Contrasting the Perverse Incentive of Family Law and Collaborative Divorce~4 min read

The Conflict Incentive

There is a dirty secret in some family law cases, one that clients only learn about long after they’ve retained counsel, and sometimes only after they look back at the pain, stress, and expense of their divorce.  The secret is that some family lawyers have a perverse incentive.  Attorneys bill clients by the hour to solve their problems.  That means they get paid more if the clients have more problems.  Quite simply, lawyers have an economic incentive to create conflict to bill the file.  Sure they have a lawyers’ creed that says they will be reasonable and advocate settlement, but ask any economist which is a better predictor of human behavior: a creed or an economic incentive?

Worse still, clients often never know, or only realize much later, the role their lawyer plays in either minimizing or exacerbating that costly conflict.  It’s all too easy for a lawyer to receive a curt email from opposing counsel and forward it right along to the client with a message of outrage and indignation instead of restraint and understanding.  In fact, that’s exactly what some clients want to see from their lawyer.  When lawyers ask their clients to take a breath, recognize that while this is personal it’s still business, and try to explain the other side’s point of view, they can be accused of being a pushover.  That’s natural; clients want their lawyers to be tough.  They want them to be as outraged as they are and to convey every bit of outrage and contempt right back to the opposing counsel and their spouse.  For a short while responding to contempt with contempt will make the client feel better, but then of course the litigation, the anxiety, the bitterness and the bills that go with it continue to expand.

The much harder, much less profitable, and often completely thankless job in the short term is telling the client that the other side has a point and they won’t be threatened or insulted into settlement.  Some clients don’t want to hear that.  They will tell you they had rather pay the attorney than the opposing party.  For a short while that may be true, but it’s almost never true in the long run.  We see this in many litigated cases where attorneys file motions to withdraw based on non-payment of attorneys’ fees.

There is Another Option

Potential clients should understand they do have choices in how they go about ending their marriage.  Collaborative divorce is a legal, non-adversarial method available in Texas to address the perverse incentive to bill clients.  Both collaborative law attorneys sign a contract with the clients at the start of the case which requires them to withdraw if the case cannot be resolved during the process.  In fact, the Texas statute which governs collaborative divorce makes this mandatory.  As such, the attorneys are prohibited from acting as litigation counsel if the case is not settled.  This means that from day one, both attorneys are incentivized to work with only one goal in mind; and that is, to settle the case.

That simple agreement, perhaps more than any other feature of collaborative law, creates an atmosphere conducive to settlement and curtails that perverse incentive to create conflict.  The more conflict you create, the more likely a collaborative case will end up litigated and the lawyers will stop getting paid.  That means the lawyers have an economic incentive to stay at the table and continue negotiating, to respond to client demands with understanding, and to control the expectations of their clients.

The Texas Lawyer’s Creed is great and contrary to the cynicism of this post, I honestly believe that most lawyers are good people who put their clients’ best interests above their own bottom line.  Still, lawyers are people and people generally follow economic incentives, so I’ll continue to support collaborative divorce where the economic incentive aligns with the client’s best interests.