Shouldn’t a party’s assets be a factor in “ability to pay” family court attorney’s fees?

Posted Thursday, October 25th, 2018 by Gregory Forman
Filed under Attorney's Fees, Litigation Strategy, Of Interest to Family Court Litigants, Of Interest to Family Law Attorneys, South Carolina Specific

E.D.M. v. T.A.M., 307 S.C. 471, 476-77, 415 S.E.2d 812, 816 (1992) is the seminal South Carolina case in deciding whether to award a prevailing party attorney’s fees in family court. It lists four factors the family court should use to determine an award of fees. Excepting the “beneficial results” factor, the other three factors all invoke the parties’ financial condition: “each party’s ability to pay his or her own fee…the parties’ respective financial conditions; and the effect of the fee on each party’s standard of living.”

Subsequent case law has developed two distinct lines of inquiry to analyze these financial factors. The first line of cases looks at the attorney fee award as a percentage of the income of the party ordered to pay fees. If it’s too high a percentage, the appellate courts typically reverse the award. In Srivastava v. Srivastava, 411 S.C. 481, 769 S.E.2d 442 (Ct. App. 2015), the Court of Appeals reversed an award representing 90% of the Wife’s gross annual income. In Rogers v. Rogers, 343 S.C. 329, 334, 540 S.E.2d 840, 842 (2001) the Court of Appeals reversed the family court’s award of attorney’s fees where the award represented 16% of Mother’s annual income, and some of the beneficial results obtained by Father in the litigation were reversed on appeal. In Spreeuw v. Barker, 385 S.C. 45, 682 S.E.2d 843 (Ct. App. 2009), the Court of Appeals expressed concern “by an award of attorney’s fees representing approximately 40% of Father’s annual income.” It allowed that fee award to stand only because of the Father’s litigation conduct.

Another line of cases involves situations in which a losing party’s disputatious litigation conduct greatly increased the other party’s fees. There are five such reported case, including Spreeew, and I’ve represented the winning side in one and the losing side in two (in neither of those two cases did the Court of Appeals note that I was not that party’s trial attorney, thereby unfairly adding to my fairly earned reputation as a somewhat disputatious attorney). In those cases, E.D.M.’s financial factors become of diminished importance.

These separate lines of cases leaves an attorney litigating the issue of attorney’s fees with two potential strategies: 1) acknowledge that one’s fee request likely cannot exceed 25-40% of the other party’s annual income; or 2) try to prove that the other party’s disputatious conduct greatly increased the client’s fees.

I was left with this conundrum in the recent appeal in Bojilov. I’m not sure I should have been. From the parties’ trial postures it was clear that my client would likely be transferring her husband some funds as part of his equitable distribution award. Any attorney fee award to my client would merely reduce the amount of funds she had to transfer to him. This was not a situation in which the losing party would actually have to pay fees from future income. Rather, a fee award would simply offset his equitable distribution award.

There’s currently no reported case law in which the appellate courts have approved a large fee award because the party ordered to pay it would not actually have to “pay it” or could pay it from his or her equitable distribution award. However there are myriad circumstances in divorce cases in which an attorney fee obligation can easily be balanced by an equitable distribution award. The current system makes it too easy for the low-income spouse in a divorce to run up both parties’ fees. So long as that party’s litigation conduct isn’t too disputatious, that party runs minimal risk of paying the other side’s fees, even if that fee award merely reduces that party’s equitable distribution payment.

It’s time for South Carolina family law attorneys to start arguing that assets, especially marital assets, be considered as part of E.D.M’s financial factors.

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