ANI MASON IS THE CREATOR OF THE DIVORCE FIELD GUIDE. YOU CAN LEARN MORE ABOUT HER HERE AND HERE.

Episode 18 Transcript: Paying For Divorce + Navigating Divorce Law

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Hi, everyone, and thank you so much for tuning in to The Divorce Field Guide. My name is Ani Mason, and I am a divorce mediator and divorce lawyer, and I’m also the creator of this podcast.

Today, we are in Episode 18, and we’re going to be talking about the costs of the divorce process and the role of the law in divorce.

COSTS OF THE DIVORCE PROCESS

With regard to the cost of the divorce process, we have talked about this somewhat in Episode 9, answering the question of, “What would be the total cost of my divorce process?”

As you learned in Episode 9, I don’t know. But I did share with you some thoughts on what different elements impact the total cost of your process, and how you can positively impact the total cost of your process.

In this episode, I want to talk about a different component of the costs of your divorce process. I want to talk about how exactly do lawyers and mediators charge for divorce, and so whatever those fees are, who pays them? How are they paid?

How Do Lawyers + Mediators Charge For Consults?

A couple of things to just familiarize you with about how attorneys and mediators work in terms of their fees.

An initial consult, whether it be for a mediation or to retain an attorney, is typically billed by the hour. People’s practices differ there, honestly. Some people will speak to you by phone briefly before a consult, and they won’t charge you for that, and many others will not. Some people have a flat fee that they charge for consults.

That is something that you should be able to call a person’s office and get clarity on at the very outset. How do you bill for consults? And they will give you a sense. And if they bill hourly, what’s their hourly rate? And if it’s a flat fee, what is it?

How Do Retainers Work?

If you decide that this person that you’ve had a consult with is the person you want to continue working with, if they’re an attorney, you will retain them as your attorney. That involves signing a retainer agreement and paying them a retainer fee.

And a retainer fee is not a flat fee. It is just an upfront payment of a portion - or perhaps all, but often a portion - of what you will pay the attorney or the mediator over the course of your work together.

What happens with a retainer is that you make this upfront payment to the lawyer in sync with signing the retainer agreement. You would not be paying them a retainer without signing a written contract around your work together. As they do work on your case, they will deduct the money from your retainer, which is reducing your retainer credit as you go. Then, when you get down to a certain level of retainer credit, if there’s more work to be done, you replenish your retainer.

Every attorney and every firm is different in terms of, at what level do you replenish, by how much do you replenish. Within the same firm or the same attorney’s practice, that’s also going to differ from case to case, based on the nature of the case and the amount of work remaining to be done.

But that is the most typical way of operating in terms of hiring an attorney.

Retainers in Mediation

With mediators, some mediators take a retainer, and they use it in the exact same way as an attorney would. It’s an upfront payment, it’s not a flat fee, and they bill against it. They reduce it as they do work on your case.

And then some mediators will just bill you at the end of every session, which is more in the style of, say, a therapist, who just bills at the end of every session.

I will say that the amount of the retainer is going to vary a lot, based on the contours of your case, the particular person you’re working with, and, if they are at a larger firm, the policies of the firm.

And again, larger firms tend to take larger retainers than, for instance, a solo practitioner might. But, at the same time, if somebody is very experienced and has a high hourly rate, their retainer might be the exact same or more than it would be if you went to a larger firm and worked with somebody with a lower hourly rate.

Typical Hourly Rates for Attorneys and Mediators

In terms of hourly rates, there’s such a difference from state to state, from city to city, that it’s really impossible for me to say what the average is in your particular location. My best guess is a range from about $300 to $600 an hour, but I don’t know what’s normal in your location.

And that is information that you can very easily get for yourself, specific to your situation, by just calling the mediator or the attorney’s office and asking what their hourly rate is. That’s very, very easy information to get.

Beware of Flat Fee Divorces

I do want to just flag for you, as a word of caution, I would be very wary of flat fee arrangements for a divorce. I say that because there are some attorneys who will offer to “do your divorce” for a flat flee, like a very low flat fee, and in fact, what they’re committing to do is just the court paperwork related to an uncontested divorce.

So, you have to be really careful if you sign on and pay this flat fee, of $2,500 for them to handle your divorce, that you are clear about what they will do and what they won’t do. What you really want to clarify is, if my spouse does not agree to the divorce, or if my spouse doesn’t agree to – you know, I want custody and if my spouse doesn’t agree to that – what happens? What’s the financial arrangement then?

With some of these agreements, these flat fee agreements, it will say that if the divorce is contested, if your spouse doesn’t agree to the divorce itself or doesn’t agree to any of the components of the divorce regarding custody, child support, spousal maintenance, division of property and debt, etc., etc., anything, then there’s a totally different hourly rate that’s billed, and that’s quite substantial.

So you just want to be really careful. Divorces are so different from one case to the other that I, at the outset of a case, I don’t know how you could possibly offer people a flat fee. A case could take 100 hours or 10 hours. Are they really representing you for the entirety of the divorce, if it involves three years in court, for this particular flat fee? I highly doubt it. And if they’re not, then what’s the financial arrangement at that point?

HOW (AND BY WHOM) ARE DIVORE COSTS PAID?

Once you have clarified the fee arrangements with your lawyer or your mediator, and you really feel crystal clear on what they are and what they cover, where does the money come from to pay those fees? And who is ultimately responsible for them?

Paying Costs During The Divorce Process vs. Ultimate Responsibility For Divorce Costs

I want to distinguish those two things from one another because they are different.

There’s the question of, during the negotiation process - actually, during the entire divorce process, so the negotiation, the drafting of our contract, and the filing of our divorce papers - where is the money coming from to pay for the fees related to our divorce?

Separate from that is the question of who is ultimately responsible for the fees, or how you are ultimately sharing responsibility for the fees.

Let me give you an example.

Divorce is an expensive process, and not a lot of people have liquid cash available to them to pay for the entire process upfront. Sometimes, what happens is that one spouse may, for instance, have an account - a separate account that they inherited from a relative - and there’s enough money in that separate account to pay for the fees of the divorce process, but that spouse may not be comfortable taking 100% ultimate responsibility for the cost of the divorce.

During the process, they may pay for the mediator’s or the lawyer’s bills out of their separate account with the agreement between the spouses that ultimate responsibility for the total cost of the process – let’s say the total process costs were $60,000 – that there will be some kind of reconciliation, or at least discussion, of how each spouse will be held responsible for that $60,000 of cost.

So, who’s paying for it during the process? The one spouse with the account available to them to make those payments.

But who is ultimately responsible for the fees is a separate question.

Paying Divorce Costs Upfront May Entail Greater Risks

During the process, if you are paying for any portion of the costs of the process without any kind of agreement in place, you and your spouse, if he or she is doing the same, you bear some risk in fronting the money for the process in the absence of an agreement about who is responsible for fees, if that feels like it’s an issue that may well be contested between you.

So, if it’s critically important to you that your spouse pay for 100% of the process, bear in mind that if you are putting up the money upfront – and you may not have a choice but to do that, but if you’re putting the money up front – to pay for the process yourself, you’re carrying some risk that you, there’s no guarantee that you, will ultimately resolve things in a way that works for you.

And if you’ve paid the money, you’ve paid the money. The mediator or the attorney you’ve paid the money to is not going to refund the money to you simply because you assumed your spouse would take responsibility for 100% of the costs, and they ultimately have not. So once that money is out of your pocket, you’re bearing some elevated risk.

In light of that, it’s not uncommon that where there’s any disagreement about how fees will ultimately be shared between the spouses, you may sign a temporary or interim mini-agreement saying, “We are going to pay for fees in the following way during the process. However, we are reserving the issue of who is ultimately responsible for the costs of the process to be negotiated between us.”

And in addition to that, you – and you should consult with your own attorney or mediator on this, but you – can add language that entitles the person who’s fronting the money to a credit (vis-à-vis the spouses, not from the mediator or the attorneys; the professionals will not get involved in that), but between you and your spouse, you could agree to say, “Look, I’m going to front the money, and we agree that we are not agreed that I’m going to pay 100% of the costs. We’re going to negotiate that. If we cannot negotiate that successfully, if we are in disagreement and conflict around it, and we end up in court, I get a credit back for half of what I fronted or all of what I fronted.” Or whatever, to put you guys back on the same footing as if – to put both spouses back on the same footing as if - neither person had had to front any money.

Those are just a couple of considerations to keep in mind as you’re thinking about what happens in terms of payments during the process.

Who Has Ultimate Responsibility For The Divorce Costs?

With regard to ultimate responsibility for payments made during the process, at the end, at the conclusion of your divorce, people take different approaches to how to share responsibility or not share responsibility for the costs of the divorce process.

One very common way to approach sharing responsibility is to equally share it, for both people to be 50% responsible for the total spend, that is, on the mediator, if you have one, on both people’s attorneys, on the costs of filing papers with the court.

Sometimes, where people are in a mediation process, they will agree to equally share the mediator’s fees, and then each person is responsible for their own attorney’s fees.

And similarly, if you’re not in a mediation process and you don’t want to equally share fees, you can say each person is going to be 100% responsible for their own attorney’s fees. That may end up similar to equal sharing, if you both have a roughly equal spend on your attorneys, and it may not. The benefit there is that if one person really, really, really wants to spend a lot of time talking with their own attorney and/or hire an attorney who has a much higher hourly rate than the other spouse, the other spouse is not subsidizing that, and they are just paying for their own attorney’s fees and their own usage of their own attorney.

Sometimes, in contrast, spouses will agree, and it resonates with them more, to divide the costs of the process or to share them based on what they see as, I don’t want to say culpability, but it could be either if they identify one spouse as being “to blame” for the relationship ending and/or they see one spouse as really wanting the divorce in opposition to what the other spouse wants, there may be an agreement between the spouses that the person who has “caused” the divorce or the person who wants the divorce is going to have to pay for the divorce.

Then finally, you can do a division for responsibility for divorce fees based more on what the law says in your particular area. And I’m going to speak more on that subject in this episode because it’s actually, it’s kind of a complex question of what does the law say about attorneys’ fees or divorce process fees in your state. I don’t know.

In New York, there is a presumption that the higher earning spouse will pay for some or all of the fees of the lower earning spouse, but that doesn’t always happen, and it’s up to the discretion of a judge, certainly. So there’s no guarantee. And when fees are awarded, they are rarely awarded at 100% of the cost incurred.

The law is different in every state, and you really need to consult with your mediator or your attorney on what it says in your state.

Paying For Divorce From Income vs. Paying From Assets

Another important distinction that I do want to draw for you is the difference between paying for divorce fees with income and paying for divorce fees with assets.

If one spouse is paying for the divorce costs entirely out of their income, meaning they are not depleting assets to do it, and they are not going into debt to do it, and if you have drawn a line in the sand and said, “Alright, from here on out, everything we earn and acquire is totally ours separately, we no longer have a joint economic venture in our marriage,” that person, who’s paying out of their own separate income, is paying 100% of the fees.

However, if you have not separated your finances, and you are still putting income into the same joint checking account that you always have, let’s say one spouse is the sole earner and that person is paying for the fees out of their income - again, they’re not depleting assets to do it, they’re not incurring debt to do it - in fact, if your economics and your finances are still joint, you are actually sharing that cost 50/50.

The spouse who is paying for the cost out of their income may not feel that way, which is understandable, it’s coming 100% out of their income, but if you have joint finances, and their income was otherwise going to go into a shared account that would ultimately be shared 50/50, you are in fact sharing the costs of the divorce that that income is being diverted to 50/50.

If the divorce costs are being paid out of assets…let’s say both spouses are working, but their income just covers their expenses, and they definitely can’t cover the added expense of the divorce out of their income, but they do have a savings account with $50,000 in it that they are able to draw down on to pay the divorce costs. Well, if that savings account is marital, and you intend to share it equally, you are, in effect, equally paying for the divorce costs.

On the other hand, if that savings account, as I had spoken about before, is a separate account, let’s say it was an inheritance received by your spouse’s uncle during the course of your marriage, and the $100,000 in that account is all separate property remaining with your spouse, if the divorce fees are being paid out of that account, your spouse is paying for the divorce 100%.

So, with that, we have, in the last six episodes, covered all of the key substantive topics that you will need to address in your divorce process. We have covered your kids, custody, child support, spousal support, division of assets and debts, taxes, health insurance, life insurance, estate planning, and the costs of the divorce process.

WHAT DOES DIVORCE LAW SAY? HOW SHOULD THAT IMPACT YOUR DIVORCE?

Now I want to shift to a question that inevitably comes up around almost every substantive topic in a divorce. And that question is, “Well, what does the law say about that? What does the law say about custody? What does the law say about child support?”

I want to back up and clarify what I think that question is asking, because I think it’s twofold.

What Do People Mean When They Ask “What The Law Says”?

On the one hand, I think that question is asking for information or, better said, insight into how the legislature, and the courts, and people who have thought about the divorce process more so or more frequently, typically, than an individual couple going through it for the first time, what solutions have they come up with to resolve the different issues that typically arise in a divorce?

It’s sort of like asking what’s the shared wisdom around this challenge in divorce. That’s one prong of the question of “What does the law say about that?”

But then I think the other component of the question is, “Am I getting an okay deal? Is what we are talking about in my negotiation process within the range of the reasonable when it comes to this particular issue in divorce?”

And I think, in part, people judge that by “what the law says.” (I’ll talk more about how I define what the law says.) I think they also define what’s fair and reasonable by a whole host of other components, including the history of their relationship, and their respective financial and other considerations in their lives at the time that they’re divorcing, and the way their marriage ended, and a host of other factors other than what the law says.

But I think those two components are contained in the question of “what the law says,” both looking for guidance, in terms of sort of a shared wisdom, but also, sort of like crowd-sourcing a question in a way, but then also trying to gauge whether what you are considering, or proposing, or thinking about agreeing to is reasonable or within the realm of what you could feel good about if you learned what the law actually said about the topic.

Figuring Out Your BATNA

And actually, on that note, I want to bring into the discussion a concept called “BATNA,” which stands for “Best Alternative to a Negotiated Agreement.”

This is a concept that comes, not surprisingly, from the world of negotiation. In essence, the concept is that when parties are negotiating, they bear in mind, in weighing what options they would agree to or accept for settlement, or resolution, what other options they have.

So, if you could not come to a negotiated agreement, what is your best alternative?

For many people in a divorce process, BATNA, or their best alternative to a negotiated agreement is the court system, is whatever would happen in if they went to court. And so they are often, in asking what the law says on a topic, trying to understand, “What are my alternatives? Is this the best I can do? Could I do better than this? And if so, how?”

Why It’s Hard To Know “What The Law Says”

So, now let me say a word about why it’s a little bit hard to answer the question of what the law says on the given topic.

Actually, it’s not hard for every topic. Sometimes the law is clear. In general, in the United States, we have a system of caselaw in which we have the law that is black letter law, that’s written in statutes and regulations and different administrative guidelines, that’s clear, to some extent. But our style of law generally leaves a lot up to the discretion of the judge or the trier of fact in court.

The upside of doing that is that it is, in theory, empowering of the trier of fact to come up with a resolution that is ideally suited to the individual two people in a divorce case (or more, involving kids) in front of them. It comes from the philosophy that there’s, this is not a one-size-fits-all process. There’s no right answer for everybody. And we really want to give judges and decision-makers latitude to make decisions in their discretion and to do what they see fit in a given situation.

The downside of that is that there’s a lot of uncertainty when there’s a lot of discretion. Judges are different. They have different biases, different preferences, different moods on different days, sometimes. And it’s extremely difficult in that context to predict with certainty what would happen if you went to court.

So when you’re asking, what does the law say about custody? There’s a literal answer to that. The law will say something about custody determinations probably being made in the best interest of the child, but the black letter law in the statute will not tell you exactly how your case will be resolved on the subject of custody if you went to court.

When you’re asking a mediator or attorney what would happen if you went to court on very many topics it will be unclear. And there will be a potential and potentially wide range of possible resolutions if you went to court.

That can make it hard if you are trying to understand your so-called BATNA, your “best alternative to a negotiated agreement,” in your divorce, and you’re trying to assess what the law says or what would happen if you left the negotiation and you litigated, what could you expect to get?

If your attorney or your mediator can’t tell you that clearly, it does make it challenging for you to know whether to stick with the negotiation process and accept the settlement offer on the table, or make a particular offer, or whether to say, “You know what, this just isn’t good enough for me, and I’m going to have to go to litigation and try my luck.”

HOW TO TALK ABOUT THE LAW IN YOUR DIVORCE

What I recommend in terms of how to incorporate the law into your divorce process is to make the role of the law as explicit as possible.

Know The Law – Don’t Be Controlled By It

I definitely come from the perspective that I think you need to know what the law says, to the extent that you can know it, to the extent that it is clear, in the course of making agreements in your divorce.

I do not think that it’s advisable to settle your entire divorce in a total legal vacuum, with no idea of what the law says on a particular subject, because I think that sets you up potentially for being very disappointed in something that you’ve agreed to. Or potentially elated if you find out that the law would have in fact been far less favorable to you, but then likely your spouse might be very disappointed.

In creating sustainable and lasting agreements, we don’t want to put spouses in a situation in which they are likely to be shocked and devastated in the future, not if, but when, they certainly find out, at some point, through the grapevine, or through someone else who went through a divorce process, what the law says on a given subject.

But at the same time, you also want to maintain a balance in terms of not having the law and what the law says take over your entire negotiation process. Because the legislators who made up the law do not know your family, and the judges who interpreted the law and further developed the law do not know your family. And they don’t know what’s best for you as well as you and your spouse do, if you can agree on it.

So you need to know the law. You don’t want to be controlled by it.

Discuss When and How To Talk About The Law In Your Divorce

What I recommend at the outset of your negotiation process is that you and your spouse and your mediator or your attorneys get on the same page about when you want to bring in the law, when you want to have the conversation that explains what the law says on a given topic, and how you want to bring it in.

If you’re in a mediation process and you’re working with one neutral mediator, but you also have attorneys outside the process, do you want to hear the summary of the law from your mediator? Do you want to hear it from your individual attorneys first? Do you want to hear it from all three people?

There are benefits to hearing the law from a neutral person, and we’ve spoken about this before. All of us are subject to an unconscious inclination toward bias in our favor. And people generally skew about 30% in their own favor off of what…if, you know, $1 were the exact middle of the road reasonable settlement, if you are the person receiving it, you might think $1.30 is the most reasonable settlement, just right middle of the road, totally reasonable, and if your spouse is paying it, your spouse might think that $0.70 is actually middle of the road, totally reasonable.

So that’s typical in a divorce. And when you get legal information about what the law says from a neutral person, they’re less likely in the role of a neutral to fall prey to that unconscious trap.

That said, you may not feel comfortable asking really detailed questions or raising things that you’re uncertain about in the presence of your spouse for the first time. And you might prefer to hear the information from your own attorneys, first to give you a little bit of, not exactly privacy, but just sort of time to acclimate to what you’re hearing and let it sink in and be able to freely ask any questions that come up for you without having to censor yourself or feel scrutinized or self-conscious in any way.

How Much Power To Give To The Law?

And then finally, I think what you can attempt to say at the outset or commit to is how do you want to apply what the law says in your negotiation. So let’s say, on a particular topic, the law is crystal clear, and it’s obvious what would happen if you went to court.

Do you and your spouse want to, no matter what, apply the law and do whatever it says?

Do you want to apply the law unless you can agree to something else, which is generally the case, that you apply the law unless you can agree otherwise?

But also, do you want to try to come to an agreement first, before you hear what the law says, so that you can have unfettered creativity in brainstorming different options for resolution before the elephant in the room of the law comes in and says, “Well, actually, this is the way we do it in our state.”

Do you want to hear the law first, so that you don’t brainstorm some resolution and spend three mediation sessions on it, and then hear the law, and the one person whom the law benefits is like, “Ok, well, I’m not willing to do something other than what the law says now."

The Law Is Both Collective Wisdom + Pretty Arbitrary

And along those lines I want to say to you that in some ways, the law is, on the one hand, it’s a compilation and a development of collective wisdom around divorce gathered over years and decades, for sure. But on the other hand, it’s kind of arbitrary.

If you’re on one side of a state line, your law would have you receiving or paying child support until your kid turns 18. If you’re on the other side of the state line five miles away, that child support would go until age 21. And a host of other differences like that.

So in some ways, the law is collective wisdom and it definitely has value. But then at the same time, it can be quite arbitrary.

It’s something to give thought to at the outset. But the key in incorporating what the law says into your own negotiation process is really trying to be as mindful as possible and as mutual as possible, in mutual agreement as possible, about how you will talk about and bring in and be impacted by what the law says (to the extent that that’s clear, which it often is not).

NEXT UP

That is it for our Episode 18 on handling divorce costs and figuring out what the law says. I really hope that it was helpful for you.

Next up, in Episode 19, we’re going to be covering some “pro tips”, both on negotiation strategy and practice, and also on the interpersonal dynamics that can come up in a divorce and can hinder your progress towards settlement.

Until then, thank you so much for joining me, and I will look forward to speaking with you soon.

 

 

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Episode 19 Transcript: Pro Tips For Divorce

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