November 2009 Archives

November 29, 2009

Divorce Mediation, Costs, Lack of Training & Scare Tactics....

Today, courtesy of Google, I received a link to a webpage titled something like "Free Divorce Help in San Diego", followed by an advertisement looking like an article touting a private mediator with a law degree, but apparently someone who never passed the bar examine to become a lawyer. Aside from the irony of starting by offering free help, then charging, the page contained a lot of misinformation.

As with much mediator advertising, it was peppered with misstatements about the cost of the legal process. It reported that lawyers charge "at least $500 per hour" and many charge non-refundable retainers as much as $7500, and "total fees of $100,000 are not unheard of for a divorce."

Although legal services are expensive, let's set the record straight. In San Diego, the number of competent lawyers consistently charging $500 or more per hour is probably well under a dozen. Yes, a divorce can cost $100,000 or more, but that's because the parties are unreasonable and lousy candidates for mediation in the first place - and few lawyers have done cases that have gotten that expensive.

Retainers of $7500? Again a small number of lawyers, or those where the attorney knows going in that there is going to be a large amount of work to do, or there are other issues [a lot of property to keep track of, custody disputes, prior lawyers, a particularly obnoxious attorney on the other side] - and non-refundable retainers are generally prohibited in California, so you are only going to pay for the actual work needed.

And, this person bragged that most cases are mediated for less that $5,000: Now that's still a fine fee to charge if you are a lawyer, and in my experience far more than having a competent family law lawyer mediate your divorce and process it through the courts, as long as the people are reasonable and mature. Yes, most of us charge on an hourly basis for the work, so there is no limit, but you can have it done competently for less, in most cases.

One regular warning I make here is that you need to examine the credentials of the mediator: In my mind, it is more than taking a short class in how to help people reach agreements, and knowing some basics about the law. You want accurate information about your legal rights and responsibilities and knowing the mediator's thought processes have been honed by litigation, where biases and assumptions are tested daily. A J.D. degree means the person went to law school - it does not mean or imply the person knows the law, or ever competently practiced. Masters and Bachelor degrees are meaningless in choosing a mediator.

There is no substitute for education and experience as a family law specialist with years of litigation experience. Scare tactics to draw you in should be viewed with suspicion. If you can hire a true expert for the same price, why go to someone with a good sales pitch that lures you in with a promise of free or cheap resolution of your divorce? Someone who badmouths competitors on the basis that they are educated, knowledgeable, and experienced. There are a few, money hungry lawyers, whom you can't trust, but the vast majority know what they are doing and went into the legal profession because they wanted to be able to help people.

November 17, 2009

House Prices and Divorce in San Diego....

Today's San Diego Union contains an article on the front page with a headline that "S. D. County home prices inch higher." While this is certainly welcome news, it hardly serves as notice of the end of falling prices and is not enough to make settling divorce cases easier.

The statistics cited in the article refer to median home prices in the county - for those non-math majors, that means that one-half of the houses sold are above, and one-half below that median number. The increase, if you can call it that, is .5%, year to year for October. That can easily be a statistical anomoly, and not reflect an actual increase in prices, although the article does reflect a 2% increase in the number of sales - of course that increase is from the extremely desperate days of October, 2008, just before the election, when it seemed our financial world was about to end, which is probably not a good guide post from which to measure the market.

What I notice in my family law practice is that houses at the very bottom of the market are selling as a few buyers think they can pick up a rental propery cheap [especially based on early 2005 prices].

In one case, we have two houses to value; one in the $300,000 range, and one nearer $700,000. Because of delays, we've had two appraisals of each house - the same appraiser says that the less expensive house has actually increase in value about 10% in the last year, while it is opinion that the higher priced house remains unchanged. With the median at $325,000 [according to the article], it may just be that the bottom end has firmed up as buyers think they are getting a bargain, while the number of foreclosures and repossessed houses continues to keep the overall market soft.

Those few friends who are looking at houses in the range above $700,000, are finding they can buy nearly new, custom built houses far below the cost of construction - one friend remarked that the top end is equivalent of being given a free lot, then a discounted bid on building - he's interested in moving, but is really picky because he finds so much from which to choose - he doesn't have to suffer noise problems or bad layouts, as there are other houses on the market.

Before taking a step into buying a new house, think carefully. We may not be at the bottom. And, remember, one factor in keeping the bottom firm is that interest rates on these sub-jumbo loans remain very low, and money is available to many buyers in that price range. That does not necessarily mean that people are trading up, only that houses at the bottom are becoming attractive to investors, while pricing remaining a gamble. If interest rates rise, prices will drop. As always, be sure you have the financial stability to keep the property you buy even if housing prices and rental values drop, and interest rates go up.

November 2, 2009

Frivolous Motions and Setting Aside Old Judgments:

The last couple of months in my practice have seen a flurry of frivolous motions to set aside or modify existing judgments, based solely on one party's desire for a different result than they had originally agreed to. Maybe it's the economy driving litigants to re-divide assets, or attorneys who need the work, but it seems to be an epidemic in my office - often where one party has been denied relief by the judge, that person keeps coming back with a different strategy.

The basic rule of law is that a judgment is final, and can only be set aside or modified for specific reasons, such as fraud, mistake, an undivided asset, or failure to serve an appropriate declaration disclosing assets. The policy of the law is that judgments should be a final resolution, not an invitation to further litigation.

Let's say, for example, that boyfriend gives girlfriend an engagement ring - they get married - they stay married for 10 years - they get divorced - in their judgment the wife is awarded all her jewelry. A few years later, the husband decides he wants his ring back. Should he get it? What did wife give up to get her jewelry? Maybe nothing, maybe a lot, but the parties negotiated an agreement.

How many times do we litigate the value of the wife's jewelry, or whether it is community or separate property? How many years do we allow the husband to wait before he changes his mind, and files a motion to divide the ring?

Or how about a case we see often: The house is awarded to husband, and he pays wife an equalization payment for one-half the equity. In this market, he may not be able to refinance the property, or it may be upside down and can't be sold or refinanced, but he intends to stay there so he buys her out. Because of the conditions of the market [or just bad lawyering], no one put anything in the marital settlement agreement about refinancing the property to take wife's name off the mortgage. Wife got her bargain, and husband got his - how many years later can wife come back and sue, claiming she should have gotten an order that her ex-husband should be required to refinance the property to take her name off or, if he can't do that, he must sell the house? What if the house had equity when they got a divorce, but now it is upside down - can the court order him to sell the house at a loss?

It is easy to come up with these hypotheticals because we and our friends see such motions filed all the time. To curb these frivolous motions, the legislature has seen fit to set limitation periods for the filing of such motions, depending on the nature of the grievance. For fraud, the longest periods generally, the right to sue usually starts at the time you knew about the fraud, or should have known about it - in other words, if you had all the documents all along, but didn't look at them, maybe you should have known about the "alleged fraud" and the period might run from the date of the judgment rather from a date years later when you bothered to look.

The point of this post is to point out a flaw in the system, allowing people to sue when there is absolutely no merit to their position, with no consequences. Yes, courts have the power to order sanctions for frivolous motions, judges just don't tend to want to upset anyone by actually ordering sanctions. Who is more likely to complain? The party who is sanctioned, or the one who doesn't get a sanction award - I guaranty you it is the former - judges tend to take the easier path, sometimes assuming that people really aren't mean spirited, even when they clearly are.