There is an interesting study by Austrian economist Halla Martin, Divorce and the excess burden of lawyers, which explores how divorce proceedings end up dividng assets. He argues that in any divorce, both parties "encounter incentives as in the classical prisoners’ dilemma."
The conclusions are that "it is financially beneficial for the wife to hire a lawyer, if she expects their husband not to. The lawyer increases the wife’s alimony award in this case by 5.4 percent of the husband’s income. This is equal to an average present value of 15,320 euros. For all other combinations we do not identify any causal effect of the involvement of lawyers on the division of matrimonial property. The child-support award and the alimony award would have been precisely the same as in the case where neither spouse had hired a lawyer.
There exists also no benefit of the engagement of lawyers in terms of more sustainable divorce settlements over time. Therefore, many spouses incur substantial lawyer fees without any benefit. On top of that in most of the cases lawyers prolong the divorce process. This excess burden of lawyers increases both the private and public cost of divorce. In the case
where both spouses hire a lawyer, the highest lawyer fees accrue and the divorce process is extended unnecessarily by about 2 months. In order to overcome this worst case we suggest to change the institutional setting so that as many of these couples as possible choose to hire a joint lawyer. A joint lawyer does not alter the divorce settlement either, should charge a lower fee and most importantly does not unnecessarily delay the divorce process. In any case it should be guaranteed that in a case of a conflict of interests a joint lawyer should step down according to professional ethic rules."
Husbands therefore end up paying the smallest alimony when no lawyers are involved. If the husband hires a lawyer, but his wife does not, the alimony payment rises (and then there are fees to be paid, too). If the wife hires a lawyer, or the couple hires a joint lawyer, the husband forks out still more. Worst case scenario for hubby is if both sides hire their own lawyer. On top of that the proceedings are longer and more expensive.
Tim Harford cautions from reading too much into the results, since it is not clear whether the lawyers cause poor settlements for husbands, or whether husbands hire lawyers when things look grim!
1 comment:
Increasing incidences of divorce around the world have a negative impact on the environment, leading to a less efficient use of energy and resources and bigger expenditures on utilities,
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