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Anti-Business, Freakish Divorce Laws Result from Too Many Lawyer-Legislators

The head of the Virginia bar association is concerned because Virginia, which once had the highest percentage of lawyer-legislators in America, now ranks behind New York and Massachusetts and on par with New Jersey. Although I am a lawyer myself, I view this as cause for celebration, because the more lawyers are in a state legislature, the more unfair a state's divorce laws tend to be, and the more anti-business they tend to be. The states with the weirdest, most lawyer-intensive divorce laws are New York, New Jersey, and Massachusetts -- states with lawyer-heavy legislatures. (Given the ideology of my classmates at Harvard Law School, this doesn't surprise me).

The New Jersey courts recently ordered a man to pay alimony to an ex-wife who killed his child, despite public outcry, in Calbi v. Calbi. Its lawyer-dominated legislature won't do anything about this, although it regularly rewrites the state's divorce laws to enrich divorce lawyers and harm husbands and fathers.

The Massachusetts courts typically set child support levels for middle-class families at 25 percent of a father's gross income (that is, more than a third of his net income) for just one child, even though that vastly exceeds the actual cost of raising a child. Mothers commonly assign a portion of those child support payments to their lawyer in exchange for squeezing the money out of the father, which takes a lot of court motions filed by the mother's lawyer, since the father often has difficulty paying such a huge amount out of his own pocket, and the threat of being held in contempt of court (and imprisoned) is thus necessary to make him borrow the necessary money from his parents or second wife (note that most divorces are no-fault divorces sought by the wife, not the husband).

The New York courts treat your potential lifelong professional income as "property" that can be awarded immediately on divorce to your ex-spouse, under the theory that the income couldn't have occurred if you hadn't acquired a professional license or credential during the marriage, like a law degree, or even a routine real estate or securities license. As New York Court of Appeals Judge Robert S. Smith noted in a recent dissent in Holterman v. Holterman (2004), no other state follows New York's bizarre rule that income potentially earned from a professional license is marital property even if no business has yet been created as a result of the license.

Virginia is not as bad as New York, New Jersey, or Massachusetts, but it does have the weirdest case law on alimony in the entire southern United States. In Bristow v. Bristow (1980), the Virginia Supreme Court overturned a lower court's refusal to award lifetime alimony to a wife who sought a no-fault divorce after just weeks of marriage, ruling that the trial judge could not deny alimony without making extensive findings, even after such a brief marriage, even though state law explicitly lists the duration of a marriage as a factor in whether to award alimony. (By contrast, in many states, like California, there is a judicial rule-of-thumb that alimony should not last longer in years than the length of the marriage).

The Virginia Supreme Court's "generosity" with other people's money was selective and discriminatory. That same year, in Counts v. Counts (1980), the state supreme court barred a man from suing his ex-wife for deliberately maiming him, applying the now-defunct doctrine of "interspousal tort immunity," even though Virginia circuit judges previously allowed ex-wives to sue their husbands for any domestic violence under an "intentional tort" exception to that immunity. The state supreme court barred the ex-husband's suit even though it had earlier (rightly) allowed an ex-wife's estate to sue the ex-husband who murdered her in Korman v. Carpenter (1975). (In response to public outcry, the legislature eventually abolished marital tort immunity).

Why does divorce law matter economically? Because divorce cases outnumber any other category of civil case in state courts (nearly half of the docket of the Virginia Court of Appeals is made up of family-law cases), and redistribute far more money from any other category of case -- and because decisions by divorce courts on how to set alimony and child support payments can be potent disincentives to setting up a small business, as I explain below. (By the way, since I'm sure you're wondering, I am happily married, never-divorced, and have no kids with anyone but my wife).

The Virginia Bar president claims that legislative drafting errors are the result of non-lawyers sitting in Virginia's legislature. That argument is ironic, wrong, and contrary to recent history. It is lawyers who are responsible for much of the botched legislation in the Virginia General Assembly.

It was a senior lawyer/legislator from Tidewater, Virginia who was responsible for the most famous legislative drafting error in Virginia history -- the failed rewrite of Virginia's blue laws that so botched the law (potentially costing businesses millions) that then-Governor Mark Warner had to call the legislature back into special session to fix it, at a cost of hundreds of thousands of dollars to taxpayers. The state senator responsible for that botched legislation intended to achieve the exact opposite of what his bill actually achieved, thanks to lousy drafting.

The large number of lawyer/legislators in Virginia may be one reason its courts do more to promote divorce than most surrounding states: That creates more work for divorce lawyers, including the divorce lawyers who sit in the General Assembly. (Most Virginia judges are picked by the legislature; governors only make recess appointments).

That may be why Virginia courts do things that are economically inefficient and unfair, like allowing awards of permanent alimony even after very short marriages (Bristow v. Bristow, 1980), then constantly allowing the alimony levels to be reset based on upward changes on the paying spouse's income (Conway v. Conway, 1990), but not downward changes (Antonelli v. Antonelli, 1991), and allowing child and spousal support levels to be set based not on what the paying spouse actually makes (which would be an easy mechanical calculation that would not require any lawyer time or attorneys' fees to compute), but rather based on higher, hypothetical (and sometimes arbitrary) estimates of what the paying spouse could make ("imputed income"), as in the cases of Cochran v. Cochran (1992), Antonelli v. Antonelli (1991), and Auman v. Auman (1995).

Setting support levels based on hypothetical rather than actual income results in lots of argument between opposing lawyers about what the hypothetical income should be, generating work for lawyers at the expense of the paying spouse. Similarly, allowing permanent alimony based on very short marriages results in lots of demands for such alimony by wives, and lots of arguments by their lawyers, even though such demands are often rejected anyway by the courts, based on statutory factors other than the length of the marriage.

Virginia's divorce laws are an impediment to small business creation by divorced people, who comprise more than a million Virginia residents. (Virginia gets a high rating from the Institute for Legal Reform for how fairly it treats businesses, but in reality, it's really Virginia's fair-minded juries -- not state judges -- who make Virginia a fair forum for many business disputes).

As prominent divorce lawyer Richard Crouch once noted, Virginia courts employ a "heads-I-win, tails-you-lose" approach to people who try to start small businesses.

If you leave a steady salaried job in order to try to set up a small business, and it succeeds, increasing your income, you will have your alimony and child support payments increased over their prior levels. (Conway v. Conway, 1990).

But if the business fails (as most small businesses do), resulting in your income falling below its prior levels, the courts will force you to pay alimony and child support as if you were still making the higher income you made at your prior job, rather than at the income you currently make (Antonelli v. Antonelli, 1991).

I have often used gender-specific words such as "father" and "husband" to describe those who pay alimony and child support in my above discussion, even though state laws do not prevent judges from giving a father custody of the children or awarding support to the father. I do that because, in practice, it is usually the husband and father who pays them, and the law is not applied in a gender-neutral fashion, as Virginia attorney Richard Crouch observed in a 1992 article in Family Law News. (For example, the Virginia Court of Appeals denied alimony to a father even though his ex-wife made five times what he did, and he was the caregiver for the couple's children, and instead ordered him to pay his ex-wife 40 percent of his meager disability pension, in Asgari v. Asgari [2000]. It is hard to imagine a similarly-situated ex-wife not receiving alimony for at least a few years).

In my earlier post,"The Economics of Divorce"(Dec. 4, 2007), I explained how faulty economics and legal ignorance are behind the misguided push to increase child support guidelines in states like Virginia.