How family court law on payment of attorneys fees alters negotiation strategy

In a typical negotiation each party’s initial offer is the least generous offer they might hope the other party will accept.  The rationale behind such a negotiation strategy is that one shouldn’t make one’s best, or even a realistic, offer up front because one does not want to give up any more than absolutely required in order to make the deal.

Family court negotiations are different in two respects.  First, unlike typical negotiations in which no lawsuit has been filed and the parties are free to end bargaining without adverse consequences, parties to a family court negotiation end up with a judicial resolution of their disputes if they do not reach an agreement.  Second, in family court the judge can make the “losing” side pay the “winning” side’s attorney’s fees and costs.  It is this second difference that should alter family court negotiation strategy.

In family court “winning” and “losing” is largely determined by looking at the parties’ settlement offers (and the history of when their settlement offers were made).  A father whose settlement offer demands custody but gets liberal visitation at trial achieves the same results as the father whose settlement offer demands liberal visitation and achieves it at trial, but the first father has “lost” on the issue of custody and the second father has “won.”

Further, attorney’s fees often become a significant element in marital litigation.  Rare is the highly contested case in which the parties’ total attorneys’ fees and costs do not exceed 10% of the total marital equity; I have seen marital dissolution cases–primarily those in which custody is highly contested and the parties have few assets–in which the fee claims can exceed the value of the marital estate.  Because of this, a party who prevails on a certain contested financial issue (property division; alimony; child support) but loses on the issue of attorney’s fees is often worse off than he or she would have been had the financial issue not been contested.

Under South Carolina case law the parties’ relative ability to pay fees is a large factor in deciding whether to award the prevailing party fees.  In fact, absent outrageous conduct or unreasonable settlement positions, the courts are highly reluctant make the lower-income party pay fees to the higher-income party when there is a substantial financial disparity.  Thus, when I have a case in which there is a substantial income disparity, I am thinking strategy for attorney’s fees at the beginning of the case: if I represent the low-income party, I want to maximize my chance for a fee award; if I represent the high-income party, I want to reduce the risk that my client will pay fees.

The way to do this is to make a settlement offer early in the case that is about as good (perhaps even a bit better) than I might expect the other party to achieve at trial.  I do this as soon as I have a good enough factual understanding to be comfortable making an offer.  I would rather make a generous offer early–and increase the chance that my low-income client will be awarded fees or reduce the chance that my high-income client will be required to pay fees–than wait to see if the other party accepts a less generous offer.

As this strategy is atypical for negotiations, it often flummoxes opposing counsel.  They typically perceive this initial offer as “lowball” and will ignore it or try to get me to “improve” the offer.  However, unless new information arises that makes me concerned the offer wasn’t generous enough (i.e., providing substantial concern that, at trial, my client will do worse than the offer) the offer does not “improve.”  While my client might trade off things within the offer (e.g., more property for less alimony) these offers typically do not become more generous.  Meanwhile both my client and the opposing party continue to incur fees and costs while my offer remains open.

Often, after the remaining issues have resolved and it is time to negotiate fees, I can pull this offer back up and remind opposing counsel that my client has done as well (or better) than my early offer.  This provides substantial leverage in negotiating attorney’s fees.  When attorneys representing lower-income parties realize that they have not done better than the early offer, they have lost most of the leverage they might have had to obtain an award of fees.  When opposing attorneys representing higher-income parties realize that my client has achieved what the early offer sought, they have no good argument against my clients obtaining at least some of their fees.  Using this strategy, I have often had clients who would normally have to pay fees to the other side not have to pay fees.

Because of the unique circumstances of family court negotiations, making early and generous settlement proposals is actually–and counterintuitively–good negotiating strategy.

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