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Modern Family Meets the Great Recession and Divorce

By Susan Carlisle, CPA
Valley Lawyer – December 2010
A publication of the
San Fernando Valley Bar Association

An attorney received a frantic call from Steven, a man in his late 40’s. “Please help us. Over the last year the lawyers got the remaining $60,000 equity in our house. There’s nothing left, and we’re not even divorced yet. We’re still living together in the same house. It’s awful. Can we come talk to you right away?” he pleaded.

DIVORCING COUPLES ARE desperately seeking alternatives to making deals “at the courthouse steps.” A trip to the Superior Court in downtown Los Angeles found that a majority of the people in the halls are dressed in clothing from Target or Walmart and few, if any, wear tailored Italian suits. Estimates are that eighty percent or more of the cases are in pro per. The expensive suits are more often sitting in conference rooms in Century City or Encino with private judges at the head of the table.

As the middle class suffers through trauma and disruption, can the family law community justify taking what little remains? In the midst of this jobless recovery, emotional distress is being caused. The impact of the economic downturn will be felt by families for quite some time. The practice of family law will also be transformed, not only as a result of the Great Recession, but as a result of the changing nature of marriage itself.

The normal challenges associated with splitting one household into two in a marital dissolution have been rendered even more daunting. Falling home prices, the slow market in home sales, sizeable credit card debt and home equity loans, along with diminished savings and retirement funds make negotiating a marital settlement agreement even more stressful.

Although there are discussions about giving up on real estate with excessive mortgages, clients think that the market is poised for an upturn in the near future. Only the “ruthless and the reckless” have walked away from their homes (Brett Arends, The Great Mortgage Mystery, Wall Street Journal, Oct. 8, 2010). Most people, especially women, still feel that it is essential to remain in the family residence.

Job loss, or the losses generated by a previously flourishing business, is a real financial stressor that leads to the breakdown of marriages. Men account for about 75% of the decline in employment (U.S. Bureau of Labor Statistics, 2009). The breadwinner has to cope with his declining self- image. Often this triggers depression or exacerbated abusive behavior. Women report their resentment after coming home from work to find their unemployed husband on the couch watching television, or worse, with a bottle of booze. A sudden decline in the marital standard of living is difficult to cope with.

Accruing substantial debt puts a strain on a marriage. Sometimes it causes one spouse to blame the other, especially if a higher level of spending continues unabated. Conflict over money is the most common predictor of divorce for men. For women, conflicts over finances and sex are the most common predictors (Cheryl Wetzstein, Marriage, Money Go Hand in Hand, The Washington Times, Dec. 27, 2009).

The National Marriage Project attempted to put a positive spin on the falling divorce rates, which were down for the first time in five years (“It’s Official: Recession Kills Divorce,” They pointed out that tough times often reminded the family members of their interdependence (Emily S. Rueb, Love in the Time of Recession, The New York Times, Feb. 9, 2010): one spouse needed the other’s steady job and health care benefits; in-laws were available to provide child care and temporary financial assistance, even a roof.

A more cynical (or realistic) view, perhaps, is that divorce is expensive. With more married people admitting to being unhappy, they just cannot afford two separate households or to hire attorneys. What can they do if there is nothing left to divide but the debt? One common solution is to continue to live in the same house together, albeit in separate bedrooms, if possible.

More often than not, divorcing couples in the Los Angeles area report during their initial visit to their attorneys that they are still living together. An article in The New York Times pointed out that there were many people who just stayed married for years – the “Un-Divorced” – because they did not want to go through the agony and expense of divorce proceedings, and there were other practical considerations. Warren Buffett, the chairman of Berkshire Hathaway, stayed married for 27 years until his wife died, while he lived with another woman. The three of them even sent out holiday cards together (Pamela Paul, The Un- Divorced, The New York Times, July 30, 2010).

Another recent addition to marital settlement agreements is the payment of child support to people in their 50’s, who, only one generation ago, would have been childless, or empty nesters. Surrogacy, egg donation and in vitro fertilization have generated babies for middle aged parents; therefore, there are still young children to consider while divorcing couples approach retirement age. Gay and lesbian partners often have children as well with assisted reproductive technology. Couples still plan for the care and support of their 80 and 90-year-old parents, who live longer than they had been in the past.

Stay-at-home moms are slowly but surely disappearing from the landscape. With high unemployment rates among the workforce, nonworking wives are a luxury few can afford. Yet, there were more stay-at-home dads last year (Ross Douthat, Marriage and the Recession, The New York Times, Dec. 8, 2009).

Today there are more women graduating from college than men. Young people are waiting longer to get married – average age 25 for women and age 28 for men – and even longer to have children (Richard Fry and D’Vera Cohn, New Economics of Marriage: The Rise of Wives, Pew Research Center Publications, Jan. 19, 2010). They are moving in together instead.

In 2008, 41% of all births in the United States were to unmarried women, about half of whom were cohabiting (Mark Mather and Diana Lavery, U.S. Economic and Social Trends Since 2000). In the future, family lawyers may have fewer divorces, yet more child support only cases.

Research indicates that as marriage rates overall have declined, marriage has become the province of the more educated class; it’s a “wealth-building institution” (Wetzstein). A newly minted male professional is acutely aware of this advantage; therefore, it is more likely that he will marry another professional with similar tastes in politics, hobbies and entertainment. In the year 2007, 22% of wives had income higher than their husbands, whereas in 1970 only 4% did (Fry and Cohn).

Young, two-earner families are more likely to share household chores and child rearing; therefore, 50/50 custody arrangements are realistic when they split up. Family lawyers more often represent one of two lawyers divorcing each other, or two doctors, or an engineer and an accountant. These sophisticated clients demand more control over the process and the outcome.

It is time to give serious consideration to cutting unnecessary costs. Letter writing between two lawyers is expensive. Stonewalling is expensive. Extreme positioning is expensive. Court appearances are expensive. Trials are outrageously expensive. Settling cases in the ADR room of the courthouse after exhausting a significant portion of the family’s assets is a waste of precious resources.

Unfortunately, there are still a small number of irrational clients who are motivated by revenge or avarice. On their own, or with the acquiescence of their attorneys, they commit themselves to perpetuating the war. A new generation of family lawyers and their experts may find it too distasteful to represent them in the future.

Mediations and collaborative law are a growing solution for divorcing middle and upper class families, although mediations are far more popular due to the perception of their lower cost. An increasing number of family lawyers advertise their availability for both methods. Collaborative groups have formed committees to identify methods of keeping the costs down. The

Elkins Family Law Task Force’s implementations will require more court time, not less, so that it will take longer to schedule court appearances in the future.

After this recession, lawyers can expect a backlog in divorce cases. Couples will have become accustomed to spending less, and they will balk at writing big checks for retainers. The word will be disseminated on the internet from the advisors of the rich and famous to the middle class. In a short time, mediation and collaborative law will no longer be alternatives to litigation. They will be widely recognized as the only sensible and cost-effective ways to divorce.

Susan Carlisle, CPA is a solo practitioner in Woodland Hills and West Los Angeles specializing in financial consulting for family law. She volunteers for the SFVBA Fee Arbitration Panel and the ADR Accountants’ Pro Bono Panel. She can be reached at (818)888-3223 or Visit her website at

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