion-dollar jury verdicts. His firm consists of eight lawyers and approximately five support staff. Three of the lawyers work primarily in Cook County. Two of these lawyers earn annual salaries around $100,000, with the other attorney earning approximately $75,000 per year. In addition to these salaries, the attorneys receive referral fees for cases they bring to the firm and a percentage of the judgments or settlements they obtain. When asked if any of these three attorneys had “go[ne] to trial” and “obtain[ed] a verdict” within the last three years, respondent indicated that only one of the attorneys had, in three or four cases. Respondent stated that he had not terminated the employment of any attorney in his firm within the last two years, because the attorneys are “bursting at the seams in terms of work.” Respondent was quick to clarify that “of course, [this] doesn’t always mean[] profitability.” According to an exhibit that respondent claimed to have never seen, knew nothing about, and questioned because it came from petitioner’s attorney, the attorney fees paid to respondent’s firm during the first quarter of 2012 totaled $370,752.85. However, respondent’s gross income amounts to $5,000 every two weeks, with $1,000, among other amounts, being taken out to repay $50,000 he recently took out of his IRA to “keep [the firm] afloat.”

Moreover, respondent stated that a month prior to the hearing on the contempt petition he did not pay his attorneys their salaries because he did not have the funds with which to do so. Despite the firm’s alleged shortfalls, respondent buys tickets to various Chicago Bulls and Chicago Cubs games, which he uses to obtain new business. In 2012, more than $3,800 was spent on such tickets. No attempt was ever made to sell these tickets.

The trial court found that the accused attorney controlled family assets including an apparently successful pizza business and income-producing rental properties.  (Mike Frisch)