{ "id": 5591052, "name": "In re MARRIAGE OF MYRA JOYCE ZELLS, Appellant, and MARTIN B. ZELLS, Appellee", "name_abbreviation": "In re Zells", "decision_date": "1991-04-18", "docket_number": "No. 70419", "first_page": "251", "last_page": "256", "citations": [ { "type": "official", "cite": "143 Ill. 2d 251" } ], "court": { "name_abbreviation": "Ill.", "id": 8772, "name": "Illinois Supreme Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "155 Ill. App. 3d 55", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3465567 ], "weight": 2, "pin_cites": [ { "page": "58-59" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/155/0055-01" ] }, { "cite": "98 Ill. App. 3d 380", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 8499321 ], "weight": 2, "pin_cites": [ { "page": "384" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/98/0380-01" ] }, { "cite": "122 Ill. App. 3d 338", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3523414 ], "weight": 2, "pin_cites": [ { "page": "348" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/122/0338-01" ] }, { "cite": "231 Kan. 456", "category": "reporters:state", "reporter": "Kan.", "case_ids": [ 1443939 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/kan/231/0456-01" ] }, { "cite": "309 N.W.2d 341", "category": "reporters:state_regional", "reporter": "N.W.2d", "opinion_index": 0 }, { "cite": "103 Wis. 2d 327", "category": "reporters:state", "reporter": "Wis. 2d", "case_ids": [ 8674560 ], "opinion_index": 0, "case_paths": [ "/wis-2d/103/0327-01" ] }, { "cite": "127 Ill. 2d 333", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5563734 ], "opinion_index": 0, "case_paths": [ "/ill-2d/127/0333-01" ] }, { "cite": "197 Ill. App. 3d 232", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2483194 ], "weight": 2, "pin_cites": [ { "page": "237" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/197/0232-01" ] } ], "analysis": { "cardinality": 473, "char_count": 8523, "ocr_confidence": 0.79, "pagerank": { "raw": 4.100296784150909e-07, "percentile": 0.9096800624283501 }, "sha256": "8f1a7aa5fdba35390e11a585b1d05fddabeac33a4aceb74de775b1b063d43faa", "simhash": "1:f73b775be601945e", "word_count": 1391 }, "last_updated": "2023-07-14T18:09:26.787690+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "In re MARRIAGE OF MYRA JOYCE ZELLS, Appellant, and MARTIN B. ZELLS, Appellee." ], "opinions": [ { "text": "JUSTICE HEIPLE\ndelivered the opinion of the court:\nThis case concerns the division and distribution of marital property between a lawyer and his spouse. There are two issues. The first is whether a lawyer\u2019s contingent fee contracts are subject to valuation, division and distribution as part of the marital estate. The second issue is whether professional goodwill is a marital asset and subject to division or distribution. Our conclusion is that neither contingent fee contracts nor professional goodwill is subject to valuation, division or distribution as marital assets.\nThe circuit court of Cook County determined that contingent fee contracts are marital assets which are subject to equal division between the parties. The court also determined that the goodwill of the husband\u2019s law practice is a marital asset. The appellate court affirmed the valuation and distribution of goodwill, but held that contingent fees are not marital assets subject to division. (197 Ill. App. 3d 232.) We reverse and remand.\nWe agree with that part of the appellate court\u2019s opinion which found that contingent fees are not marital assets. In its determination, the appellate court relied on three factors:\n\u201cFirst, the nature of a contingent fee contract indicates that an attorney has neither the right to receive the fee until the case is disposed of, nor any assurance that he ever will receive the fee. Second, the amount of the contingent fee depends on the amount of the award or settlement in the case; therefore its ultimate value, if any, remains highly speculative during the pendency of the case. *** Third, the worth of a contingent fee to an attorney, if any, remains intangible until the firm receives cash or other consideration for the services rendered.\u201d 197 Ill. App. 3d at 237.\nThe context for the consideration of fees, contingent or otherwise, is in the determination of income for support and maintenance. Fees earned by an attorney contribute to the annual income figures relied upon in awarding maintenance and support. Future earned fees would be considered should the subject of maintenance be revisited.\nAdditionally, we note the impermissible ethical conflict posed by a court-ordered division of contingent fees. Rule 5.4 of the Illinois Rules of Professional Conduct (134 Ill. 2d R. 5.4) provides in part:\n\u201c(a) A lawyer or law firm shall not share legal fees with a nonlawyer, except that:\n(1) an agreement by a lawyer with the lawyer\u2019s firm, partner, or associate may provide for the payment of money, over a reasonable period of time after the lawyer\u2019s death, to the lawyer\u2019s estate or to one or more specified persons;\n(2) a lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation which fairly represents the services rendered by the deceased lawyer; and\n(3) a lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.\u201d 134 Ill. 2d R. 5.4.\nThis court outlined the potential harms associated with fee-sharing arrangements between attorneys and non-attorneys in O\u2019Hara v. Ahlgren, Blumenfeld & Kempster (1989), 127 Ill. 2d 333 (revenue-sharing agreement between- attorney\u2019s widow and new law firm to which she sold her husband\u2019s practice held to violate Rule 3 \u2014 102 of the Code of Professional Responsibility (107 Ill. 2d R. 3 \u2014 102)). While it is not necessary to here restate these harms in full, we reaffirm the reasoning of O\u2019Hara and decline to enlarge the exceptions to include a contingent fee fee-sharing arrangement resulting from a judgment of dissolution.\nWe next address the issue of the goodwill value of the law practice. Goodwill represents merely the ability to acquire future income. Consideration of goodwill as a divisible marital asset results in gross inequity.\nIn the instant case, the trial court purported to divide the marital assets but offset an award of real assets to the wife against professional goodwill or blue sky which was assigned to the lawyer husband. This type of disproportionate division has been the basis for the decisions of other State courts that professional goodwill is not a marital asset. Holbrook v. Holbrook (Wis. App. 1981), 103 Wis. 2d 327, 309 N.W.2d 341 (marital estate did not include goodwill or intangible value of husband\u2019s partnership interest in reputable law firm); Powell v. Powell (1982), 231 Kan. 456, 648 P.2d 218 (goodwill in a professional medical practice was not an asset subject to division in a divorce action).\nPanels of the Illinois appellate court have similarly held that the goodwill of a professional business is not marital property subject to division. The first district adopted this position with its decision In re Marriage of Wilder (1983), 122 Ill. App. 3d 338. The appellate court held that the trial court\u2019s failure to set a fixed monetary value for goodwill in valuing the husband\u2019s stock in his medical practice, a professional corporation, was not error. (122 Ill. App. 3d at 348.) The Wilder position was in contrast to the earlier fifth district decision In re Marriage of White (1981), 98 Ill. App. 3d 380, wherein the appellate court stated that goodwill is a factor to be considered in valuing a professional corporation \u201cunder the theory that despite the intangible quality of good will in a professional practice, it is of value to the practicing spouse both during and after the marriage and its value is manifested in the amount of business and, consequently, in the income which the spouse generates.\u201d (98 Ill. App. 3d at 384.) The Wilder court held that the White definition of goodwill is reflected in three of the factors which the trial court must consider in reaching a just property distribution under section 503(d) of the Illinois Marriage and Dissolution of Marriage Act (the Dissolution Act) (Ill. Rev. Stat. 1989, ch. 40, par. 101 et seq.):\n\u201c[T]he relevant economic circumstance of each spouse when the division of property is to become effective^] *** [the] occupation, amount and sources of income, vocational skills, [and] employability *** of each of the parties *** [and] the reasonable opportunity of each spouse for future acquisition of capital assets and income.\u201d Ill. Rev. Stat. 1989, ch. 40, pars. 503(d)(4), (d)(7), (d)(10).\nThe third district followed the reasoning of Wilder in In re Marriage of Courtright (1987), 155 Ill. App. 3d 55, holding that the goodwill value of the husband\u2019s-medical practice was not a marital asset. The court stated:\n\u201cAlthough many businesses possess this intangible known as good will, the concept is unique in a professional business. The concept of professional good will is the sole asset of the professional. If good will is that aspect of a business which maintains the clientele, then the good will in a professional business is the skill, the expertise, and the reputation of the professional. It is these qualities which would keep patients returning to a doctor and which would make those patients refer others to him. The bottom line is that this is reflected in the doctor\u2019s income-generating ability.\n* * *\nAlthough good will was not considered in the court\u2019s valuation of the business itself, it was a factor in examining [the husband's] income potential. To figure good will in both facets of the practice would be to double count and reach an erroneous valuation.\u201d 155 Ill. App. 3d at 58-59.\nThe reasoning presented in Courtright is correct. Adequate attention to the relevant factors in the Dissolution Act results in an appropriate consideration of professional goodwill as an aspect of income potential. The goodwill value is then reflected in the maintenance and support awards. Any additional consideration of goodwill value is duplicative and improper.\nFor the foregoing reasons, we affirm in part and reverse in part the judgment of the appellate court, reverse the judgment of the circuit court, and remand the cause to the circuit court for further proceedings.\nAppellate court affirmed, in part and reversed in part; circuit court reversed; cause remanded.\nJUSTICE CALVO took no part in the consideration or decision of this case.", "type": "majority", "author": "JUSTICE HEIPLE" } ], "attorneys": [ "Melvyn H. Berks, of Des Plaines, for appellant.", "Joel S. Ostrow, of Chicago, for appellee." ], "corrections": "", "head_matter": "(No. 70419.\nIn re MARRIAGE OF MYRA JOYCE ZELLS, Appellant, and MARTIN B. ZELLS, Appellee.\nOpinion filed April 18, 1991.\nRehearing denied June 3, 1991.\nCALVO, J., took no part.\nMelvyn H. Berks, of Des Plaines, for appellant.\nJoel S. Ostrow, of Chicago, for appellee." }, "file_name": "0251-01", "first_page_order": 283, "last_page_order": 288 }