Given the recent raid on attorney Michael Cohen’s office and home, the issue of attorney-client privilege is very much in the news. The purpose of the privilege is to encourage truthful and frank communications between an attorney and his or her client. Generally, any communications between lawyer and client are privileged and cannot be disclosed to a third party. The privilege applies in divorce actions in New York State.
There are, however, some issues with the privilege. The biggest issue is waiver of the privilege, particularly inadvertent waiver. Frequently when a prospective client appears at a lawyer’s office for an interview, he or she will bring along a parent, friend or other supportive person. Unfortunately, having a third party present during the conversation with the lawyer is a waiver of the privilege. Only the lawyer and client can be in the room. The support person has to remain outside.
Is important to understand that the privilege only covers legal advice. Accordingly, conversations between the attorney and the client regarding other issues are not subject to the privilege and disclosure can be compelled. Another exception to the privilege is the “crime fraud” exception, which does not permit the privilege to perpetrate a crime. This is the exception alleged in the Michael Cohen case.
Is important to preserve the attorney client privilege, right from the initial interview. In that way, the client and lawyer can have informative, truthful discussions without any fear of disclosure.
Friday, May 4, 2018
Wednesday, March 21, 2018
I LOVE YOU, BUT I NEED YOU TO SIGN THIS...
One of the most difficult issues in family law is the negotiation of a prenuptial agreement. Prenuptial agreements are used to change the outcome in the event of a divorce. They were frequently used when there is a family business or children from a prior marriage.
The prenuptial agreement can provide that a certain asset will remain separate in the event of divorce. The problem is with when marital funds are used to maintain or add on to the separate asset. Prenuptial agreements can also provide for lump sums in lieu of equitable distribution and can alter amounts due under the maintenance statute.
The negotiation of a prenuptial agreement can become very emotional. It takes a cool head to navigate these waters and ultimately reach an agreement that both parties find acceptable.
Contrary to popular belief, it is difficult to set aside a prenuptial agreement. Where there has been full financial disclosure, and both sides had attorneys, it is very difficult to set aside the agreement. However, if there was no financial disclosure, a lack of meaningful negotiation or no attorney review, it is possible to set aside a prenuptial agreement. Courts strictly construe such agreements, and if an issue is not addressed in the agreement it will be decided under applicable New York State law.
Since the prenuptial agreement can control your financial future, it should be approached carefully. Any party enter entering such an agreement should absolutely have competent matrimonial counsel.
The prenuptial agreement can provide that a certain asset will remain separate in the event of divorce. The problem is with when marital funds are used to maintain or add on to the separate asset. Prenuptial agreements can also provide for lump sums in lieu of equitable distribution and can alter amounts due under the maintenance statute.
The negotiation of a prenuptial agreement can become very emotional. It takes a cool head to navigate these waters and ultimately reach an agreement that both parties find acceptable.
Contrary to popular belief, it is difficult to set aside a prenuptial agreement. Where there has been full financial disclosure, and both sides had attorneys, it is very difficult to set aside the agreement. However, if there was no financial disclosure, a lack of meaningful negotiation or no attorney review, it is possible to set aside a prenuptial agreement. Courts strictly construe such agreements, and if an issue is not addressed in the agreement it will be decided under applicable New York State law.
Since the prenuptial agreement can control your financial future, it should be approached carefully. Any party enter entering such an agreement should absolutely have competent matrimonial counsel.
Thursday, January 4, 2018
THE END OF ALIMONY AS WE KNOW IT
For 75 years, alimony (also called maintenance) has been tax deductible to the payor and taxable income to the recipient. That is, the person paying alimony to an ex-spouse got to deduct it on his or her income tax returns, and the person receiving it had to declare it as income on his or her returns and pay taxes on it. That all changed last Christmas, when President Trump signed the Tax Cuts and Jobs Act (“TCJA”).
Effective January 1, 2019, alimony will no longer be deductible. For agreements signed prior to that date, it remains deductible.
The practical effect of this change will make it harder to settle divorce actions. Typically, the fact that the payments were deductible softened the monetary blow to the paying party. Now, however, that carrot is gone.
It will be interesting to see how this plays out in New York. The legislature recently amended the maintenance statute to provide for a formula for paying maintenance. Implicit in that formula was the fact that maintenance would be deductible. Now that it will not be, the legislature may have to revisit the formula. Even if it does not however, the trial court has the option to deviate from the formula and consider the tax aspects.
Effective January 1, 2019, alimony will no longer be deductible. For agreements signed prior to that date, it remains deductible.
The practical effect of this change will make it harder to settle divorce actions. Typically, the fact that the payments were deductible softened the monetary blow to the paying party. Now, however, that carrot is gone.
It will be interesting to see how this plays out in New York. The legislature recently amended the maintenance statute to provide for a formula for paying maintenance. Implicit in that formula was the fact that maintenance would be deductible. Now that it will not be, the legislature may have to revisit the formula. Even if it does not however, the trial court has the option to deviate from the formula and consider the tax aspects.
Thursday, October 19, 2017
THE FALSE PROMISE OF MEDIATION
Mediation is one of those things that sounds good, but is difficult in practice. Countless times I have interviewed people on the verge of divorce who expressed a desire to avoid the cost of litigation by mediating their dispute.
The problem with mediation starts with the mediator. There are no licensing requirements to be a divorce mediator. One would think that at a minimum, the mediator would be familiar with New York divorce law so that it could be applied to the parties situation. That is not always the case. I have seen many mediated agreements that flatly fail to comply with the law and are basically useless.
Mediation assumes that both sides are committed to resolving the case in an amicable fashion. That is not always true, as divorce is not only a financial process but an emotional one as well. Many times I've seen parties waste thousands of dollars in mediation only to give up without an agreement. This happens when one party is angry or wants to “win” in the mediation.
Finally, there is the ethical issue. Occasionally, the mediator drafts the separation agreement once an agreement in principle is reached. Although the mediator claims he or she is not representing either party, there are always small issues that can go either way.
A better approach is collaborative divorce. In this process, both sides retain their own lawyers with the express understanding that the process is to resolve the dispute. Both lawyers agree that if settlement talks break down, neither will represent their client in the forthcoming litigation. Each side therefore gets unbiased advice, and can make an informed decision on whether to settle their dispute.
The bottom line is that if you are going to try divorce mediation, proceed very carefully. While it can work, many times you will end up in litigation anyway.
The problem with mediation starts with the mediator. There are no licensing requirements to be a divorce mediator. One would think that at a minimum, the mediator would be familiar with New York divorce law so that it could be applied to the parties situation. That is not always the case. I have seen many mediated agreements that flatly fail to comply with the law and are basically useless.
Mediation assumes that both sides are committed to resolving the case in an amicable fashion. That is not always true, as divorce is not only a financial process but an emotional one as well. Many times I've seen parties waste thousands of dollars in mediation only to give up without an agreement. This happens when one party is angry or wants to “win” in the mediation.
Finally, there is the ethical issue. Occasionally, the mediator drafts the separation agreement once an agreement in principle is reached. Although the mediator claims he or she is not representing either party, there are always small issues that can go either way.
A better approach is collaborative divorce. In this process, both sides retain their own lawyers with the express understanding that the process is to resolve the dispute. Both lawyers agree that if settlement talks break down, neither will represent their client in the forthcoming litigation. Each side therefore gets unbiased advice, and can make an informed decision on whether to settle their dispute.
The bottom line is that if you are going to try divorce mediation, proceed very carefully. While it can work, many times you will end up in litigation anyway.
Friday, August 11, 2017
AVVO RULED UNETHICAL BY NEW YORK STATE BAR
AVVO.COM, the popular attorney referral service, is in trouble in New York State. The New York State Bar Association issued an opinion on August 8, 2017 that attorneys may not pay the marketing fee to Avvo, as it constitutes an impermissible payment for a recommendation. The opinion can be found at http://www.nysba.org/EthicsOpinion1132/.
Avvo rates attorneys on its website. Attorneys can sign up to receive Avvo referrals, but it they are retained by an Avvo referred client, they are required to pay a marketing fee to Avvo. The amount of the marketing fee varies with the amount the lawyer charges the client, with the fee being higher for higher priced legal work.
The New York State Bar opinion holds that the payment of the marketing fee to Avvo, is an illegal payment for a referral, in violation of Rule 7.2 of the New York State Rules of Professional Conduct. Other states, such as New Jersey, Ohio and Pennslyvania have made similar rulings.
Avvo rates attorneys on its website. Attorneys can sign up to receive Avvo referrals, but it they are retained by an Avvo referred client, they are required to pay a marketing fee to Avvo. The amount of the marketing fee varies with the amount the lawyer charges the client, with the fee being higher for higher priced legal work.
The New York State Bar opinion holds that the payment of the marketing fee to Avvo, is an illegal payment for a referral, in violation of Rule 7.2 of the New York State Rules of Professional Conduct. Other states, such as New Jersey, Ohio and Pennslyvania have made similar rulings.
Saturday, June 3, 2017
GETTING MONEY SMART
I often interview people who are about to get divorced that have absolutely no inking of their finances. They will tell me that their spouse “handles all the bills” and that they have no idea what money they have or where they have it. This is a significant disadvantage when entering a divorce.
Divorce in New York is strictly a financial process. Not knowing anything about your financial situation can allow the other spouse to liquidate or hide assets. If you are getting divorced or you think you may be headed to one, the smartest thing you can do is to get educated about your finances. Know in what institutions your accounts are located, and know the amounts. This includes retirement accounts and records of real estate purchases. Get and keep copies of statements and tax returns. If a divorce is imminent, keep the copies somewhere other than the marital residence, lest they disappear later on.
In short, forewarned is forearmed. Know your finances.
Divorce in New York is strictly a financial process. Not knowing anything about your financial situation can allow the other spouse to liquidate or hide assets. If you are getting divorced or you think you may be headed to one, the smartest thing you can do is to get educated about your finances. Know in what institutions your accounts are located, and know the amounts. This includes retirement accounts and records of real estate purchases. Get and keep copies of statements and tax returns. If a divorce is imminent, keep the copies somewhere other than the marital residence, lest they disappear later on.
In short, forewarned is forearmed. Know your finances.
Friday, February 3, 2017
TIME TO GET RID OF THE RETAINING LIEN
In New York and in many other states, if you don't pay your lawyer, the lawyer can retain all of your papers and property in his or her possession. This is called a common law retaining lien. In divorce cases, clients frequently change lawyers. When changing lawyers, if the prior lawyer is not fully paid, the outgoing lawyer can retain the file until paid in full. This type of legal blackmail can be disastrous for a litigant.
When a client changes lawyers, he or she is usually required to a pay a retainer to the new lawyer. There are often no funds to pay the prior lawyer. By retaining the file, the prior lawyer can seriously affect the client's case going forward.
Without the file, the new lawyer is severely handicapped in litigating the case. He or she does not have the prior exchange of documents and information. Documents the client gave to the prior counsel can be withheld. The file does nothing for the outgoing attorney. It does not get him or her paid.
It is time to eliminate the retaining lien. Forcing a client to proceed to trial without a file is both unfair and barbaric, and can have a catastrophic effect on the case and the client. Outgoing attorney’s fees can be secured by a charging lien, which is a lien on the proceeds of the divorce action. The outgoing attorney would then be paid at the conclusion of the divorce action.
Unfortunately, it will probably take legislation to do away with retaining liens. And that is highly unlikely.
When a client changes lawyers, he or she is usually required to a pay a retainer to the new lawyer. There are often no funds to pay the prior lawyer. By retaining the file, the prior lawyer can seriously affect the client's case going forward.
Without the file, the new lawyer is severely handicapped in litigating the case. He or she does not have the prior exchange of documents and information. Documents the client gave to the prior counsel can be withheld. The file does nothing for the outgoing attorney. It does not get him or her paid.
It is time to eliminate the retaining lien. Forcing a client to proceed to trial without a file is both unfair and barbaric, and can have a catastrophic effect on the case and the client. Outgoing attorney’s fees can be secured by a charging lien, which is a lien on the proceeds of the divorce action. The outgoing attorney would then be paid at the conclusion of the divorce action.
Unfortunately, it will probably take legislation to do away with retaining liens. And that is highly unlikely.
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