Cashing in on Divorce: Now it’s not Just the Spouses Doing It

This remarkable story is just the latest in the long, sorry saga of our nutty promotion of divorce (New York Times, 12/4/10).  Oh, I know what we say.  We pay lip service to stable families, but then we turn around and our share to break them down. For example, we abandoned the stigma on unwed childbearing decades ago.  Early in the 1960s, about 8% of Americans believed it was acceptable for a woman to have a child without being married.  Now it’s broadly accepted. And we know that the overwhelming reason that women are the ones to file for divorce is that they know to a virtual certainty that they won’t lose their kids.  That’s what researchers Margaret Brinig and Douglas Allen called the finding that “swamped all other variables” in their study of over 40,000 divorce cases in four states. 
As Nathanson and Young write, “Women are much more willing to split up because – unlike men – they typically do not fear losing custody of the children.  Instead, a divorce often enables them to gain control over the children.” (Emphasis in the original.) Brinig’s findings were so powerful that she changed her mind about the best way to lower the divorce rate.  She had thought that abandoning no-fault divorce was the answer, but, according to Nathanson and Young “she now believes that the key is to rewrite custody laws.” In short, equalize parental time and responsibility and you take away the overwhelming reason for divorce.  But we don’t do that.  We barely even nod in the direction of equal parenting.  The result?  An ever increasing incidence of divorce. Then there’s child support and spousal support just to make sure there’s as little downside to divorce as possible and therefore to encourage it.  Child support is necessary because of unequal parenting.  Equalize parenting and much of the necessity for child support vanishes.  But as I said, we don’t do that and aren’t about to start. And, as so many have pointed out so often, the fact that downward support modifications are so hard to obtain, even if the father has lost his job or had a lengthy illness, can make divorce financially sensible to the mother.  After all, if the two were married and Dad lost his job, the whole family would suffer, but if she divorces him, her standard of living doesn’t change.  So financially at least, her decision is easy. Spousal support?  It too encourages couples to divorce and indeed to never marry in the first place.  It little matters what one’s conduct was during the marriage, in most states, the lower earner (usually the woman) can take her divorce decree to the bank.  Again, at least in financial terms, what’s the downside? So now there’s the subject of the Times piece.  It seems the entrepreneurial spirit in the United States isn’t dead after all.  We know this because there’s a small cottage industry growing up that finances divorce cases for the lower earner.  The spouse who avails herself of the services of these start-ups doesn’t have to pay a thing up front.  The company looks at her prospects for cashing in and pays to finance her litigation against her soon-to-be-ex-husband.  When the deal is done, it takes a cut of the proceeds. As things stand now, the company the article is about only takes cases in which the marital estate is between $2 million and $15 million.  Below that, it’s just not worth it to Stacey Napp who started Balance Point Divorce Financing that only represents women. But count on it, as surely as there’s a market for VW Bugs, other entrepreneurs will fill in where Napp fears to tread.  Soon enough companies will be funding divorces in for far less affluent couples than Napp’s.  And, since they’re getting paid from the proceeds, it’ll be in their interest to make the process as adversarial as possible.  That’s how to get paid the maximum possible and if the parties can’t get along afterward, hey, that’s their problem.  Bottom line?  The companies are in it for the money and playing hardball maximizes the return.  If it were a business transaction, it would be defensible, but it’s not.  Where children are involved, there will be an ongoing relationship between the parents long after the ink is dry on the final order.  It’s in everyone’s interest for the divorce to be as conflict-free as possible.  Everyone, that is except Balance Point Divorce Financing and others of that ilk.

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