There was a time not so long ago when clients would unload their domestic troubles on lawyers like a cord of rotted wood. They might take care in shopping for the right fit in terms of who would represent them. But once the selection was made, the answer was “Let the lawyer do it.” That’s what they get paid for, right?

True enough, but as the quantity and quality of on line resources have proliferated, legal advice has started to be viewed as an indulgence. Anyone can tell you it’s expensive, and it is. And, there is a huge array of free information on the internet (like this blog) calibrated to be useful.

Millennials, in particular, like to do it themselves. In domestic affairs, they see this as their relationship and they should be able to regulate how it ends. They may grudgingly tolerate advice from others but they see that as a plot to abridge their right and their power to manage their own affairs. Their parents tend to be more practical at least in their own view. “For what I pay a lawyer, I could go to Disney, replace a car or some other entirely useful thing.” All true. Until it bites you in the backside.

In the past couple of weeks here are some of the internet myths we have had to detonate for true believers in the power of the web. Divorces are granted automatically in Pennsylvania after two years. Custody courts automatically impose shared physical (50/50) custody arrangements. The person paying the child support always gets to deduct the children. There is no alimony in Pennsylvania. Every child over 10 gets to decide where he will reside. Courts can’t divide pensions because they belong only to the employed spouses who earned them. All of these myths contain a kernel of truth but are more wrong than right. Not any of the websites we have seen actually misrepresent the law. But none of us relies exclusively on the net for information. We dose it with the information we get from the yoga instructor, the bartender at the favorite restaurant or the well- meaning advice of great uncle Ellwood who left his horrible first wife in 1978 to marry your not so great aunt.

So, does this mean forego Disney, the new car, or the 72” flat screen? Perhaps yes. But if you are doing a divorce where money matters or it is going to affect whether your kid spends two non-consecutive weeks or half the summer with his dope smoking mother, some legal counsel may be in order. There are times when we actually do advise clients that the battle is not worth the personal or economic price. But we had people come to us with agreements they have signed or court orders they never appealed that promise them a lifetime of pain. Like the spouse who assumed that lifetime alimony meant “until he retired”. Or the parent who thought that if she just let father relocate to San Diego with the child, she could always go back to her local court to undo it later. This has become more true over time. We now commonly see executives who once could easily afford the college commitment they signed up for in 2005. Ten years later, their child has been admitted to a college with tuition that consumed more than half of their downsized net income.

Lawyers are not retailers devoted to crafting a “happy” shopping experience. Like physicians we sometimes have to report unhappy results. But the results you get will be directed toward your assets, your children, your experience and not some well-crafted avatar which might seem to be similar to your life experience, but really does not.  Your domestic affairs are about your skin and, like it or not your skin is a custom made suit, not something you found on line or at Kohl’s or Boscov. If you must do it yourself, at least find out whether  it needs to be done, and how best to do it.


We have recently been working with a client married to a “sophisticated investor.”  When we cracked open the documents telling us what Mr. Investor owned, we found a succession of limited partnerships not one of which offered us any information from which we could begin in ascertain value.

Meanwhile, there were eight of these and one formed the impression at the outset that the investments were heavily weighted towards newly formed businesses.  

Valuing any closely held business is a challenge.  The typical approaches employed to do this involve measuring the stream of income or cash flow and efforts to find a comparable company that has recently sold.  The trouble with startup companies is that they rarely have strong financials.  It is not uncommon to engage a business appraiser to have that person come back and report that while they can see value from an intuitive viewpoint, the objective criteria needed to opine about value in an objective report is simply not there.  

Occasionally, the stock market affords us a demonstration of this conundrum and the recent transaction involving Merck’s acquisition of tiny Cubist Pharmaceuticals is a good example.  Cubist was formed in 1992.  It has fewer than 1,000 employees but it has been publically traded at a price that did not crack the $25 mark until 2010.  Startup pharmaceutical companies can be a roller-coaster as good and bad news circulates about the products they are trying to develop.  Moreover, it costs millions if not billions to bring a meaningful drug to market and that investment is typically a multi-year journey.  However, Cubist rose in price on a pretty steady basis until early 2014 when it reached $75 a share.  In 2014, after peaking early, it tumbled back toward $60 and then clawed up to $75 a share.  

In today’s world pharmaceutical companies trade at about 40x earnings.  As December approached Cubist was trading at 87x earnings, more than double the industry average.  It’s profit margin was 5.6%. Operating margin was 9.5%.  Return on assets was 2.3%.  Return on equity 4.47%.  On these numbers one could argue that the market had it a little overpriced. 

Then Merck stepped in offering to buy the company for $8.4 billion; roughly $110 a share.  That’s just about one-third more than the market thought it was worth the day before.  But then, on the very evening when the sale was announced, a court in Delaware issued a ruling that challenged one of Cubist’s patents.  Cubists shares instantly fell 4% and Merck’s shares fell 5%. 

Cubist’s largest individual shareholder holds 176,000 shares.  He saw this transaction coming as he is the CEO.  Let’s assume he was dividing his property with a spouse.  Last Friday his spouse would have been negotiating over shares with a market value of $13,200,000.  On Monday those same shares were worth $19,360,000.  A day later; $2,640,000 less.   If you were being divorced from the shareholder and made your deal on December 5, you would have had no idea that the following Monday would see the shares worth an additional six million.  But then who could predict both a court ruling on Tuesday and just how the market would react.  The experts are saying Merck overpaid by $2 billion. 

The point of this is that we all like certainty when valuing assets.  But even it situations where the stock is publically traded, the tides of the market can change precipitously.  The problem is all the more difficult the smaller the business involved because small companies, like small boats, are less seaworthy in changing economic climates.

In most instances, people who take the time to visit a website like this are either enmeshed in domestic relations problems or trying to be supportive of those who are.  No one likes being in this position but statisticians tells us that this is a pretty common event in modern society.

Folks in the “system” are often frustrated.  Very few people want their relationships to fail or to fight over how they will allocate their income, their assets or how and when they will see their children.  But that is what occurs when relationships fail.

When these sad events occur, people tend to want advice.  Of course there is lots of free advice from friends, family, co-workers, and people at the gym who passed a bar exam in Indiana ten years ago and worked briefly for a law firm doing securities work in Indianapolis.  Divorce lawyers who really do this work charge what some would call an unfair amount of money undoing the damage of free advice.  “No, you are not automatically divorced after ninety days or two years or whenever.”  “No you are not entitled to live the frivolous lifestyle you and your spouse had for the last three years of your marriage.” “No, you don’t always get one year of alimony for every three years you were married.” Of course, you were getting much better free answers from your friends who “only want to help.”  In 2008 when your financial adviser told you that Citigroup was a buy at $60 a share, he wasn’t out to ruin you.  He just didn’t know better.

Almost like the sixth sense, people will reach out for free advice when intuitively they know that “professional” advice won’t be what they want to hear.  What does a client want to hear?  They are entitled to live the lifestyle they enjoyed during the marriage.  They want to hear that a father who has left a mother for another won’t get an overnight visit with his child.  The person who wants the divorce must pay the other spouse’s legal fees.   So, check with mother, sis or your brother in Istanbul first before checking with your lawyer.

Anyone involved in the divorce process can tell you it is frustrating, time consuming and expensive.  For most, this is absolutely true.  But part of the reason it is frustrating, time consuming and expensive is because clients (a) don’t like what their counsel is telling them and (b) tend to ignore advice they don’t like because they are getting free advice they do like.

This leads to today’s topic; the unasked question.  It comes out of an experience last week where a client’s former spouse sued him to increase the child support.  While we did not know her income (and the payee’s income has very little to do with the child support amount), our initial analysis was not only that support would not increase, it would most probably decrease.  At the support conference on the modification we exchanged data and the hearing officer came back with a recommendation that did involve a five percentage increase.  We reported all of this to our out-of-state client.  And while we reported that we did not agree with the conference officer’s analysis, the recommendation was not completely off base and merited consideration particularly if one looked at the cost of the next stage of litigation.  The client saw the point and wrote back that much as he loved his lawyer, he did not feel impelled to fight over principle given the dollars involved and that he knew that such a fight was only going to adversely affect their shared child, who would be caught in the middle.

It’s not always that easy.  But what is frustrating to lawyers is that their clients will often tell them things like: “He/She will never get overnight visits given what has happened.” Or “She will have to pay child support based on her last year’s reported earnings” even though she was part of Merck’s recent reduction of 9,000 employees.

The great unasked question is: “What is the likely income if we litigate?”  That is often a complex question with many moving parts.  But it is a question best posed to your own lawyer with the companion question of: “What is the estimated cost to litigate.”  Today, in many instances, the uncertainty of “winning” coupled with the relative certainty of investing in litigation make the question vitally important, and thus, well worth asking.

I am sorry I doubted you, Alan Thicke
I am sorry I doubted you, Alan Thicke

Like many people, I have a healthy skepticism for infomercials or to-good-to-be-true schemes, so when I kept hearing Alan Thicke – famous for the 1980’s show “Growing Pains,” marrying a Miss World, and the real life dad to pop star Robin Thicke – pitch a tax forgiveness program, I dismissed it. I assumed it was probably another borderline-legal payday loan scheme, reverse mortgage concoction, or debt forgiveness system which prey on fiscally at-risk and naive.

The pitch was about a “Fresh Start Program” offered by the IRS which, it turns out, is a real thing. The basic tenants of the program are to allow for taxpayers to satisfy their back taxes and avoid tax liens on their property. There are three main elements to the program: first, the IRS will, in many cases, hold off on filing a Notice of Federal Tax Lien on amounts up to $10,000.00 which means a delay in the IRS attempts at collection. Secondly, the taxpayer can have up to 72 months of installment payments to pay back taxes up to $50,000.00. Longer installments or back taxes greater than $50,000.00 require some additional disclosures and scrutiny by the IRS. Finally, the program allows for the taxpayer to enter into an Offer in Compromise to pay-off back taxes for less than the amount they owe. That determination is made by the IRS if the Offer in Compromise is a better or more secure outcome for the IRS than other options.

Mr. Thicke is in the celebrity pitchman for a tax preparation company which specializes in the Fresh Start Program, but what he says about it has merit. For individuals who have gone through a lengthy and difficult divorce, they may have tax liabilities which arose before they had the financial resources to properly address them.  The IRS Fresh Start Program may be a viable option to offer some relief and stability to such individuals before they incur the adverse credit event of a Notice of Federal Tax Lien or collection attempts by the IRS. It is certainly worth exploring with your attorney and tax professional.

While reading a press release by the American Academy of Matrimonial Lawyers this afternoon, I realized individuals in the midst of a divorce regularly receive warnings about what is acceptable and safe to post on Facebook and what might get them in trouble. They also receive advice from their counsel about when it is appropriate to start dating again and when, for strategic reasons in a divorce or custody case, it might be best to wait. But what about when the two collide and people in the middle of a divorce put a profile on an online dating site? Here are five things I hope my clients never put on their online dating profiles:

1.             Pictures of your kids: While your children are undoubtedly adorable, your spouse (or ex-spouse) will have a field day in a custody case with the family photographs you put on your dating profile. Your decision to upload a picture of you with your child from last Christmas may have been completely innocent, but the other parent can easily turn it around on you, claiming you are using your children to find dates or exposing your children to internet predators.


2.             A claim you don’t have kids (when you do): The exact opposite of putting pictures of your children on your profile, if you have kids, don’t claim you are childless on your dating profile. Immediately, the other parent will claim you must not love your children if you won’t tell anyone about them.


3.             Anything about your income: If you are in the middle of litigating your income in a divorce or support case, and claiming in court that you make less than $50,000 a year, stating on your online dating profile that you make more than $200,000 per year might not be the wisest move. While it might attract people that otherwise wouldn’t respond to your profile, you will pay for it dearly in court.


4.             Stating you are divorced, or single (when you aren’t): Often times in a divorce or support matter, the date you separated from your spouse is very important. If you posted that you are single on your dating profile, weeks or months before you spouse knew your marriage was over, you may have set your date of separation unintentionally. You may have also admitted infidelity (or at least an attempt at infidelity) prior to your official date of separation, which may preclude you from collecting spousal support. To be safe, I wouldn’t put up a profile on a dating site at all until you are definitely separated. 

One of the great frustrations of practicing in the domestic relations field is trying to figure out income in a world where it can be a marital asset or an element of support.  That issue is primarily one of timing.  The law is clear that if your company pays you a bonus on January 31 and your spouse tells you “game over” on Ground Hog Day, your bonus is a marital asset.  That part can be simple.

But over the years we have evolved from a time and place where compensation consisted of salary and a bonus to one where a paystub reads like the Dresden Codex (an anthology of Mayan astronomical tables).


I write this having just devoted more than half an hour to reading and interpreting two paystubs from folks who are each employed by Fortune 200 companies.  Yes, we had salary, commission, vacation time, etc.  But, one paystub incorporated more than $100,000 of payments under the titles: ECC Disc Incentive; Long Term Cash Vest; RS Unit Vesting; and RSS Vesting.

In each case I am forced to ask what these things mean; when they were granted; when they were paid and whether they are recurring.  My client’s pay history was a little simpler but still had restricted stock.  The happy news is that it appears that all compensation was reflected on a year to date basis.  Last week I dealt with a company that paid commission by separate check but then incorporated the payment in year-to-date earnings.  So the client handed me six months of pay advices each of which showed a $1500 gross but the year to date income total after nine months totaled more than $90,000.


I appreciate the need of American management to “incentivize” all of us.  But these systems make the work of the courts expensive, time consuming and error prone.  If you look at your own pay advice and can’t figure out what SDI/SUI Tax is being extracted or you don’t know what GTL imputed income is, take heart.  You are not alone.  But if you want to save yourself some attorneys fees get your stub.  And call someone in the human resources department to get your “key” to what it all means before you send your lawyer your most recent paystub.


N.B. SDI/SUI is unemployment and disability income tax. GTL is life insurance you get through your company that exceeds the thresholds for free insurance the government says you don’t get taxed on.

Leslie Spoltore, a partner in our Wilmington, Delaware office, just posted a blog entry on an unusual alimony argument made on appeal to the Delaware Supreme Court.  The family court evaluated the ex-wife’s expenses when calculating alimony she would pay to her ex-husband and reduced the significant contributions she made to her church down to what it deemed a "reasonable" amount of $100.00.  The Court considered it a voluntary reduction in income. This is not unlike how Pennsylvania’s courts add back, for instance, voluntary contributions to 401(k) accounts when calculating child support and alimony pendete lite. 

On appeal, the ex-wife claimed that the Court’s assessment of alimony based on their consideration of her available income resulted in her inability to appropriately tithe her church and violated her First Amendment freedom of speech.

It is an interesting and creative argument, but did not carry her case and the Supreme Court ruled the family court could consider any factor it deems appropriate and nothing prohibited her from contributing as much as she would like to her church.

Read Leslie’s blog entry and link the decision here.