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Brian Burke: About Your Divorce (Letter 26)

Clients have little control over the nature of the work or the amount of time spent doing that work

Dear Nick and Nora:

In my last letter I explained how the profitable practice of law involves the use of leverage, accomplished by providing office support for and paying salaries to associates and assistants at a total cost that’s less than the fees collected from clients who are charged for their time. The more time the lawyer and the associates and assistants can bill, the more money the lawyer will earn.

The rest of the equation requires work that pays, which means: (a) engage clients who have the wherewithal to pay fees; (b) find work to do for the clients engaged; (c) do the work; (d) get paid.

In general, a client is entitled to his lawyer’s “vigorous” (*1) representation, so it’s possible to do work that can be justified as necessary for “vigorous representation” even if it does nothing but inflame an emotional situation in a way that makes it look like legal conflict.

The client has little control over the nature of the work done on her case and, because lawyers spend almost all of their professional time working alone in the privacy of their law office, she has no control over the amount of time spent doing that work. It’s extremely difficult to show that a given activity was not required, and it is nearly impossible to show that some of the time billed to the case was not actually spent on the case.

If the estate has assets that are easily liquidated, the lawyers will make sure they get paid. The techniques used are more complicated than I want to explain here, but you can be confident that lawyers get paid when there is money to pay them.

To summarize: When a lawyer gets a case with plenty of “semi-liquid” assets, there are any number of ways to inflame conflict, generate the need for legal work, satisfy those needs and get paid for the effort.

The big problem is finding the supply of cases, and this is the limiting factor that no lawyer can control. During normal times, about 750 couples (1,500 people or “parties”) file for divorce is South Santa Barbara County. I’m not certain about the percentage of cases that involve estates big enough to pay high fees, but I’m confident that it is less than 30 percent. Thirty percent of 1,500 equals 450 potentially “good” clients who enter the divorce market every year.

There are about 50 divorce lawyers who work and live in Santa Barbara. If you divide the 450 potentially good clients by the number of lawyers who want to make a living providing representation to those people, the quotient is a maximum of 11 new cases per year per lawyer. Those are very slim pickings. Each case has to pay its way.

That’s the size of the market in normal economic times. Beginning with the last quarter of 2008, the demand for divorce in South County Santa Barbara dropped dramatically. In the past three years, there have been periods where the number of filings has been 70 percent of the historic record.

What cases are not being filed? Are they those that involve little or no assets, or the cases that can support the lawyers who handle them? I suspect it’s the latter. It’s one thing for a couple to divide their estate so each gets 50 percent, but when the estate loses 30 percent of its value in a recession, it’s like dividing 70 percent of the whole by two, which leaves 35 percent each.

Initiation of a division that yields 35 percent each requires a significantly higher degree of discontent than a 50/50 division.

There may be a pent-up demand for divorce. Time might allow couples to reach the heightened critical point of misery, or they may become more and more reconciled to the diminished value of their estate. Or maybe the divorces that haven’t been filed have been “lost.”

Regardless, a 30 percent reduction of the market means hard times for the divorce business, and that causes economic pressure to find work in the limited cases available. To put this a “positive” way: Any particular case can “benefit” from a surplus of legal talent.

This is what it boils down to: As soon as a client signs a representation agreement in which the client agrees to pay the lawyer and the lawyer’s professional staff on an hourly basis, the potential conflict between lawyer and client is likely to be greater than the potential conflict between the client and her spouse.

What can be done? One of the readers of these letters saw the problem and figured out the solution after the first month or two: What if the lawyers were paid a flat fee to get the job done? If so, how much?

If divorce lawyers were seen (and saw themselves) as trustees of the marital estate whose responsibility was to divide it in a way that would minimize the waste inherent in division, they would be entitled to be paid as trustees, which is usually a percentage of the estate they are responsible for.

It would be ridiculous to pay trustees only when they “did something.” A trustee is responsible for preserving the value of the trust. If a trustee decides the best way to fulfill her responsibility is to leave the assets alone, the exercise of discretion is a valuable service. To pay only for action is to invite unnecessary action — and that problem is at the heart of the conventional practice of divorce law.

As much as I object to the generation of legal fees in family law cases, I don’t think divorce lawyers shouldn’t be paid. I think they should be well paid for the responsibility they handle. My objection is to what they are now paid to do. I think the necessity of taking action to earn a living leads to unnecessary action that’s harmful to the people it is supposed to help.

In the next letter I’m going to tell you how to test and revise your relationship with your attorneys. I’ll give you a list of questions you should ask, starting with: “Can you tell me the absolute maximum amount of legal fees this divorce is going to cost me — and promise me that there is no possibility that I will pay more than that amount?”

Your oldest and best friend,
Bucky

*1) The American Bar Association’s Model Rules for Professional Conduct call for “zealous” representation of clients. The person who planted that word was either sinister or had a warped sense of humor. The zealots (circa First Century CE) were so dedicated to their cause against the Romans and other religious sects they opposed that they died rather than surrender or compromise. According to the ABA model’s fight to the death, who’s death do they have in mind — the lawyer’s or the client’s?

— Brian H. Burke is a certified family law specialist practicing family law and mediation in Santa Barbara. A researcher and educator in the field of divorce and family conflicts, he is also the creator of the Legal Road Map™. Click here for more information, call 805.965.2888 or e-mail .(JavaScript must be enabled to view this email address).

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