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Just a few years ago, separation agreements consistently preceded about 7 percent of divorces, providing a cost-effective way for unhappy couples to start dissolving their marriage and a steady source of income for matrimonial attorneys drawing up the agreements.

But in the 3 1/2 years since New York enacted a no-fault divorce statute, the percentage of divorces beginning with a separation agreement has been cut by more than half, even as the number of failed marriages has soared.

Data from the New York State Department of Health showed that in 2012, only one of every 32 divorces followed a separation agreement, compared with one in seven in the pre-no-fault era. Although separation agreements fell slightly between 2008 and 2010, they took a nosedive after the law was changed in October 2010.

“The takeaway is that a staple product of the matrimonial/ family business model is going the way of the dodo,” said senior associate Richard W. Cole of the Albany Law firm of Tully Rinckey.

Cole said the bonus for matrimonial litigants is a bust for lawyers.

“Frequently, we would negotiate a separation agreement, obviously for which we get paid, and then we’d file for a divorce, for which we’d also get paid,” Cole said. “[No-fault] is good for litigants and can save them a couple thousand dollars in attorney fees. But there is a downside for lawyers.”

According to the Health Department data, divorces in New York had been on an overall decline since 2001, when 66,377 couples legally divorced, to 2009, when 49,816 couples did.

See additional data from the Health Department.

When no-fault came in, eliminating the need to assess blame, the number jumped back up to 56,382 in 2010, reaching levels not seen in six years, and continued climbing through 2012. Statistics for 2013 are unavailable.

Separation agreements did not follow the upward trend.

“Previously, separation agreements were like a two-step divorce because you didn’t want to fight over fault grounds,” Cole said. “So, the parties would reach a separation agreement and wait out the year without having to prove cruel and inhuman treatment or any of those other unpleasant things that come up in divorce complaints.”

Under no-fault, spouses can end their marriage simply by asserting an irretrievable marital breakdown that has existed for at least six months.

“Nowadays, couples mainly resort to separation agreements when one spouse needs to remain on the other spouse’s health plan during the year of separation,” Cole said.

A Proliferation of Litigation

In the past, couples who lacked grounds for a divorce or didn’t want to assert grounds had to work out an interim agreement and wait a year, said Lee Rosenberg, a partner at Saltzman Chetkof & Rosenberg in Garden City.

“Now, with no-fault divorce you don’t have that impediment of grounds anymore so you there is a relatively innocuous way of getting a divorce” Rosenberg said. “In these days, the main reason I see for people who want separation agreements rather than divorces has to do with health insurance coverage.”

Rosenberg, a fellow with the American Academy of Matrimonial Lawyers and former chairman of the Nassau County Bar Association Matrimonial Law Committee, said that while he is writing far fewer separation agreements now, he is seeing more divorces—and an inexplicable elevation in hostility.

“There is a proliferation of litigation,” Rosenberg said. “The amount of recalcitrance and expectations which are illegitimate, the amount of infighting amongst the litigants, and to some degree amongst counsel, is from my perspective at an all-time high.”

Rosenberg said court system is being strained due to an influx of unrepresented litigants and budgetary constraints. The Judiciary, which has been functioning for years with flat budgets, is seeking about a 2.5 percent increase from the Legislature for the fiscal year that begins April 1.

“It is extremely burdensome on the judiciary and court staff to try and manage these cases,” Rosenberg said. “If there are more cases filed, there are more cases in the pipeline and less resources to deal with them. We have judges triple-booked for trials through the end of the summer.”

Michael Stutman, a partner at Mishcon de Reya in Manhattan and chapter president of the Academy of Matrimonial Lawyers in New York, said the downswing in separation agreements doesn’t seem to “herald any major change in the nature of the work.” He said the details of a divorce, such as child custody and equitable distribution of property, need to be worked out either before or after a filing.

“A stipulation of settlement or a settlement agreement is essentially the same thing as a separation agreement,” he said.

Stutman said he didn’t know what to make of the sharp increase in divorces since the no-fault provision took effect. He said it may be enabling people “to exit unsatisfactory marriages that they might otherwise not have been unable to extract themselves from,” but suspects the spike is temporary.

Michael Friedman of Friedman and Molinsek in Delmar said the decline in separation agreements really hasn’t impacted his income since any work that in the past would have occurred prior to the divorce now takes place a little later in the process.

“The only reason you would do a separation agreement [in the past] is you didn’t have or didn’t want to fight out grounds for divorce, or you wanted to stay on the health insurance for another year or so,” Friedman said. “But there is usually no reason to do a separation agreement anymore because if you have the money to pay for it, which is not that much, you can just convert right into a divorce. There certainly has not been a decline in the negotiation of agreements in my practice, and what used to be a separation agreement is now a divorce settlement.”

Some practitioners link the fairly recent increase in divorces to the improving economy, or the fact that, with no-fault, it’s easier and quicker to dissolve a marriage.

Friedman has a different take.

“My theory is it is related to the Yankees,” Friedman said. “When the Yankees do well, divorces decline. They won the World Series in 2009, and as the team gets worse and worse the number of divorces goes up. If I had to guess, I’d say divorces are going to go through the roof in 2013.”