Alton Abramowitz ()
The recent release of the January 2017 Report of the Chief Administrative Judge’s Matrimonial Practice Advisory & Rules Committee (MPARC report), chaired by Supreme Court Justice Jeffrey S. Sunshine, provides the stimulus for reflection on the manner in which divorce lawyers process their client’s case matters from the moment that the potential client first walks through their office doors. Thus, this month’s column does not focus on particular substantive issues and, instead, looks at some of the practicalities of matrimonial practice and procedure in today’s environment. What follows may strike experienced, diligent divorce lawyers as elementary, but it bears review from time to time as one’s law practice develops and evolves, along with changes in the substantive law and in the procedures and rules applied by our courts. This is the same “back to basics” to which good lawyers, like star athletes, should periodically return.
From the very inception of the attorney client relationship, fact gathering is essential. A simple one-page intake form that provides the lawyer and office staff with the basic facts of identification of client and spouse (allowing for a particularized conflict of interest check), including contact information, biographical data (dates and places of birth for the parties and their children, college degrees, professional licenses, nature of and places of employment, Social Security numbers, health insurance data, etc.) among other things, should be completed at the first meeting. Having this form on hand for future client meetings, for settlement discussions with opposing counsel, for mediation sessions and for court appearances enables attorneys to have at their fingertips data that is essential to the knowledgeable discussion of issues wherever those talks take place. Reliable knowledge of the case’s basic facts provides the lawyer with credibility in all contexts, particularly on-the-record in the judge’s courtroom and off-the-record in the robing room. At the conclusion of the matter, the information that is essential for completion of the findings of fact and judgment of divorce, as well as the Health Department’s Certificate of Dissolution (DOH-2168), need not be dug out because it is all already on hand and located in one identifiable place in the file.
22 NYCRR Part 1400 provides the requisite procedures for attorneys being retained by clients in domestic relations matters. Section 1400.2 requires that a “prospective” client be provided with a statement of client’s rights and responsibilities, the prescribed language for which must be set out verbatim in that statement. The statement should be signed by the attorney and by the client to acknowledge its receipt. Similarly, once the client and counsel agree to move forward with the retention for the matter, 22 NYCRR §1400.3 contains specific requirements for a written retainer agreement and its terms and provisions. That retainer agreement, along with the client’s rights statement, must be filed with the court in which a matrimonial action is pending and is among the documents that must be attached to the client’s sworn statement of net worth. (Any amendment to the retainer agreement must be filed with the court within 15 days.) None of these requirements can be ignored or overlooked or the attorney is at risk of forfeiting the right to payment by the client, or of losing a motion to require the monied spouse to pay attorney fees pendente lite or at the conclusion of the case. Domestic Relations Law (DRL) §237. (See, e.g, Piza v. Baez-Piza, 145 A.D.3d 808 (Second Dept. 2016) where the appellate division reversed and limited an award of counsel fees to the initial retainer amount because of an attorney’s failure to comply with 22 NYCRR §§1400.2 and 1400.3.)
Although “private ordering” in the form of a written settlement agreement that is fairly negotiated and freely entered into by the parties is the mode of resolution that should be pursued, the need for disclosure of reliable financial information prevails regardless of whether the settlement or litigation routes are followed. DRL §236B(4) provides for “compulsory financial disclosure” in all matrimonial actions where financial matters are at stake (e.g., spousal maintenance, child support, equitable distribution, and counsel fees) and specifically requires the exchange of sworn statements of net worth. That section also describes what the statement of net worth is to contain and requires that there be attached to it the party’s most recent income tax returns, including all W-2s and tax statements “submitted with the returns,” along with the party’s most recent paystub. 22 NYCRR §202.16(b) prescribes the form that is to be used for the sworn statement of net worth. The MPARC report, at pages 7-8, discusses the new revised form of net worth statement that became effective on Aug. 1, 2016. (A fillable version can be found on the website of the Office of Court Administration (OCA).) Importantly, the new form also requires the attachment of additional documents that are not required to be filed with a party’s income tax returns, such as K-1s, 1099s, etc.
Careful preparation of the net worth statement is one of the key essentials of good lawyering by the matrimonial bar. To be blunt, simply asking the client to fill out the net worth statement or to provide the numbers without the attorney exercising due diligence is a recipe for future difficulties. The client should be assisted in preparing the net worth statement by their attorney or a member of their attorney’s staff or a financial professional, such as an accountant or bookkeeper or someone adept at “lifestyle analysis.” One of the most important things that can and should be done is to insist that the client provide complete, detailed documentary back-up for as many of the monetary entries on the net worth statement as possible; at a minimum, one to three years’ worth of statements; spreadsheets summarizing the entries and the calculations used to make them are also invaluable—this is especially true for both the expense portion of the statement and any claims of separate property. Back-up of this nature lends credibility to the client’s factual statements, whether at their deposition, a settlement meeting or in court, because it enables the client or their attorney to quickly, easily and authoritatively respond to any criticism or questions about the accuracy and veracity of the numbers and information presented in the client’s statement of net worth. Thus, it is recommended that all of the back-up for the net worth statement be kept in a loose-leaf notebook that is available and on hand for reference at those times when the net worth statement’s accuracy may be brought into question.
One final note about net worth statements. Not only must they be sworn-to by the client in the same way as any other affidavit, but, as with every paper filed with a New York state court, they must be signed and certified by the attorney as required by 22 NYCRR §130-1.1-a of the Rules of the Chief Administrator of the Courts. This requirement places a unique burden on counsel in matrimonial actions because of the importance of the reliability of the client’s statement of net worth for which the attorney is, in effect, called upon to vouch based upon the belief formed after a “reasonable” inquiry that the facts or contentions, as presented in the statement, are not “frivolous,” etc. (See 22 NYCRR §130-1.1(c) for the definition of “frivolous” conduct.)
Assuming that settlement cannot be achieved and trial is unavoidable, the Court Rules, at 22 NYCRR §202.16(h) require each party to exchange statements of proposed disposition prior to trial. Here, too, craftsmanship and attention to detail are paramount objectives because a party’s proposals for all or any of spousal maintenance, child support, and equitable distribution are required to provide the court with the facts pertaining to those statutory factors upon which the court is being asked to rely in making its decision on those issues. The statement of proposed disposition provides the lawyer with two important things: (1) a roadmap of those evidentiary facts that must be proved in order for their client to prevail at trial; and (2) the opportunity to provide the judge with their client’s version of the story of the marriage, encompassing the salient facts pertinent to each of the statutory factors of DRL §236B with respect to spousal maintenance and equitable distribution of marital property, and DRL §240(1-b) with respect to child support; in other words, the chance to argue the case before one bit of sworn testimony has been presented by a witness or one document has been provided to the judge. A strong statement of proposed disposition will weave into its presentation of the facts on each of the pertinent factors relevant case citations that support findings by the court in accordance with the client’s claims—essentially, a memorandum of facts and law encapsulated within the statement of proposed disposition. Here too, the lawyer can begin planning for trial from day one of their retention by the client by continually updating their own narrative of the facts of the case, as well as by accumulating relevant case law as the lawyer comes across it in research for the lawyer’s other cases and in following newly published decisions.
Although many lawyers follow Benjamin Franklin’s admonition— “By failing to prepare, you are preparing to fail”—a better guide might be Mel Brooks’ observation: “If you believe you can accomplish everything by ‘cramming’ at the eleventh hour, by all means, don’t lift a finger now. But you may think twice about beginning to build your ark once it has already started raining.” (“The Zombie Survival Guide: Complete Protection from the Living Dead.”)