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Maintain liquidity by hiring the right divorce team

Maintain liquidity by hiring the right divorce team
July 12
13:15 2017

Divorce is never easy. It represents the end of a way of life you have known for years. Not only could a divorce wear you out emotionally, it could wear you out financially. Even the wealthiest may not have sufficient access to capital during a divorce. Assets could be frozen during the pendency of a divorce. Some turn to friends or family for capital but, for some, this is not an option and certainly it is not an easy ask.

As the divorce process begins, it’s not uncommon for the spouse with the financial power during the marriage to declare war against their former partner by cutting off credit cards, hiding assets and hiring the most litigious attorney. This could send their estranged partner into a financial and emotional tailspin. Those who can’t bear the cost of the battle, often “surrender,” reluctantly agreeing to a sub-par settlement, all because he or she can’t afford the steadily mounting bills or can’t take the stress of protracted litigation with someone who can afford to litigate a case to death.

Complex divorces can be shockingly expensive. Attorneys can cost many hundreds of dollars per hour and require substantial retainers up front, and then you have to add on fees for divorce financial advisors, forensic accountants, vocational and valuation experts, and other professionals whose expertise you may require. Clients often do not have the liquidity to simultaneously engage in divorce proceedings and be able to afford living expenses such as mortgage payments, school tuition and other personal costs during the proceedings. Divorce funding can “level the playing field,” enabling litigants to fund their attorney and expert fees while maintaining their standard of living. In the United States, divorce lawyers are not allowed to represent clients for a share of whatever they are awarded (a “contingency fee arrangement”). However, such an arrangement is not prohibited of financiers.

A business niche has emerged to provide financing for those without the immediate means to fund the legal battle. This levels the playing field significantly against the well-known tactic of wealthy husbands or wives dragging on divorce proceedings and costs ad infinitum until their spouse runs out of money and are forced to concede. With independent financing, these individuals can pursue settlements they might not otherwise have been able to attain.

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