The Breakup Is Going to Cost How Much?

Most families consisted of a working husband and a wife who was a homemaker and mother. The most valuable asset was typically the family home or farm. Consideration of pensions as an asset of the marriage was not something that really caught on until the 1980s. There were no 401(k) plans, deferred income, or expensive perks, like cars. Pensions were a stream of income not unlike the monthly payment of social security.

Fifty to sixty years ago, the most expensive element of a divorce was whether a finding of “fault,” sufficient for a court to enter a finding that the marriage should be ended, was present. Extramarital affairs and extreme mental and physical cruelty are examples of what spouses would allege to obtain a divorce. Often the most expensive pretrial expert was the photographer who waited for the cheating spouse to be in a compromising situation so the photographic evidence could be presented to get settlement discussions underway.

As women had not yet entered the workforce in a widespread way, the issue of custody was not in question unless the mother had substance misuse issues or she endangered the children. There was a concept called the “tender years doctrine,” which held that a mother’s care was exceptionally important to the healthy development of a child. Fathers would typically get alternate weekends with the children, which consisted of Friday evening through Sunday at dinner, when the children were returned to their mother. Women received spousal support because most had neither the education nor the work experience to support themselves. They also received child support. The amounts paid and received were a hardship on both of the parties and the children. Then, like today, a family income did not typically provide sufficient resources for two families to thrive.

In this modern age, there are many more complicating factors in divorce cases. How does one navigate the cost of a divorce today without incurring enormous debt and/or draining important financial marital assets? This examination of the financial expense of divorce pertains to the majority of spouses involved in the divorce process, i.e., the middle class, who need to be mindful of what is spent on the legal process. Those who have substantial resources and an axe to grind need not read further.

Selecting a Lawyer

The most important decision the client can make in commencing a divorce is whether to choose a divorce lawyer who is skilled at litigation or skilled at negotiating fair settlements. Some attorneys have both, but these are very different skills. Today, being a good negotiator is exceptionally important as 95 percent of cases result in settlement, albeit sometimes after a significant amount of money is spent.

Keeping Costs Down

Once the lawyer is selected, it is important to remember that there are two elements of cost in any divorce: the emotional cost and the financial. The client has control over both, even though the client may feel out of control. While there are those individuals who are able to process divorce without a thought for their spouse or children, most of the time both parties are in pain. The pain may be very different for each person, but that does not negate it. As such, the responsible attorney seeks to find a way to resolve the disputed issues in in a manner that minimizes both the emotional and financial toll of the case.

A client who can master their emotions will spend fewer dollars on the divorce. This is especially true where both parties are able to approach the resolution of the case with their emotions in check. When only one party is able to do this and the other party is out of control, keeping the financial cost down is a challenge. Attorneys charge for their time; the more time the attorney spends on the case, or engaging with the client, the more the costs increase. The hourly rate of most attorneys is more than that of a good therapist. The lawyer should encourage the client to seek a good therapist to work through their emotional issues and dedicate time with their lawyer to the legal issues and procedures of the case.

To keep expenses under control, the attorney and client need to start with a plan. The attorney should provide a blueprint of the process and have a frank discussion with the client about their options and the costs. The issues in dispute are always the biggest factor in the financial cost of a divorce. Issues that tend to result in expensive or extended litigation include business ownership and business value; nonmarital claims with complex tracing over a long-term marriage; child custody; and, in many states, spousal maintenance. In identifying issues and assessing the case, the lawyer and client must decide how to proceed, how many resources are available to fund the divorce process, and how to make the most effective use of those resources. It is always important to do a cost-benefit analysis: Will the cost of pursuing the issue exceed the value the client places on it? This is an easy analysis for certain issues, such as finances and personal property. It is a more difficult when assessing nonfinancial issues, such as child custody. With limited resources, most clients can only afford to pursue some, not all, of the disputed issues.

Four Stages of a Divorce Proceeding

Initiating the Process

In the earliest stage, the lawyer will gather from the client the basic information, such as date of marriage, birthdates, children, place of marriage, a general description of the marital property, the length of the marriage, and the financial needs of the parties. Often this initial information is provided by the client through a questionnaire. The more information and detail provided by the client at this stage, the less time the lawyer will need to spend coaxing this information from the client or gathering the information independently. Next, the lawyer will draft the initial “pleadings,” or documents to be served on the other party and filed with the court. Most states require some type of initial financial disclosure, which will be prepared at this time as well.

Gathering Information and Documents

This second part of the process is the “discovery” phase, where the attorneys, individually or in conjunction with one another, work with their clients to gather information to identify and value assets and debts. In cases with custody and/or spousal maintenance, the documents needed to determine the parties’ respective incomes and monthly living expenses are obtained.

The discovery process can be costly. There are many tools in the toolbox. Most clients cannot afford to use the entire discovery toolbox, so the lawyer and the client must discuss and decide together which tools are most important and efficient. Discovery tools include the informal exchange of information and documents, interrogatories (questions to be answered in writing and under oath), requests for production of documents, depositions of the parties and witnesses (answering questions under oath, transcribed by a court reporter), custody evaluations performed by forensic experts, and business valuations. There are many other tools that are available, but they are not the subject of this article, except to note that the more tools required, the more expensive the divorce. An emotionally charged divorce can often require many discovery tools.

The client can keep the cost of discovery to a minimum. When the lawyer requests information from the client, the client can minimize cost by providing the information and documents quickly. Lawyers charge for their time spent, so making multiple requests for the same information will increase cost. Procrastination runs up fees. The time to gather electronic and paper documents is not billed to the client when they do the work. Much information is available in electronic format and online (e.g., paychecks, bank statements, retirement accounts, and investment accounts); when documents are no longer available online, the institutions can be contacted to provide earlier statements. The client who gathers the information and organizes it chronologically and by type typically incurs lower legal fees than the client who drops off a banker’s box or two of loose paper accumulated over the past few years. The client who provides requested information and documentation in electronic format saves the time and expense of creating electronic copies of paper documents.

The discovery stage may also involve determining if experts or other outside resources are needed or would be helpful. This could include a child custody evaluator, a real estate appraiser, or a business valuator. Cost will be a significant consideration and could range from a few hundred dollars to six figures. Media reports estimate that the over six-year-long custody case of Brad Pitt and Angelina Jolie has cost each of them over $1,000,000. Oftentimes, as an efficiency and cost-savings measure, parties and their attorneys agree to use neutral experts, which avoids the costs of a “battle of the experts.”

Settlement

The third stage of a divorce is the process of settlement, often called alternative dispute resolution (ADR). This involves attempting to resolve your divorce issues by agreement, rather than leaving it up to the judge to decide at trial. Sometimes this can be accomplished through negotiations between the parties’ lawyers. However, having a skilled individual, agreed upon by both sides, guide the negotiations can be more efficient and provides neutrality to the process. The most common form of ADR is mediation, where a skilled neutral tries to guide you and your spouse to reach agreement. In addition to mediation, there are other forms of ADR, such as early neutral evaluation (ENE), collaborative law, and other settlement-oriented processes.

Over the past two decades, ADR has taken a more prominent role in the divorce process. In the “old days,” the focus seemed to be on finding the best litigator possible, with the expectation that one’s case would be going to trial. In the early days, ADR was often approached with the mentality “Let’s see if we can get exactly what we want at mediation, and if not, we’ll just go to trial.” With the increasing cost of litigation, trial is a process that is usually prohibitive for all but the wealthy. While many litigants want to go to trial, few can afford this option.

Do not approach mediation with the expectation that once the other side hears your position they will be convinced and agree with you. It is better to approach ADR with a settlement-minded focus. Rather than an “all or nothing” approach, recognize that both sides will need to make compromises. A lawyer should encourage their client to be open to compromise and explain why compromise can help limit the expense of the process. The lawyer can best help the client to understand that both the client and spouse can be more creative and better tailor the terms of settlement to fit their specific family and situation than a judge. There is an old adage that when you resolve your case through settlement, you can achieve a result with a scalpel. If you leave it to the judge to decide, it will be resolved with a meat cleaver.

In preparing for ADR, the lawyer should share with the client their assessment of the case, and together they should discuss which issues are most important and which the client should allow more flexibility. The attorney should seek to persuade the client that saving money is found in the art of negotiating, and that negotiating means that both sides get some of what they are seeking. Time and resources should be spent on preparation for mediation. The lawyer needs to be organized, clearly identify all of the issues, and, to the extent possible, have evidence and documents to support the client’s position on each issue. Resources allocated to this preparation is money well spent.

The client should be strongly encouraged to never forgo settlement to litigate “out of principle.” If the client wishes to take a stand on principle or in the hope that the other side will learn their lesson or get what’s coming to them, the client will rarely, if ever, be satisfied. That day of imagined reckoning will likely never come.

If agreement is reached through settlement, then there is light at the end of the tunnel. Typically, fewer documents are needed to finalize the divorce than there would be if some or all of the disputes remained unresolved. The settled issues can be presented to the court. If all issues are resolved, then the document prepared is typically the final divorce judgment and decree. If some of the issues are resolved, then a settlement agreement defining the agreed-upon issues and the disputed issues can be submitted to the court and the matter would enter the fourth and final stage.

The Trial

In this fourth stage, the disputed issues are submitted to the court and a formal trial is scheduled. At trial, evidence is presented to the court through witness testimony and exhibits. The relevant information discovered about the parties’ assets and debts, as well as child custody and support issues, must be presented formally to the court. Preparing for trial is time-intensive and expensive. The time required will vary depending upon the unique facts of each case and the requirements of the jurisdiction in which your case is being tried. It is not unusual for an attorney to work ten- to fourteen-hour days during trial. In a complex case, your lawyer may have an associate or paralegal assist them in court. After trial, there may be further written submissions, such as closing arguments and a proposed judgment and decree. The client is being billed for the lawyer’s time, their associate’s or paralegal’s time, expert witnesses’ time to testify, and other expenses. In this modern age, trial expenses are rarely less than five figures and often can cost hundreds of thousands of dollars. Managing the cost of a trial can be difficult, but the following can help:

1. Rate the issues on a scale of one to ten in terms of their importance to the client. Not all issues can be a ten. Pick a few issues and focus on these.
2. Use the best expert possible. Pick an expert with great qualifications. The best experts have been through the trial process before and will often pay for themselves by providing great testimony to supplement their report. They can often assist in preparing an attorney for cross-examination of the opposing witness.
3. Work with the other side in attempting to stipulate to the admission of evidence. This can include a joint statement of the assets and debts, vocational evaluations, appraisals, custody evaluations, and pension valuations.
4. Avoid cumulative witnesses and evidence. Clients often want to call witnesses to attest to the client’s character. Or they want to call six of their friends to testify about what a great parent the client is. Generally, this is not a good use of trial time.

Keeping the costs of a divorce down is about trying to keep the issues simple, managing the client’s expectations, and treating their case with kindness and respect. Navigating the processes with skill and negotiating the outcome with intent are challenges that will be both productive and transformative in allowing spouses to heal and families to find new structures that allow them to thrive.