A cautionary tale: Beware divorce lawyers and bad advice

Whether or not this story specifically resembles your divorce, the lessons within touch on the significance of how bad advice and divorce attorneys’ expensive maneuvering can leave you in dire financial distress.

sam_mediation_photoJeff Master and his wife Janet were living in North Carolina when Janet asked for a divorce.  Jeff called to make an appointment with me, and three days later they were sitting in my office for our first meeting.  Married nineteen years and with two children, ages 11 and 16, Jeff owned a building supply business that had been started by his grandfather and gifted to Jeff by his father who had run the store for forty years. Janet had not worked in fifteen years having chosen to be a stay at home mother. Jeff was 50 and Janet was 47. Both appeared fit and attractive. Like so many other couples they told me a story about a marriage that had gone stale so that both felt they had grown apart. There had been one short round of marriage counseling. Janet had finally told Jeff she didn’t want any more counseling and wanted a divorce. Jeff did not want a divorce and felt that they could fix the marriage with more counseling and a lot of prayer. But Janet had made up her mind and was clear that the marriage was over.

The economic history of the couple was complicated. They had lived beyond their means for many years and had over a hundred thousand dollars in credit card debt. Additionally Jeff had borrowed money through the business to supplement his income and there was a large debt to the bank. They lived in a large expensive house in an exclusive neighborhood with a large mortgage. The house was about to be listed for sale in an attempt to reduce their expenses. We had a discussion about the need for overall retrenchment and I gave them budget forms to work on. We made another appointment with then for the following week before ending the session.

Two days later I received a frantic call from Jeff.  It had come to light that his wife was having an affair and he was extremely angry.  He said that now he understood why Janet wanted the divorce — to be free to pursue her affair. He had already called his lawyer and knew that in North Carolina infidelity was a complete bar to alimony. He said that mediation was off and that if he had his way he wouldn’t pay her a dime. I encouraged him to hold off on decisions until he had time to cool down. I told him I would call him in a few days and we could review whether mediation still made sense or whether he wanted to take this into the court.

I called Jeff a few days later to see how he was doing. He was still very indignant but not as hot as a few days before. I suggested we get together and he agreed to come in that afternoon. I told him that he was right that he could deny Janet any alimony but asked him whether that was a good idea. Because all the friends and relatives he had been talking to had encouraged him to punish Janet he was surprised that I would ask such a question. “Why wouldn’t it be a good idea?” he asked.” She screwed around so let her pay.”” OK,” I responded, “but let’s just play it out and see what it looks like. First, to fully deprive her of alimony you’re going to have to go to court. Have you asked your lawyer how much that will cost?” He replied that he did not because his discussion with the lawyer had focused more on cutting her off than anything else. I explained that in the year or two he would be waiting for a trial he would have to pay spousal support anyhow. She would continue to live in the house with the kids and he would have to support that. So for some undetermined time he would have to support her and the kids. She would be reluctant to agree to selling the house until she had to so his hopes of reducing his costs would have to wait on the trial. And during all that time his relationship with her would be poisonous. I wondered if he thought that would affect the kids. “Of course it would he said and it’s a shame they would have to suffer, but she should have thought about that earlier. But on the other hand why should the kids have to go through that stuff?”

expensive_divorce_attorneysWe talked for about an hour. I showed him on paper that his total costs if he litigated and won would be far higher than if he negotiated a settlement that would help them get control of their finances, pay her alimony for a time until she could develop a career and generally maintained a cordial cooperative relationship. I also asked him to reflect on whether he had contributed in any way to the demise of the marriage. How important was it to punish Janet? And if it was going to cost a lot more money to do it what would be the point? Was this the time for him to be responsible for improving Janet’s morals? By the time we were done he had a lot to think about. Two days later he called. He had been thinking about our discussion and had decided to resume the mediation and not try to cut Janet off from alimony. “I’ve been thinking about what you said. My kids don’t need the added grief and we don’t need the lousy publicity. When can we come in?”

They came the next day. I reiterated my approach which was no-fault divorce. We would approach this divorce on the assumption that we were seeking solutions that would allow all family members to thrive and asked if they could recommit to that. Both indicated they would and we began.

Over the next month we worked out a settlement that was very generous to Janet. She and the kids got to stay in the house until it was sold with Jeff paying the bills. In fact when I added up what he was paying it came out to 75% of his income an amount that would never be ordered in a local court. But Janet was not quite satisfied. When Jeff’s exclusive ownership and the building the business occupied was excluded and when all debts were paid off they had almost no equity. And although Jeff was paying more than he had to even had there been no infidelity, it nevertheless represented a reduced standard of living because there would be no more borrowing to subsidize their spending. Although I had explained several times that inherited and gifted property was separate property of the spouse who received it, Janet clung to the idea that somehow she was entitled to part of the business. As we had dealt with all the issues I drafted the memorandum of understanding and sent them to see their lawyers.  Felt that Janet was a bit shaky in her commitment to the agreement but believed that she would come around. I was completely wrong.

After a few weeks Jeff called. He was upset that Janet was refusing to have the memorandum converted to a separation agreement. She told him there was no rush and that a relative of hers who was a lawyer had told her the agreement did not have to be signed until the one year waiting period had passed. This worried me as in my experience relatives who are lawyers make very poor advisors because they tend to counsel fighting rather than peacemaking. I told Jeff to be patient and that I thought Janet would eventually cooperate. He called me again a month later. Janet had borrowed money from her family and hired a litigator to file for divorce. The complaint she had filed asked for sole custody of the kids, substantial alimony and child support and distribution of Jeff’s business. I could not imagine what possessed her to seek alimony when there was incontrovertible proof of infidelity. In fact investigation had proved that Janet had been involved with her paramour for years and the man’s wife was divorcing him and cooperating with Jeff’s lawyer. It seemed like a losing proposition to litigate this in the face of the agreement she could have had. Jeff called me from time to time to report what was happening. After eight months the judge held a hearing on spousal support and custody. Janet’s bid for sole custody was denied and the judge ordered joint custody. Her application for alimony was denied. Jeff was ordered to pay child support consistent with North Carolina guidelines.

Having lost on alimony and sole custody Janet and her lawyer doubled down on distribution of marital assets seeking a share of Jeff’s separate property in the business. In this upstream swim the lawyer hired experts to try to prove that the business had increased in value since they married and that she was entitled to a share of the increased value. Jeff’s lawyer hired a forensic accountant who said that the business was worth the same or a little less than the date Jeff acquired the business. Jeff called me about two years later to report that they were just about ready to go to trial on property division. He said that each had now spent $200,000 on legal fees and it no longer mattered what happened because they were both now broke.

When I reflect on this case I feel sad that Janet had chosen such a destructive path. It also reinforces my view that relatives, particularly those who are lawyers should stay out of the divorce as they inevitably lead one party astray. Why do so many people encourage divorcing friends and relatives to fight? I seldom hear of friend or relative encouraging a peaceful resolution. Despite an adversary divorce system that produces such destructive divorces the myths about fighting continue to have a powerful hold on the American imagination.

Sam Margulies, North Carolina Divorce Consultation & Mediation

Sam Margulies, Ph.D., J.D. is one of the most experienced mediators in the United States. Since 1980, he has mediated hundreds of civil disputes and approximately four thousand divorces including many complex multi-million dollar matters.

Author of several books on divorce, Sam Margulies is an empathetic and knowledgeable guide through the difficult journey of divorce.  Residing in North Carolina but helping clients nationally, contact Sam with your questions and to talk about your divorce.

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