For the big city perspective, we interviewed a Manhattan-based attorney, Doug Kepanis. For the "rest of the state" perspective, we interviewed Bruno Colapietro in Binghamton.
Bruno Colapietro graduated from Cornell Law School in 1960 and served as an adjunct professor there from 1970-1999. He has a credible "seen it all" demeanor after more than 50 years of handling divorce lawsuits. When we interviewed this grandfather of 10, he said that he was "still playing ice hockey at 79. Haven't missed a game in 26 years." [Note to young readers: becoming a divorce litigator may keep you young!] Most of Colapietro's career was spent while New York was under a "fault" regime, but told us that "in 2010 the Legislature passed a statute saying that if you were unhappy for past 6 months and swear to it that's all you have to do to get a divorce. We're now in line with rest of states when it comes to [no-]fault." Colapietro is now Of Counsel at cglawoffices.com.
Doug Kepanis runs his own firm, The Kepanis Law Firm, in Manhattan. He is a lifelong New Yorker who practices both in New York and New Jersey. He is best known for his contributions to the Huffington Post and FOX News. Kepanis also appears in the 2014 movie "Divorce Corp." which he says was "pretty accurate in terms of my experience with bad judges, but they are showing extreme cases."
Kepanis handles a 60/40 mix of male and female clients in cases that "hardly ever" go to trial, only about 1 per year. Kepanis charges $450 per hour and tries to keep his fees to within $75,000 per case. However, New York is one of the more expensive jurisdictions in which to litigate and Kepanis is familiar with cases that consumed more than $3 million in legal fees.
What motivates divorce in New York? "A person's decision to divorce is primarily financial. Of course there are people who are concerned about the kids, but they are not very common. Sad to say it is all about money here in the U.S."
As in other states, there is little practical right of appeal in New York. "The appeals court is almost a rubber stamp," says Kepanis..
New York is a true winner-take-all state. Unless the plaintiff and defendant agree on joint custody, a judge will award sole custody to one parent, reducing the other to an every-other-weekend visitor. Thus the children will be with one parent 83.3 percent of the time (Kepanis says that a typical visitation schedule is for the loser parent to see the kids from Friday afternoon through Sunday afternoon, with a two-hour mid-week visit). With ownership of the children will come a guaranteed stream of child support, roughly half of the loser parent's after-tax income in the case of two children. Ownership of the children also will tend to result in exclusive use of what had been the marital home, at least until the children turn 21.
Thus judges are forced by statute and custom to choose a winner between a man and a woman. Whom do they choose? Kepanis says that "In theory there is no longer a preference for the mother. So the outcome should depend on expert witnesses and child psychologists, which is another way of saying that it is just going to be a mess. In practice the playing field is not equal. The mom will usually get the custody at the trial. Judges are usually older and they are used to the way things were back in the day, with the mom being the primary caretaker of children. No guarantee though."
Another New York litigator said "It was a lot better for people in the old days when the mother was the guaranteed winner. Today a couple will spend $1 million in fees on lawyers and experts because in theory the outcome is not determined. In practice the mother will get the kids and the father will become an every-other-weekend visitor, but the judge is supposed to pretend that he or she is keeping an open mind until the trial. Families in New York would save a lot of money and time if the Legislature would just clarify that the mother will get the kids unless she is incarcerated."
A child support plaintiff in New York can collect money every month until the child turns 21. In theory the formula is very simple: 17 percent of the loser parent's pre-tax income for one child, 25% percent for two children, 29 percent for three children, 31 percent for four children, and "no less than 35 percent for five or more children." Illustrating the importance of consulting with an attorney rather than relying on official materials, the child support standards chart for 2016 (https://www.childsupport.ny.gov/dcse/pdfs/CSSA.pdf) states that "Where the total income of both parents exceeds $143,000 the law permits, but does not require, the use of the Child Support Percentages in calculating the child support obligation on the income above $143,000." Can a judge do whatever he or she wants? Will there be a consideration of a child's actual needs? Is there a practical cap of $24,310 per year ($510,510 total) in child support revenue? The answer turns out to be "no."
Colapietro told us that a judge would tend to apply the percentages to an income of at least $360,000 per year, resulting in payments of $61,200 per year ($1.29 million total). The $360,000 number was used by the Supreme Court of the State of New York in handing down a decision in the Dorscher v. Dorscher case (March 16, 2016). The wife sued her husband after 5 years of marriage and the litigation lasted for at least 13 years:
The parties were married on June 6, 1998, and had one child, born in November 2000. During the course of the parties' marriage, they lived a luxurious lifestyle, almost exclusively funded with the defendant's earnings as a successful Wall Street bond trader. Upon the parties' agreement, the plaintiff, who had only a high school diploma, quit her job at a textile company shortly after becoming pregnant with the parties' child so that she could care for the child. On May 16, 2003, the plaintiff commenced this action for a divorce and ancillary relief. Following a trial in 2008, a mistrial was ordered due to the death of the justice presiding over the matter at the time, who had not yet rendered a final determination. A new trial was held before a newly assigned justice who, inter alia, adopted the valuation of certain assets of the defendant contained in a judicial hearing officer's report dated March 31, 2011, distributed the marital property equally, and awarded the plaintiff maintenance, child support, counsel and expert fees, and prejudgment 9% statutory interest on her distributive award. The defendant appeals.
On top of the unspecified alimony ("maintenance") and all of her litigation costs, the plaintiff secured $102,000 per year in child support for the single child, but it was dialed back to $61,200:
Here, although the Supreme Court enumerated the factors it considered in determining the child support award, those factors, on this record, do not support basing child support on $600,000 of the defendant's annual income, which is $464,000 more than the $136,000 statutory cap. Specifically, there was insufficient evidence in the record supporting the plaintiff's claims regarding expenses for the child's clothing, recreation, and miscellaneous items. Therefore, in considering the relevant factors enumerated in Domestic Relations Law § 240(1-b)(f), and the child's actual needs and the amount that is required for the child to live an appropriate lifestyle, the defendant's child support obligation should have been based on $360,000 in annual income. Accordingly, after applying the 17% statutory percentage for one child (see Domestic Relations Law § 240[1-b][b][i]), the plaintiff should have been awarded the sum of $5,100, rather the sum of $8,500, in monthly child support.
Note that the modification of child support occurred a few months prior to the child's 16th birthday.
In theory New York has an "income shares" child support system in which both parents are required to contribute something and in which income would be imputed to a non-working parent. Here, however, the defendant was responsible for 100 percent of the costs of the court-determined child support. This is in line with the traditional New York system that child support doesn't depend in any way on the winner parent's income. In theory, a person earning $10 million per year as an investment banker could obtain 50 percent of a schoolteacher's after-tax income as child support. Does it really happen? "All the time," says Kepanis. "The woman will say 'I'm entitled to child support under the law so I will take it.'"
New York statutes permit a court to order the parent paying child support to pay for private school and/or college in addition: "Where the court determines, having regard for the circumstances of the case and of the respective parties and in the best interests of the child, and as justice requires, that the present or future provision of post-secondary, private, special, or enriched education for the child is appropriate, the court may award educational expenses. The non-custodial parent shall pay educational expenses, as awarded, in a manner determined by the court, including direct payment to the educational provider" (DRL 240 1-b(c)(7); FCA 413 (1)(c)(7).)
A parent need not perform any hands-on child care in order to receive child support: "Day care/child care, as well as unreimbursed medical expenses, are paid for by both parents on a pro rata basis (of their income)," says Kepanis. Because "income" doesn't include child support, if the parent receiving child support doesn't work, he or she would incur no cost from enrolling a child in full-time daycare.
Typically a child's preferences regarding where to live will be taken into account when a child is about 13 years of age, though Kepanis says that a "law guardian" will ask children of all ages about their preferences. Note that "law guardian" is the New York term for what in other states is called a Guardian ad Litem or sometimes a "custody evaluator."
A "walk-away" prenuptial agreement, in which neither party can profit from property division and alimony via a marriage, is valid in New York: "As long as both parties agree and were represented by attorneys, it should be fine as a freely bargained contract," says Kepanis. To avoid the potential for a challenge that the agreement was signed under duress, Kepanis says "The prenup should be signed at least three months prior to the wedding and probably longer." As in other states, the prenuptial agreement cannot bind a court regarding child support and custody. Given the high stakes for both custody and child support in New York, therefore, a prenuptial agreement probably won't do much to streamline the typical divorce lawsuit.
Colapietro's perspective on prenuptial agreements was similar: "both sides should be represented by attorneys. The agreement has to be somewhat fair. I like to put in that, after five years of marriage, the wife gets some maintenance. Remember that alimony comes from the Latin 'to succor.'"
The average hourly wage in New York is $25.76 per hour. A person who goes to college at the SUNY, Albany will spend approximately $95,300 over four years to earn a bachelor's degree. Census 2014 data show that median income for a 22-36-year-old college-educated woman working full time is $47,000 per year ($35,182 after taxes). The corresponding man earns $53,000 per year ($38,836 after taxes). New York is the highest tax state in the Union, collecting 12.7 percent of state residents' income to run state and local government (Tax Foundation).
The average annual cost of child care is $14,009 for an infant, $11,585 for a four-year-old, and $10,962 for a school-age child. Thus the total cost of child care from age 0 through 12 is $85,793 in commercial settings or $$69,539 in a family care setting.
For a man who goes to college and then works for 17 years, his total after-tax spending power would be approximately $564,912 (17 years of average earnings minus college outlays). After adjusting for USDA-estimated costs of caring for a single child, he will have a higher personal spending power by collecting child support of $2,885 per month or more. He can get this by suing a woman earning $203,647. If can obtain custody of two children from two different mothers, he can come out ahead compared to the college/work scenario when each mother pays at least $1,764 per month. He can get this by suing mothers who earn at least $124,517 per year.
The corresponding woman would be able to spend $502,794 if she chooses college and work. She's better off by collecting child support of $2,638 or more per month. She can get this by suing a man earning $186,212 per year. With two children from two different fathers, she needs $1,642 from each defendant. Each must earn $115,905 per year.
Taking care of one's own child is much more lucrative in New York than taking care of someone else's. If you're a foster parent in Manhattan, the state will pay you roughly $7,300 per year to take care of one child. Outside of the NYC Metro area, the pay rate is $6,850 per year.
"NY court approves extended jail for child support non-payments" (Associated Press, June 7, 2016) says that "State law generally limits Family Court to imposing single six-month sentences [for overdue child support]" but that, as a result of a ruling by "New York's highest court," a defendant could be ordered to serve three consecutive sentences, 1.5 years of imprisonment.
Among residents surveyed by the U.S. Census Bureau in March 2014, 91 percent of those collecting child support were women.
A 35-year-old female hand surgeon earning $325,000 per year marries a 33-year-old photographer. She sets up her husband with a photo studio and $100,000 of equipment, but he works just a few hours per week. They have a one-year-old child who is cared for by a nanny. The father is often home with the baby and nanny, but he spends most of his at-home time watching TV and surfing the Internet, leaving the child-rearing chores to the nanny. With the mom at work and/or taking care of the baby, the dad begins an affair with a young fashion model. After two years of marriage, the mom sues for divorce, custody, and child support.
The Manhattan perspective from Kepanis: "It will be hard to prove that husband doesn't do anything. A court will more likely give custody to the person who can stay home. The court would rather have a parent home with the nanny. The affair doesn't matter unless he is with the fashion model in front of the kid. I could see the dad having primary residential custody because he is home. The mother may have liberal visitation." What's "liberal"? "One night during week, every other weekend, maybe two nights mid-week during some weeks."
If the mother winds up losing custody she may have to pay the father over $50,000 per year for the next 20 years, roughly $1.1 million tax-free. That's based on 17 percent of $325,000 per year in income, minus FICA and Medicare taxes.
The mother will have to pay the father's legal fees: "There is a rebuttable presumption that she will have to pay due to the discrepancy in income. This is hard to rebut."
The mother will have to pay what would be called "alimony" in other states. "They've changed the term to 'maintenance' here in New York," says Kepanis, "because they felt that 'alimony' was mostly for women." Due to the length of the marriage, however, it won't be significant compared to the potential profits from child support: "For alimony purposes there will be some income imputed to him. With a two-year marriage the alimony would be only six months."
Colapietro brought a different perspective from Binghamton. He thought that the mother would get custody because "we are philosophically riding along with the typical judge's concept that mothers are the ones principally raising the children and that should continue post-divorce. The child would be better off with the mother." If the mother won the "primary physical residence" fight, what would the child's schedule be with the father be? "You're looking at every other weekend (Friday to Sunday) plus there could be an overnight Wednesday except during the school year when it would be 5-8:30. Holidays would alternate. Summer vacation probably two weeks but not consecutive. If the mother is still nursing, there would be less time with the father. Judges' general experience is that fathers are not too interested taking care of a 1-3-year-old."
A 22-year-old woman marries her 22-year-old college sweetheart. After 14 years of marriage, they have four children, ages 3, 7, 9, 13. Both parents are public school teachers earning approximately $65,000 per year. They have shared child care duties roughly equally over the years. Now they can't stand to be in the same room together. He accuses her of having an affair. She accuses him of being verbally and emotionally abusive to her, but not to the kids. After a stormy argument in the kitchen, he moves in with a friend and she files for divorce, requesting sole custody and child support. The father answers the Complaint by requesting sole custody, but no child support. Both parents agree that the marital assets can be split 50/50. Both parents prefer as little post-divorce contact with the other as possible.
Where another state might say "You may not get along with each other but you are simply going to have to share these children" New York says "Let's have a huge lawsuit and trial so that we can decide who will win the kids and 31 percent of the other parent's pre-tax income."
Kepanis says that it is hard to predict who will be the winner from this dispute, except that the mother is more likely the winner simply due to her sex and the prejudice of judges, especially older judges. Colapietro agreed: "the court won't award 50/50 unless there is a request from someone. A mother that is working is also typically more involved with the children. There is still a prejudice among judges in favor of mothers." Did Colapietro see anything wrong with that prejudice? "No. It is a big job taking care of children and women deserve to be paid for it." Colapietro thought that there was at least some possibility of a split custody decision, with a subset of the children having a different primary residence from the remainder.
Note that in a state where taxes can be close to 50 percent of income, the loser parent will be left with less than 50 percent of his or her former after-tax income. With $65,000 in gross annual income, for example, a New York City resident filing singly would have after-tax income of approximately $44,000 per year (ADP Paycheck Calculator). After paying $20,150 in child support for the four children, the loser parent would have $23,850 to spend. The winner parent filing as head of household would have approximately $48,500 after taxes, plus the $20,150 in child support for a total of about $68,650 after taxes. [Note that the loser parent's $23,850 in annual after-tax income is below the poverty guideline for a New York City family of five and therefore it is unlikely that the loser of the divorce lawsuit would be able to host the children in his or her home, even on an every-other-weekend basis.]
An 18-year-old woman marries a medical resident. She spends the first four years of the marriage as a college undergraduate, earning a bachelor's degree, and then becomes a stay-at-home mother to two children. She files for divorce after 10 years of marriage. The kids are 5 and 2 years old at the time the divorce commences. The plaintiff does not allege any misdeeds on the part of the father, only that they drifted apart in the time that she aged from 18 to 28. The mother has very obviously been the primary caregiver. The father has now completed his medical training and is earning $275,000 per year. The family has home equity of $300,000 and additional savings of $200,000.
"This will be automatic custody to the mom," says Kepanis, "with standard visitation for the father. What is interesting about this case is that she can get a percentage of the value of his medical degree and the enhanced earning power that comes with it. She'll also receive a share of the value of his medical practice. He will pay 25 percent of his pre-tax income, after FICA and Medicare deductions, in child support [About $68,000 per year]." Colapietro pointed out that the father would also pay for "a pro rata share of work-related or education-related child care and any health expenses." (Unless the mother here gets a high-paying job, the father's pro rata share would be close to 100 percent.)
Colapietro agreed regarding the medical degree valuation: "New York has a concept if you've spent part of your education during the marriage and achieved a degree or a license as a result, with some voodoo economics you can determine the value of this education to him and she gets a piece of it. The Legislature is now trying to get rid of this because it is voodoo. Courts have gone so far as to ponder questions regarding opera singers and football players. It goes back to the Roman system of looking at entrails. Although there is no guarantee a defendant will work until age 65 he has to pay for those anticipated earnings. I call it the economic recovery act for [expert witness] accountants." What does Colapietro propose as an alternative? "The extra income from the education should just be part of alimony."
Colapietro also agreed on the custody outcome: "She'll get primary residence with standard visitation to the father. There could be some extra for the father, e.g., a ballgame."
How about property division? Kepanis: "Property division will be 50/50 but she can argue for rent-free exclusive use and occupancy of the marital home until the children graduate from high school [i.e., at least 16 years of rent-free living]. A forensic accountant will value the doctor's practice. She might settle for 15-20 percent of the practice. She'll also get a piece of his medical degree, asking for 50 percent but typically settling for less." Colpietro agreed: "She wouldn't usually get a larger property share. If there is a marital home, the court can give it to the mom until the last child turns 21." What incentive does she have to maintain the house? "It does happen that the house falls apart shortly after the child's 21st birthday. There is usually a provision for a walk-through once per year."
How will alimony work here? "Alimony will be for 5-6 years, certainly until both kids are in school and she can get back in the workforce. It would be longer if she were older and, in fact, could be lifetime alimony, e.g., if they got married at age 40 and divorced at 50. There is a formula for temporary alimony but none for post-divorce alimony calculations. The Legislature is working on that. It is all based on argument and a question for the judge at trial. I would guess that alimony will be about $1,000 per week." [So the doctor would be paying $52,000 per year in pre-tax alimony plus $68,000 per year in after-tax child support out of his $275,000 per year salary. Using the ADP Paycheck Calculator assuming that he is a New York City resident, this leaves the doctor with about $65,500 per year, after taxes, to spend on himself and/or on a new family.]
A 25-year-old woman marries a 40-year-old never-married medical doctor earning $275,000 per year. She had been earning $50,000 per year working as a receptionist in a medical office. She has a child after a year of marriage, quitting her job during the 7th month of pregnancy due to fatigue. She files for divorce when the child is 8 months old (after 1.75 years of marriage), alleging that the father did not participate in the infant's care, e.g., he did not change diapers or get up in the middle of the night to soothe the baby. The mother will allege that the father was verbally demanding and abusive, though there won't be any witnesses to corroborate. The father had savings of $2 million that he accumulated prior to the marriage but there was no significant accumulation of assets during the less-than-two-year marriage. The mother seeks a division of assets as well as alimony.
This was an easy one for Kepanis: "She'll get custody. The breastfeeding schedule will result in no overnights for a year. The $2 million is off the table. She will probably succeed in limiting him to supervised visits. There will never be joint custody if one parent refuses to cooperate. If the man wants to be more involved as a father his only legal option really is to try to get custody to him instead of to her."
The mother will receive more than $50,000 per year in child support, but alimony only for the duration of litigation, according to Kepanis. Doesn't that give her a big incentive to drag the case out? A lot of Massachusetts cases take 3-6 years to get to trial, even if the attorneys on both sides are reasonably diligent. "She will benefit from dragging it out, but if a judge senses that he may rush the case to trial. In theory a case can get to trial just 7 months after being filed."
Colapietro thought that in his jurisdiction things would go a little differently. The mother would get alimony until the child was in school. He thought that her access to premarital savings would be through a child support percentage on the income from those assets over a 20-year period.
An 18-year-old woman goes to a music festival and meets a 38-year-old medical doctor earning $275,000 per year. Things get a little crazy and a few months later she calls him up to say "I am going to have a baby." The 18-year-old does not go to college, quits her $12/hour job during the pregnancy, and does not wish to return to work.
Kepanis handles roughly two cases per year like this. "The Court will not hear a case until the baby shows up. Unless he goes to court, she will have custody. But if she wants child support she will need to go court. She is best off waiting a couple of months before filing suit because then she can establish a pattern of caregiving and therefore obtain certain custody. The only thing the man can do is contest paternity." Colapietro agreed: "She wins custody unless she is a drug addict."
Does that mean she is giving up 2-3 months of child support in order to guarantee victory? "No," said Kepanis. "She will get all of her back expenses and child support." Colapietro thought that her retroactive child support claim would go back only to the date of the petition.
Kepanis commented on the scenario's premise that the mother does not wish to return to work: "Well, who does?"
The mother here will collect $46,750 per year in tax-free child support. What if the mother gets married at 25 to a man earning $100,000 per year? "Child support is based purely on the paying parent's income. It does not matter that she remarries. This mother could grow up into a Goldman Sachs partner and her.child support would not be reduced."
The bottom line for Kepanis: "Get a vasectomy if you're a male investment banker in New York." ("Hedge Funder Offered $75,000 to His Girlfriend for Abortion" (Yahoo Style, December 11, 2016) describes litigation that followed Elmira Naymark's pregnancy with a boyfriend who apparently did not follow Kepanis's advice. The referenced New York Post article says "In addition to child support, Naymark is seeking a paternity test, full custody of the girl, health insurance for the baby, funding for private schools and summer camps, and a $5 million life-insurance policy listing herself and their daughter as beneficiaries.")
Due to the fact that child support amounts are calculated on pre-tax income, New York puts some people in quirky situations. One lawyer noted "The system is designed for people who marry just once and the marriage lasted for 15 or 20 years. The man moves to a studio apartment while handing over most of his income to his former family. He will then work until his death to pay alimony for a perpetual dependent. But in the world that we live in women become plaintiffs after a year or two of marriage or sometimes after just a brief encounter in a bar. A man paying 29 percent of his income to one woman, 25 percent to another, and 17 percent to a third doesn't have enough to pay taxes, much less any personal living expenses."
We emailed Kepanis to ask what happens in this situation and he responded with the following:
The statute recognizes the prospect that the annual amount of the basic child support obligation may reduce a non-custodial parent's income below the federal poverty level. Where that happens, the basic child support obligation is $25 per month or the difference between the non-custodial parent's income and the federal self-support reserve, if greater. If the non-custodial parent's income would be reduced below the self-support reserve, but not below the poverty level, then the basic child support obligation is to be $50 per month or the difference between the non-custodial parent's income and the self-support reserve, whichever is greater. However, notwithstanding the language of New York's Child Support Standards Act, an indigent parent is entitled, under federal law, to the opportunity to rebut the imposition of even a $25 per week award. 11 N.Y.Prac., New York Law of Domestic Relations § 16:30
Due to the fact that alimony and child support obligations cannot be discharged or reduced in bankruptcy, there is little opportunity for a New York defendant to recover financially. On January 24, 2014, the New York Times ran an article "A Lawyer and Partner, and Also Bankrupt" about Gregory M. Owens, a 55-year-old partner at one of the world's most prestigious law firms, White & Case. According to the Times, Owens earns about $375,000 per year, but "Legal fees from a divorce depleted his savings and resulted in a settlement under which he pays his former wife a steep $10,517 a month in alimony and support for their 11-year-old son." Owens had reduced his spending on an apartment, food, and transportation to about 11 percent of his pre-tax income, but he was still going into the red each month. He ended up filing for personal bankruptcy. "He has gone back to [the family court] to get some relief from his divorce settlement, so far without any success," noted the Times.
As with other states, children of the same parent will have different cash values depending on the sequence in which that parent has been sued for child support. The co-parent of the first child is entitled to 17 percent of the defendant's income. The co-parent of the second child is entitled to only 17 percent of the remaining 83 percent. The co-parent of the third child is entitled to only 17 percent of the remaining 69 percent. At this point the defendant has been reduced to poverty by a combination of child support orders and taxes. A fourth plaintiff would be unable to collect anything for a fourth child, even if the previous three plaintiffs had all married into households with high incomes. (Can this be relevant in real life? See "Professor who donates sperm in city bathrooms has sired 22 kids" (New York Post, June 12, 2016): "The first five women he worked with [as a sperm donor] successfully sued him for child support…")
New York provides superior financial security for divorce and child support plaintiffs than for married spouses. Suppose a stay-at-home mom takes the four kids up to Maine for a two-month summer vacation while the husband remains in New York City. Unbeknownst to her, this man, on whose income she is relying, has a drinking problem. He spends most of those two months hanging out in bars and, while drunk, gets three women pregnant. They file child support lawsuits and, by the formula, are awarded essentially 100 percent of the man's after-tax income. The man's wife and four previous kids are now left with no financial support.
As with other states, it is more profitable to have three children with three different co-parents than to have three children with one parent. Assuming defendants earning $360,000 per year, three kids from the same co-parent are worth $2.19 million, tax-free, over a 21-year period. Three kids from three different co-parents, however, have a cash value of $3.86 million.
As in some other states, divorce litigation can potentially last until one or both former spouses are dead. After nine years of marriage Patricia Cohen sued her husband, Steven, in 1988 and obtained millions of dollars via property division, alimony, and child support. The divorce was nominally "final" in 1990. Patricia re-opened the litigation starting in 1991, however, and it continued at least through 2014 in both state and federal courts. Steve Cohen founded a hedge fund in 1992 that made him a billionaire, creating a large enough target to attract professional litigation investors. From the New York Times, November 25, 2014:
Helping to fuel the long-running legal battle is Asta Funding, a financial backer of a Beverly Hills, Calif., firm that has provided litigation financing to Ms. Cohen, according to court documents and people briefed on the matter. Asta and the firm that is financing Ms. Cohen’s lawsuit — Balance Point Divorce Funding — have an agreement to share in the proceeds of legal recoveries by clients.
Balance Point, founded in 2009 by Stacey Napp after her own acrimonious divorce, signed a deal with Ms. Cohen in the summer of 2013 to provide Ms. Cohen with about $1.2 million to continue her litigation, said people briefed on the matter but not authorized to speak about a private transaction.
While the specific terms of Balance Point’s arrangement with Ms. Cohen could not be determined, court filings in an unrelated lawsuit reveal it is common for Balance Point to get up to 25 percent of any legal recovery by a client in return for the financing provided.
Balance Point is part of a niche business that provides financing in drawn-out matrimonial cases to litigants with wealthy spouses. Only a handful of companies provide such financing in the United States.
"This is a case to restore faith in the old-fashioned idea that divorce is something that lasts forever," wrote the federal court judge, William Pauley, in January 2014.
Due to the large number of observant Jews who live in New York, the state is a place where civil and religious law intersect and conflict. "In Orthodox Judaism, the wife who wants a divorce has to negotiate with her husband some sort of compromise so that he provides her with a 'get'," explained a rabbinically-trained Jew. "At the same time, if he wants a divorce, at least under Ashkenazi Jewish law, he has to obtain her consent. Essentially Jewish law requires people to negotiate and, if that were to fail, to mediate, traditionally with the assistance of a rabbi." Does that mean that the husband can hold up a divorce indefinitely? "He isn't allowed to withhold the 'get' unreasonably but at the same time he wouldn't have to give it to her if she demands the house, the kids, all of the family's savings, and most of his income going forward. Jewish law specifically requires that for a 'get' to be valid it must be given by the husband 'out of his own free will.'" If they were to settle under Jewish law and then go to civil court, wouldn't that be just like a mediated divorce? "Yes," continued the expert, "but suppose that she insists on everything that she can get under the civil law. She goes to the family court for a unilateral no-fault divorce and gets the standard New York package of the house, the kids, and all of the money except what the guy needs for a studio apartment in Brooklyn. Now she's divorced in the eyes of New York but, without the 'get', won't be able to find an Orthodox rabbi to marry her to anyone else." How does the impasse get resolved? "The wife can take some of the money she got from winning the civil lawsuit against her husband and hire shtarkers [Yiddish term for "strong" or "thug"] to beat up the husband until he agrees to give her the religious divorce." (The New York Times ran a story about this practice on October 10, 2013, "U.S. Accuses 2 Rabbis of Kidnapping Husbands for a Fee": "[the defendant in a criminal lawsuit] orchestrated the kidnapping and torture of reluctant husbands, charging their wives as much as $10,000 for a rabbinical decree permitting violence and $50,000 to hire others to carry out the deed, … 'They beat them up, tied them up, shocked them with Tasers and stun guns until they got what they want,' Mr. Gribko, an assistant United States attorney, said. ... A neighbor, Rose Davis, who lives opposite [the defendant's] home in the Kensington section of Brooklyn described him as a respected figure. Ms. Davis said she was skeptical of the charges, and suggested they might be the concoctions of enemies he had made as an expert in divorce work: 'There’s always a loser,' she said, referring to divorce cases.")
How easy is it for a parent to move out of state with a child? Kepanis: "The parent seeking to move out of state will have to show that it is in the best interests of the child and that includes showing that it won't interfere too much with visitation." Is there any concept in New York comparable to the "real advantage for the custodial parent" standard in Massachusetts? "No. It is all about the child in NY. It is a hard standard to meet."
Colapietro agreed: "You have to show that life of the child will be improved by virtue of the move. One factor that is very important is contact with the other [loser] parent during time living in the same area. Although a new spouse with a high income from a job in another area is an important factor, courts are loathe to allow moves and will sometimes make the parent that moves pay for a child's expenses in returning 2-3 times per year." What would the process look like? "A removal trial would last for 1-2 days. Our judges don't want to hear from experts. Downstate [in New York City] they have psychiatrists testify for 10 days. With all the money being spent you could send the kid to college."
New York may limit child support to some extent from its own courts but there are no limits when New York courts apply orders from other jurisdictions. For example, one of the wealthiest women in the world, Annabelle Bond, daughter of the former head of HSBC Bank, got an initial order from a Hong Kong court for approximately $600,000 per year in child support for a 5-year-old girl. The father, Warren Lichtenstein, a Wall Streeter who briefly dated Ms. Bond, was ordered to pay according to this order by the Manhattan Supreme Court in July 2014. Bond successfully portrayed herself as a low-income Gulfstream passenger by characterizing millions of dollars given to her by boyfriend Andrew Cader, former Goldman Sachs executive and Major League Baseball team owner, as "loans" rather than income.
Other than a statutory formula for post-divorce maintenance ("alimony"), Kepanis doesn't see any changes on the horizon in New York. There is no interest in shared custody among the legislators: "Fathers are interested in it but nobody else cares." What about Kepanis? What does he recommend as being in the best interests of children? "50/50 custody is great for kids. But it is more important to be creative and try to arrange things so that a child is always with a parent. It can work out so that everyone wins, e.g., if one parent works days and one works nights. That's the kind of arrangement that you can't get from a judge."
Does that mean that Kepanis advocates mediation? "No. The mediator will not suggest 'you could go for this.' You don't have someone on your side. Sometimes people aren't being told what they could have had. They try to push people to compromise in the middle." If Kepanis does not think the typical judge's decision is in the best interests of children and he does not advocate mediation, what then? "Each side can hire an attorney and negotiate a settlement."
Colapietro said that his life as a litigator had changed his outlook: "When I go to weddings and groomsmen ask 'are you with the bride or groom?' my responses is 'Whoever calls me first.'" Colapietro was against formulas for both child support and alimony: "they might as well at some point put all the info into a computer and they won't need us [divorce litigators] anymore." He said that other members of the American Academy of Matrimonial Lawyers (AAML) were "fighting like cats and dogs" against alimony guidelines.
The winner-take-all nature of the New York system means that there may be substantial rewards to pre-lawsuit planning. In a two-income Manhattan household, for example, where each partner earns $400,000 and there are two children, the difference between obtaining custody and losing custody will be the difference between receiving or paying up to $100,000 per year for perhaps as many as 20 years. That's $4 million up for grabs along with the kids. The spouse who knows that he or she is going to sue the co-parent can prepare for a custody victory by voluntarily taking on most child-related tasks during the year prior to filing the lawsuit. The unwary future defendant, meanwhile, is unlikely to reject offers to change diapers or supervise the nanny.
New York is home to a lot of high income parents. Unfortunately for a potential plaintiff, most of this income cannot be tapped via a child support lawsuit due to the income cap imposed. Although it varies from judge to judge it will likely be difficult to obtain more than $100,000 per year in child support ( $2.1 million over 21 years). When a high-income defendant is targeted, there may be substantial benefits for a plaintiff to litigating in a state where child support is not capped, such as California, New Hampshire, Illinois, Massachusetts, or Wisconsin. An unmarried future plaintiff can obtain the jurisdiction of another state most easily by persuading the future defendant to travel to another state and then taking advantage of the UIFSA provision, section 201(6): "the individual engaged in sexual intercourse in this State and the child may have been conceived by that act of intercourse." A married future plaintiff can obtain the jurisdiction of another state most easily by persuading the future defendant to move to another state for a period of at least 6 months.
Based on our interviews with lawyers and consumers, divorce litigation in New York is more lucrative, more consequential, and more acrimonious than in most other states. Also, due to the prevalence of sole parenting outcomes, if the research psychologists who've found that shared parenting is better for children are correct, divorce in New York is more harmful to children than it would be in most other states.
One prominent New York attorney, not a family law specialist, summed up her perspective on a typical divorce: "It's very simple. You have money. She wants it."