How To Eliminate The Need for Divorce Litigation Funding

A recent article in the New York Times covered the growing business of companies funding divorce litigation. Yulia Clement did a nice post on the same subject the other day.

Borrowing money to pay legal and accounting fees in divorces so couples can fight over who gets what share of a multimillion dollar marital estate is all well and good for those very few couples who have a multimillion dollar estate to fight over.

But what about a practical solution to the systemic problem of a divorce system which requires normal, middle class couples to spend many tens of thousands of dollars and hundreds of hours of time fighting over far less money?

Here is my proposal for changing the system so that it works for the vast majority of non-millionaires:

Basic Financial Income and Expense Disclosure:  Each party in a divorce case should be required to collect and turn over to the other certain basic financial documentation (you can debate and discuss what should be on the list, but there certainly should be a mandatory list). No more paying lawyers to draft and answer formal demands for documents. The Court sets the basic list, and after you provide that, you can ask for other materials if the Court approves the request.

For each week you are late in complying with the Court’s mandatory list, you pay a fine. The fine is paid to the Court, and will be used to fund the operations of the divorce section of the Courthouse  (not paid to the other side). You can appeal or reduce the fine at the end of the case if you can convince the Court you had a good reason you just could not locate your pension statement or credit card bill or deed to your house. In my experience, normal clients understand and respect the concept of a late fee or fine. They do not, in my experience, understand or care about the esoteric concepts of contempt of court or litigation posturing or positioning.

Asset Disclosure: End the days of playing hide and seek with money and property.  30 days from the filing of the divorce, the parties should be required to jointly hire an asset search company or forensic accountant. If that deadline is missed, the Court will name it own investigator. Both parties can jointly waive this rule. The investigator will report all of its findings to both sides and the Court. As part of the investigation process, both parties will be required to waive all privileges other than attorney/client. Should a party fail to comply with this process, he or she will pay their own investigation and discovery fees and the fees of the other party required to utilize the traditional financial discovery and investigation process.

Making these two changes to the financial disclosure system used in divorces should drastically reduce both the cost of providing financial information and the number of conflicts which arise from the exchange of information. It should also ensure that the exchange of income, expense, and asset information will be smoother, more transparent, and more efficient. In the end, for the vast majority of couples, these changes will make their divorces less expensive, faster, and less acrimonious.