Today’s consumers are rightfully cost conscious when shopping for lawyers to represent them in their divorce cases. In this difficult economic environment, in part caused by the pandemic, clients are entitled to know what to expect when it comes to legal fees in a divorce case. As such, I frequently get asked during initial consultations, “How do legal fees get paid during the divorce case?” That question, as one might expect, is not easily answered, but I outline the following to all of my clients so they have a clear understanding of how the process works as it relates to the general payment of legal fees.
The actual payment of legal fees is usually handled in one of two ways. First, all legal fees are paid “off the top” of the marital estate. That means assets of the parties’ martial estate are used to fund and finance the payment of lawyer expenses. In other words, even if one party’s lawyer incurs more fees than the other lawyer, because the legal fees are being paid out of marital assets (presumably a savings, checking, or investment account), then both litigants are sharing equally in the payment of all legal fees. That is the more traditional model that is usually applied in cases that are resolved without litigation (through settlement). Under this model, a party is not ‘penalized’ if they hired a more expensive (or more thorough) lawyer than the other.
The other way legal fees are handled is that at the conclusion of the case, all legal fees are reallocated equitably between the parties through a process referred to as “contribution.” This means that legal fees are “trued up” at the end of the case so that one party does not have greater access to marital assets than the other, for the specific use of legal fees. For example, if one spouse paid $20,000 to his/her lawyer during the case and the other paid his/her lawyer $40,000, the second spouse would owe the first $10,000 out of his/her separate share of the final settlement. Thus, this model results in equalizing the legal fees. Variations of this model also occur such that one party may be ordered to pay a greater share of the legal fees as opposed to just a straight equalization of the fees.
In determining which model gets applied, courts look at a myriad of factors. Those include: each party’s ability to pay legal fees; how and why were the fees incurred; and how do the legal fees incurred compare between lawyers, among other factors. However, in considering this issue, a litigant needs to be careful to not apply a cookie cutter approach to equalizing legal fees. Often times, one lawyer incurs more fees than the other lawyer for a legitimate reason. In that instance, equalizing legal fees either does not make sense or is inequitable.
For instance, one lawyer may need to spend more time learning and understanding the inner workings of the opposing party’s income and assets since they represent the non-wage earner spouse. Alternatively, one lawyer may be more diligent and thorough in analyzing the information on behalf of their client than the other lawyer. Further, one party may have incurred more fees (i) seeking enforcement of court ordered violations or (ii) because the other party was not forthcoming with information. With those examples, the party who incurred the greater fees should not be penalized though an “equalization process”.
Some courts take the approach that if one party chooses a more expensive lawyer than the other, then that is their choice, and they should therefore be responsible for their own fees. However, that is not the law. And, that approach fails to recognize that not all lawyers are created equal, and different lawyers may have different skill sets, which translate into different rates, and usually, different (and better) results.
Bottom line, every case has to be judged on its specific facts and a determination needs to be made on which model makes the most sense from a fairness and equity standpoint. Irrespective of the process applied, it should not be the primary driver in your selection of a lawyer. Like most things in life, usually, you get what you pay for, and the hiring of a good divorce lawyer is no exception.