May 11, 2021

The big business of divorce

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Divorce settlement

Divorce settlement

By John Roach & Laura Roach, From Texas Lawyer

Divorce is big business. In fact, it’s a $50-$175 billion business compared to the wedding industry which is estimated to generate just $40-$50 billion annually. Why is divorce big business? Just read the statistics:

• There is a divorce every 13 seconds which equates to 46,000 divorces per week.

• Almost 50 percent of marriages end in divorce.

• 60 percent of second marriages end in divorce.

• 73 percent of third marriages end in divorce.

In Texas alone, divorce filings accounted for 89 percent of all cases filed in the district courts. In 2014, there were 111,409 divorces filed in Texas district courts out of a total of 125,588. About 62,196 children were affected by divorce in 2012, according to the Texas Department of State Health Services.

In addition to the quantity of divorces, there are a lot of expenses in a divorce—especially in ugly, long-lasting, emotionally- and financially-draining divorces that end up in the courtroom.

A recent survey published in The Journal of Sociology reported that divorce drops a person’s wealth by 77 percent. In addition to the attorney fees, there are often accountants, therapists, realtors and other specialists required before, during and after the breakup, plus lost opportunity costs, increase in living expenses, moving expenses, cost of dividing or selling one’s property and the loss of savings.

With over a combined 40 years of experience in divorce cases, we have seen heart-wrenching and devastating divorces. We believe it is neither the couples nor the lawyers to blame; instead, the problem lies in a system that sets up husband and wife as adversaries, two fighting forces where the supposed winner takes all.

For an attorney, contested divorces can be highly profitable. War costs money. The more people fight, the more money the lawyers make. A small number of family law attorneys take advantage of conflict and “milk” their files to fight over the most inconsequential points and use it to their financial advantage. This practice can be justified by arguing that “the attorneys have a legal obligation to zealously advocate for their client.” Who can argue with that?

But the obligation is not to zealously advocate for clients at all cost. When the clients have less money at the end of the case than the lawyers’ fees during the case, something went wrong.

The key is to zealously advocate for the client within the bounds of the attorney’s ethical obligation but also within the bounds of the client’s financial resources. The “business of divorce” should be conducted outside the courtroom to minimize the negative emotional and financial effects. This can be accomplished by embracing alternative dispute resolution (ADR) methods and openly discussing the options with the client.

Four Alternative Dispute Resolution (ADR) methods are commonly used in the business of divorce.

• IHOP method (Informal, Healthy Opportunity for Peace), as we call it, is a voluntary negotiation between spouses without the use of lawyers or mediators based on ground rules and an agenda to resolve issues. Attorneys later prepare, explain and legalize the paperwork.

• Collaborative law allows the spouses, their attorneys and appropriate professionals to work together as a “team” to resolve divorce issues without court intervention.

• Mediation is the process we use in all types of cases but is especially productive in family law cases.

• Arbitration is usually used in civil cases and rarely used in family law cases. However, arbitration can be of great benefit to a divorcing couple who cannot reach a settlement but want a more expedited and private resolution to their divorce.

Why should attorneys practice the ADR methods? Word-of-mouth marketing and referrals are significant revenue generators for lawyers. A client who is completely emotionally and financially drained at the end of the divorce is unlikely to be a referral source.

One of the biggest compliments for a family law attorney is to get a referral from the opposing party in a previous divorce. In examining these referrals, we have noticed that they usually come from cases where the opposing lawyer was less cooperative, less reasonable and who billed more on the case. Our analysis is not a scientific one, but it is one that makes business sense in any business. A satisfied customer or client is the best source of referrals and repeat referrals are the key to big business—even in the divorce business.

IMAGE: zimmytws

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