Divorce has the potential to financially devastate you.
Investing too little in your case, as well as in the people that can help you emotionally and financially at the beginning of your case, can lead to inflated costs and extended litigation later in the process.
Conversely, working with the wrong attorneys who milk cases for their own benefit can drain your mutual assets and end in a classic lose-lose situation.
When it comes to you and your case, there are six principles your divorce lawyer should tell you from the very first meeting.
Divorce is Not as Cheap as You Think
Divorce lawyers are notoriously terrible at helping the client understand the full cost of a divorce at the beginning of the process.
Your lawyer may worry that “sticker shock” from a candid assessment and a true estimated fee for legal services might send you straight out the door looking for other counsel. As a result, he or she will quote you a modest retainer fee that will win your business but will not be enough money to see the case through to its conclusion. Your lawyer may also fail to mention ancillary costs, such as hiring an expert witness. Miscellaneous upfront costs like this could be the push your case needs to save you thousands when a settlement is reached.
The ultimate price of your divorce will depend on the issues you need to resolve and whether your case is settled out of court or litigated in front of a Judge.
You can, and should, demand that your attorney estimate the cost of total fees through each phase of the divorce. Make your lawyer show you to what amount the cost could escalate, so that you can evaluate the value of any potential settlement offers.
Hiring an Accountant Early Can Save You Money Later
Divorce attorneys often wait far too long to bring in the services of an accountant.
If alimony is at issue for any decent length of time, you should strongly consider hiring an accountant at the outset of the case.
Most states rely heavily on financial income and expenses during the marriage as a factor in determining alimony when the marriage dissolves. While you might generally know where your money went during the marriage, a skilled accountant can remove all doubt, often discerning earnings and expenditures to the penny. This can narrow the range of a settlement for both parties, and in many cases, remove the need for further litigation on the issue, resulting in further savings.
Hiring a joint expert will simplify the process even more. A joint accountant does not take sides but objectively lays out the financial picture of the parties during the time when your marriage was intact.
While the cost might seem daunting (most accountants want a retainer of 5K or more, on top of your lawyer’s costs) the reality is that it can save you both time and money in legal fees associated with your lawyer.
An accountant is the perfect example of a cost that seems large and perhaps unnecessary at the beginning of a case, but that can actually save substantial time and money for you once the case concludes.
Some Attorneys Milk Your Case
Imagine if you were consulting with a divorce lawyer who told you that she planned to gut your spouse, leaving him (or her) for dead on the side of the road?
This just happened to a client of mine. This sort of thing happens all of the time.
You are emotionally vulnerable when starting a divorce. An unethical attorney might fuel your emotional fire, encouraging you to destroy your spouse in some sort of legal bloodbath.
What these attorneys are really seeking is your blessing to run up legal fees with unnecessary litigation.
Look for a divorce attorney that will help you analyze your divorce as a financial transaction. Naturally, you want to walk away from your divorce in the best possible financial position, keeping as much of your accumulated wealth as possible. That means any value received from litigating must exceed the costs of the effort. Spending ten dollars in extended litigation to “win” five dollars is unacceptable. The cost outweighs the reward.
Divorce is not a zero-sum game with one winner and one loser. With creativity, resolutions can be reached that benefit the needs of both parties. Conversely, legal bloodbaths can result in you and your spouse both losing, while an unethical attorney is the only one that wins.
Your attorney’s goal needs to be to put you in the best financial position possible. It makes no sense spending ten dollars in attorney fees to get you five dollars from your spouse. Make sure you are getting a solid return on your investment.
See A Financial Planner If You Stand to Receive Substantial Assets
If you have been married for some time, you and your spouse probably have assets that will need to be divided.
Some of these assets can generate income. Other assets carry heavy expenses that need to be managed.
If you were a stay-at-home spouse, you may find yourself in control of substantial assets that you are not equipped to manage effectively.
On a related note, you may find yourself in settlement negotiations where some, or all, of an alimony claim is waived in exchange for additional assets.
While these conversations can lead to win-win settlements for both parties, remember that your divorce lawyer is not a trained financial planner. In high-asset cases, you need help from a financial expert to properly value settlement possibilities.
If you are standing to receive a large settlement, you are likely the spouse who did not traditionally manage the assets for the family. This lack of experience only makes qualified help from a financial expert more important.
Be Wary of Attorneys That Charge Only By the Hour
The billable hour is a broken pricing structure for a divorce case.
You pay for hours worked by your attorney, regardless of the value provided. The billable hour leads to silly results like an incompetent and inefficient attorney charging more for the end result than his highly efficient and competent counterpart. The reason being that the incompetent attorney had to learn on the job, at your expense.
Few, if any, attorneys who price solely by the billable hour have invested the time and resources needed to systematize the firm’s collective knowledge and improve efficiency. This would require an investment in firm money to reduce the value of each case.
This is not a healthy pricing model. Unfortunately, it is still heavily utilized by the divorce attorney community.
Ask more questions of the attorney who charges by the hour. Consider setting monthly reviews to insure that the process is on track and that you are receiving value for the hours worked.
Ultimately you want your attorney spending time on higher level functions, not doing mundane work more appropriate for a paralegal or low-level staff.
And please be sure to ask your attorney about alternative fee arrangements and value billing models. See if your attorney has enough confidence in his process that he or she can quote a flat fee for a segment of the case.
Seek Emotional Help When Needed
Divorce is emotionally and psychologically traumatizing. Yet you are about to be asked to push those emotions aside so that you can make clear-headed, rational decisions about your financial future.
Embrace the help of counselors and other independent parties who are trained in helping you through a difficult and emotional time. Do not rely on your attorney for emotional help. Your attorney is overpriced and under qualified to help in that regard.
Rather, seek help when needed so that you can clear your mind and focus on the important financial decisions that you need to make.
And in cases where counseling is overkill but you still need someone to help, consider divorce coaching >with an experienced coach to help guide you through the emotional hurdles in your case.
A bad divorce can destroy you and your spouse financially. Yet a strategic and intelligent divorce can lead to win-win results that both parties can live with so that they can move on towards brighter and better futures.