I’ve written before in Boomer-Living.com about legal fees in divorce—why they tend to be expensive (lawyers aren’t cheap and clients often fight incessantly), and how to minimize them (by using divorce mediation and/or “collaborative” divorce). But I’ve never addressed the issue of how a client comes up with the money to pay the fees in the first place.
Until recently, there were only three ways to do it. The client either has the money already. Or the client borrows it from a relative or other sympathetic person. Or the client tries to persuade the judge to order the other (presumably more-affluent) spouse to pay some or all of the fees.
The last option, though, is rarely successful. Judges don’t to issue attorney fee orders in the early stages of divorce cases unless the financial inequity between the parties is overwhelming and obvious. But if one spouse has mastered the art of hiding or under-valuing assets, the other spouse may never have a realistic chance of proving to the court’s satisfaction that an attorney fee award is necessary. It usually takes a lot of time and money to unearth hidden assets, so, without adequate funding, the less-affluent spouse is doomed to losing a war of attrition.
But now there’s a way of leveling the playing field—at least in big-money cases. Balance Point Divorce Funding of Beverly Hills, California “invests” money with divorce litigants (usually, but not necessarily, wives) who have limited resources of their own but whose spouses are multi-millionaires. The typical Balance Point client is a woman married to a successful entrepreneur who the woman believes is hiding assets or pleading poverty to avoid losing his shirt in the divorce. Balance Point has on its staff a retired New York City police lieutenant who has also done many years of asset recovery work as a private investigator. He will attempt to verify a potential client’s claims and, if they have merit, Balance Point will consider investing a minimum of $200,000 in the client’s case to pay for attorney fees, asset and fraud investigations, and forensic accounting and other “expert witness” fees.
Balance Point makes a distinction between “investing” and “lending.” Because the money paid is not a loan, there’s no interest charged. Instead, Balance Point will receive a percentage of any asset recovery that’s ultimately achieved. What percentage? They don’t say, other than that it’s “substantially smaller” than the one-third fee that attorneys will often charge in contingency fee cases. And because the money is an investment and not a loan, the client has no repayment obligation if she loses the case at trial or on appeal.
Because Balance Point stands to lose big if a case is unwinnable, they pick and choose their clients carefully. They’re not looking for people who are so blinded by anger and the lust for revenge that they would never accept a reasonable compromise. On the other hand, they do...
You’ll often hear that real estate is the most valuable financial asset that has to be addressed in a divorce case. Although that can be true, more often than not the pensions and retirement funds of the husband and wife are, collectively, worth more, particularly for boomer couples who have been building up their retirement assets for two, three, or four decades.