Complex Property Issues In Collaborative Law Cases

Is Less Emphasis On Law Really Such A Good Idea?

By Donald R. Royall

I. Introduction.

In our training as Collaborative Lawyers much attention has been given to “the paradigm shift”, as if to identify “IT” and embrace it, was to be transformed and well on the way to effective engagement in this new and exciting way to assist our clients in dealing their relational breakups and the resulting fallout that threatens those dear to them. Perhaps in some ways we might even assist in making it a positive experience. To do that we need only acknowledge that the client is the center of the process, not the judge, not the lawyer, not even the law. If we can do that, we in combination with such other professionals whose insights and expertise may be appropriate in a given case, can truly discover this unique client and the troubled relationship in which he/she dwells, in a holistic way. We can seek to identify the client’s unique strengths and weaknesses; explore the client’s interests, needs, goals and resources, and evaluate the relationship’s unique characteristics as well. In doing so we learn of the strengths and weaknesses, interests, needs, goals, and resources of all other individuals in the relationship. Having accomplished this, we have only to step back and let the clients resolve their own issues in a holistic way, aided by our guidance and advice, but not influenced by the courthouse world view that shaped our professional paradigms as litigators before we ”saw the light” and continues to influence our personal paradigms in ways many of us fail to see or are reluctant to admit.

This paradigm shift for lawyers, some would say, involves a de-emphasis on the law in favor of a veritable universe of other considerations which may in a given case be more relevant. It’s as simple as that. Well, maybe. However, I tend to question that, and have an alternate have a theory. In this brief paper I will argue that in “realtime”, at least in cases involving substantial and complex property issues, emphasis on “more law” perhaps in opposition to “more emphasis on law” may very well be the essence of collaboration, and require a paradigm shift for the lawyer towards more involvement with the law, not away from it.

II. The Question

A carefully crafted outline of the process has been worked out by the drafters of the Protocols Of Practice For Collaborative Lawyers, provisionally adopted by the Board of Trustees of The Collaborative Law Institute of Texas in January, 2004. Chapter Six of those protocols sets out the following in relevant part:

CHAPTER 6.FUNDAMENTALS OF THE COLLABORATIVE LAW PROCESS

SECTION 6.01. STAGES OF THE COLLABORATIVE PROCESS.

The collaborative process consists of five discrete stages:

1. Determining the clients’ goals and interests;
2. Information gathering;
3. Development of settlement options;
4. Evaluation of the options; and
5. Negotiation of the settlement.

The collaborative lawyer prepares the client for each stage, helps the client communicate effectively with the other party throughout the process and protects the integrity of the process by requiring the parties to proceed chronologically through the stages and resist the impulse to eliminate steps.

In our training we are taught to minimize the importance of the “law model” when seeking to generate and evaluate options, and usually think of the “law model” in terms of a discussion of the likely range of outcomes in the case at hand. Witness the Collaborative Law Institute of Texas protocol on the subject, with accompanying commentary:

“SECTION 6.05. EVALUATION OF THE OPTIONS.

When the parties are satisfied that all possible options have been developed, the collaborative lawyers should assist the clients in evaluating the options, analyzing how the options meets the clients’ goals, determining whether an option is realistically achievable, and considering whether the option would likely be approved by the court.

Comment
"Only if the participants agree that the exercise would be productive, in a joint session they may compare any option with the possible result if the matter were to be litigated. Otherwise, such information is to be shared with the client only in private consultation."

But is such rationing of the role of law in the collaborative process necessary, or even wise?

III. Hypotheses

According to Webster’s, a hypothesis is a tentative assumption made in order to draw out and test its logical or empirical consequences. A number of hypotheses are central to my theory. You be the judge of their validity.

1. People in a society tend to view “the law” as a reflection of a consensus of its’ citizens thoughts on what is appropriate behavior. A sort of “Peer Pronouncement”
2. People expect some sort of payback, if only approval or disapproval, when they act in a manner that deviates from that assumed norm (the law) in a positive or negative way. That expectation exists in the collaborative setting as well, although it may be subconscious. In other words people continue to subject themselves to a self monitoring form of peer pressure even when invited not to do so by the safe space created in a Collaborative Law proceeding.
3. People, even our best collaborative law clients, tend to spend substantial amounts of their time functioning at something less than their highest state. In that state, a distributive bargaining calculus tends to remain in place, whether or consciously or unconsciously.
4. Our legal system groups citizens into differing legal “societies” based upon the random selection imposed by such factors as place of birth, current residence, topographical features, political intrigues etc., with the result that profound differences exist in the expectations of individuals with little, if any, rational basis for justification of those differences in any given case.
5. We, as lawyers, are uniquely aware of the preceding fact but rarely explain that to our clients.

IV. The Theory

In cases involving substantial and complex property issues, it is beneficial to the collaborative process to inform the clients of the capricious nature of the selection process that subjects them to a particular set of legal norms, and to inform them of the wide range of other “legal norms” that could and would apply but for the accidents of geography. This could tend to diminish unconscious “scorekeeping”, broaden the range of options which still fit comfortably within their perception of the expectations of their peers, and force a client who insists upon evaluating proposed options in terms of deviation from anticipated trial outcome, to face the fact that such insistence is really about the money, as such, and not driven by a desire to conform to some generally accepted notion of what is fair.

The raw material required for the lawyer to accomplish this enlightening process is readily available over the internet, which provides numerous sources where the practitioner can obtain, in summary form, a treasure trove of ideas which, while regarded the ”legal norms” by our neighbors, are for the narrow task of “local court predictions”, decidedly “out of the box “. To illustrate the ease of this effort, the majority of comparative law data that follows was obtained from one source, www.divorcesource.com, in an afternoon.

V. Application ......Property Subject To Division

Texas Law
Under Texas law only community property is subject to division, so any contribution from a separate estate towards a settlement is certain to be viewed as a deviation from established norms which might carry imbedded within it the expectation that such remarkable action be rewarded in reciprocal fashion. But it would surprise many lawyers to know that separate personal property, be it owned before marriage, inherited, received by gift or otherwise acquired, was routinely divided between the parties in appropriate divorces cases in Texas until Cameron v. Cameron was decided in 1982 by the Texas Supreme Court in a decision wherein the chief justice and 3 other justices file concurring opinions expressing approval of the result in the case, but strongly disagreeing with the conclusion that separate personal property was not subject to division in a Texas divorce. Cameron v. Cameron, 641 SW2 210, (Tex. 1982.). The notion that only community property is subject to division in a Texas divorce case was hardly chipped in stone and handed down from the top of El Capitan! (El Capitan is the highest mountain in Texas)

Other Jurisdictions
It would seem instructive to our collaborative clients to know what some of our neighbors view as the norm in this regard.

1. In Connecticut the court may assign to either spouse all or part of the property of the other spouse, including any gifts and inheritances, based on the following factors: (1) the contribution of each spouse to the acquisition of the marital property, including the contribution of each spouse as homemaker; (2) the length of the marriage; (3) the age and health of the spouses; (4) the occupation of the spouses; (5) the amount and sources of income of the spouses; (6) the vocational skills of the spouses; (7) the employability of the spouses; (8) the estate, liabilities, and needs of each spouse and the opportunity of each for further acquisition of capital assets and income; (9) the circumstances that contributed to the estrangement of the spouses; and (10) the causes of the dissolution of marriage. [Connecticut General Statutes Annotated; Title 46b, Chapter 81].
2. In Iowa the court will divide all of the spouse's property whether it was acquired before or after the marriage, except any gifts and inheritances received prior to or during the marriage. A portion of the property may be set aside in a fund for the support, maintenance, and education of any minor children. Marital fault is not a factor. The following factors are considered in any division of property: (1) the contribution of each spouse to the acquisition of the marital property, including the contribution of each spouse as homemaker or in childcare; (2) the value of any property brought to the marriage; (3) the contribution by one party to the education, training, or increased earning capacity of the other; (4) the length of the marriage; (5) the age and physical and emotional health of the spouses; (6) the vocational skills of the spouses; (7) the time and expense necessary to acquire skills and training to become self-sufficient; (8) the federal income tax consequences of the court's division of the property; (9) the time and expense necessary for a spouse to acquire sufficient education to enable the spouse to find appropriate employment; (10) any premarital or marital settlement agreement; (11) the present and potential earning capability of each spouse, including educational background, training, employment skills, work experience, and length of absence from the job market; (12) whether the property award is instead of or in addition to alimony and the amount and duration of any such alimony award; (13) the total economic circumstances of the spouses, including any pension benefits; (14) the desirability of awarding the family home to the spouse with custody of any children; (15) any custodial provisions for the children; and (16) the amount and duration of any maintenance payments. [Iowa Code Annotated; Section 598.21].
3. Kansas courts may divide all of the spouse's property, including: (1) any gifts and inheritances; (2) any property owned before the marriage; (3) any property acquired in a spouse's own right during the marriage; and (4) any property acquired by the spouse's joint efforts. Property distribution may include actual division of the property, an award of all or part of the property to one spouse with a just and reasonable payment to the other, or a sale of the property and a division of the proceeds. The court considers the following factors: (1) the value of each spouse's property; (2) the length of the marriage; (3) the age of the spouses; (4) whether the property award is instead of or in addition to maintenance; (5) how and by whom the property was acquired; (6) the present and future earning capacity of the spouses; (7) family ties and obligations; (8) any dissipation of assets by a spouse; (9) the tax consequences of property distribution; and (10) any other factor necessary to do equity an justice between the spouses. [Kansas Statutes Annotated; Chapter 60, Article 16, Subject 1610].
4. Massachusetts is an "equitable distribution" state. There the court may divide all of the spouse's property, including any gifts and inheritances, based on the following factors: (1) the contribution of each spouse to the acquisition, preservation, or appreciation in value of the property, including the contribution of each spouse as homemaker; (2) the length of the marriage; (3) the age and health of the spouses; (4) the occupation of the spouses; (5) the amount and sources of income of the spouses; (6) the vocational skills of the spouses; (7) the employability of the spouses; (8) the liabilities and needs of each spouse and the opportunity of each for further acquisition of capital assets and income; (9) the conduct of the parties during the marriage [if the grounds for divorce are fault-based]; and (10) any health insurance coverage. Fault is not a factor if the grounds for the divorce are irretrievable breakdown of the marriage filed in conjunction with a separation/settlement agreement. [Massachusetts General Laws Annotated; Chapter 208, Sections 1A and 34].
5. Under Oregon law all of the spouses' property is subject to division by the court, including any gifts, inheritances, and property acquired prior to the marriage. Regardless of whether the property is held jointly or individually, there is a presumption that the spouses contributed equally to the acquisition of any property, unless shown otherwise. All property will be divided, without regard to any fault of the spouses, based on the following factors: (1) the cost of any sale of assets; (2) the amount of taxes and liens on the property; (3) the contribution of each spouse to the acquisition of the marital property, including the contribution of each spouse as homemaker; (4) any retirement benefits, including social security, civil service, military and railroad retirement benefits; (5) any life insurance coverage; and (6) whether the property award is instead of or in addition to spousal support. [Oregon Revised Statutes; Volume 2, Sections 107.036 and 107.105].

VI. Application.....Alimony/Spousal Support.

Texas Law.
In Texas spousal support is limited to say the least, but that is not so much indicative of any special insights we Texans have into appropriate societal behavior as it is a reflection of the peculiarities of our legislative process. Texas was also the last of the 50 states to enact a Paternity Statute. Our courts may award maintenance for a spouse only if: (1) the spouse from whom maintenance is requested has been convicted of family violence within two years before the suit for dissolution or (2) the duration of the marriage was ten years or longer and the spouse seeking maintenance: [a] lacks sufficient property to provide for his or her reasonable minimum needs; [b] is unable to support himself or herself through employment because of an incapacitating physical or mental disability; [c] is the custodian of a child who requires substantial care and supervision because of a physical or mental disability which makes it necessary that the spouse not be employed outside the home; or [d] clearly lacks earning ability in the labor market adequate to provide for the spouse's minimum reasonable needs. The amount of monthly maintenance can be no more than the lower of $2,500.00 or 20% of the paying spouse's monthly gross income. It cannot continue for more than three years, except during the continuance of an incapacitating physical or mental disability. [Texas Codes Annotated; Family Code, Chapters 8.001 to 8.055].

Other Jurisdictions.
The vast majority of other jurisdictions have a much broader view of the role that alimony plays in the adjustment of equities between spouses, and as a tool to soften the trauma of transition our clients and those around them inevitably experience. The lawyer need not necessarily agree with the policy choices underlying various statutory schemes in order to benefit from the thinking that brought others to conclude as they did, and share that information with the client in collaboration as a means of illustrating that in fashioning their unique solution, they are not necessarily going where no one has gone before. A few illustrations follow.

1. In Virginia, either spouse may be awarded maintenance, to be paid in either a lump sum, periodic payments, or both. The factors for consideration are: (1) the opportunity, ability and time necessary to acquire sufficient education and training to enable the spouse to find appropriate employment, and that spouse's future earning capacity; (2) the standard of living established during the marriage; (3) the duration of the marriage; (4) the financial resources of the spouses, including marital property apportioned to such spouse; (5) the contribution of each spouse to the marriage, including services rendered in homemaking, childcare, education, and career-building of the other spouse; (6) the tax consequences to each spouse; (7) the age of the spouses; (8) the physical and emotional conditions of the spouses; (9) the educational level of each spouse at the time of the marriage and at the time the action for support is commenced; (10) the property of the spouses; (11) the circumstances which contributed to the divorce; (12) the extent to which the age, condition, or circumstances of any child of the spouses makes it appropriate that the custodial spouse not seek outside employment; (13) any income from pension, profit-sharing, or retirement plans; (14) any contributions by either spouse to the well-being of the family; (15) the earning capacity of the spouses, including the skills, education, and training of the spouses and their employment opportunities; (16) any decisions made during the marriage regarding employment, career, education, and parenting that affected a spouse's earning potential, including the length of time absent from the job market; and (17) any other factor the court deems just and equitable. However, permanent maintenance will not be awarded to a spouse who was at fault in a divorce granted on the grounds of adultery, unless such a denial of support would be unjust. [Code of Virginia; Title 20, Sections 20-95, 20-107.1 and 20-108.1].
2. By contrast, Oklahoma’s approach is short and sweet. Alimony may be awarded to either spouse. The award may be in money or property, in lump sum or installments, having regard for the value of the property at the time of the award. Marital fault is not a consideration. There are no other factors for consideration set out in the statute. Alimony payments may be required to be paid through the clerk of the court. [Oklahoma Statutes Annotated; Title 43, Sections 121 and 136].
3. Louisiana’s view seems to emphasize fault. Permanent periodic alimony may be granted to the spouse who is without fault. Such alimony shall not exceed one-third of the other spouse's income. The factors considered are: (1) the effect of child custody on the spouse's earning capacity; (2) the time necessary to acquire sufficient education and training to enable the spouse to find appropriate employment; (3) the income, means, and assets of the spouses and the liquidity of the assets; (4) the comparative financial obligations of the spouses; (5) the age and health of the spouses; (6) the needs of the parties; (7) the earning capacity of the parties; (8) the duration of the marriage; (9) the tax consequences of the parties; and (10) any other relevant circumstances. Permanent alimony may be revoked upon remarriage or cohabitation. [Louisiana Civil Code Annotated; Articles 111 and 112].
4. Mississippi takes to cake for brevity. Either spouse may be awarded maintenance if it is equitable and just. There are no other factors for consideration specified in the statute.[Mississippi Code Annotated; Section 93, Chapter 5-23 and Mississippi Case Law].

VI. Other Areas For More Law.....Not Less

Other possible property issues where “more law” may be entirely collaborative could include:

1. Educations or professional licenses being considered as property, or as the basis for reimbursement claims..
2. The many other recognized concepts of value beyond “market value”, and the numerous variations in the treatment of personal goodwill.
3. Varying property characterization concepts.

VII. Conclusion

The diversity of legal treatment of the common issues arising out of a divorce in jurisdictions whose populations are virtually indistinguishable from our own is substantial, and instructive not because of the many and varied conclusions that have been reached by legislatures and courts in those other states, but rather because those conclusions, like our own, have been reached by reasoned and principled people seeking to carefully craft solutions to the same questions our clients face today. We are of course not bound by those solutions in our courts, and even less bound by them in collaboration, but they still constitute a valuable intellectual resource for us to consider when we endeavor to think in terms of what is, at least for us, “out of the box”.