Divorce lawyers have long grappled with one of the most disheartening realities of our practice: watching a marital estate, built over years, dissolve not into two separate households, but go down the legal fees drain. High-conflict cases where emotions are the primary drivers lead the divorcing spouses to spend so much on litigation than their assets are depleted severely, sometimes resulting in a negative net worth. This isn’t just financially ruinous; it’s a profound failure of the legal profession and the legal system to serve the very people it’s meant to protect.
While many of us informally budget for our clients (i.e., determine how much the client should spend and allocate those funds as productively as possible, according to what the client can and cannot afford to do), the idea of a court-ordered litigation budget is a more formal concept that deserves consideration, not just for our clients’ benefit, but for the integrity of the process itself.
Why a Formal Budget is a Good Idea
When made a formal part of the court process, a litigation budget serves as a check on unrestrained and unjustified spending. The primary purpose and the benefit of the litigation budget is the preservation of the marital estate. By setting a clear, judicially approved limit on what can be spent, we can prevent a case from becoming a race to the bottom, ensuring there is a meaningful estate left to divide for the benefit of both parties and their children.
A formal, court-ordered litigation budget also acts as a meaningful incentive for settlement. When a client understands that his/her legal expenses are not limitless, he/she is far more likely to consider a reasonable settlement offer. A budget forces a litigant to make rational, rather than purely emotional, decisions.
A litigation budget can also level the playing field. We’ve all seen cases where a monied spouse uses a “scorched earth” strategy to exhaust the other party both financially and emotionally. A court-ordered litigation budget can prevent this abuse of the legal process by putting a clear financial restraint on that party’s actions.
Addressing Due Process and Constitutional Concerns
One reason (perhaps even the main reason) a formal, court-ordered litigation budget isn’t a universal practice is the concern that it could violate a party’s right to due process—the right to fully litigate one’s case. What if a new issue, like a hidden asset, is discovered after the budget is set? A rigid cap on spending based upon incomplete or outdated data could prevent the necessary legal work to address it, leading to an unjust outcome.
The solution is to move away from a simple, “one-size-fits-all” cap to a more nuanced, judicially guided financial oversight system. This framework would not be the default for every case but would be a tool the court can employ when necessary or warranted.
Here’s how it might work:
- Judicial Oversight, Not an Arbitrary Cap: A litigation budget would be imposed only when a party can demonstrate that the other side is engaged in unreasonable or vexatious litigation tactics that are draining the marital estate. It would not be a pre-set limit but a court-approved plan for the specific case.
- The Budget as a Court Order: A judge would approve a budget after a hearing where both parties present their anticipated costs and explain the necessity of their planned legal work. This ensures the budget is tailored to the case’s complexity and not an arbitrary or self-serving figure.
- Built-in Flexibility: The budget would include provisions for a contingency fund for unforeseen circumstances. A party could file a motion to amend the budget if a new issue arises, fully preserving their right to litigate all relevant matters.
- A Focus on Sanctionable Conduct: The budget would be a remedy for legal abuse. If a party files frivolous motions or engages in endless discovery battles, the court could impose a budget on him/her as a sanction, effectively tying the financial consequence to the bad-faith conduct. We already award attorney’s fees and impose fines as sanctions in divorce cases. Imposing a budget on a such a misbehaving party is just another way of applying this principle.
Practical Benefits for Family Law Practitioners
For us as practitioners, embracing this approach can lead to more predictable, more manageable, and more efficiently handled cases. It allows us to be proactive, helping our clients understand the financial realities from day one. It encourages a focus on the most critical issues, rather than wasting time and effort (and charging fees for) treating minor and distracting disputes. A court-ordered budget gives us a clear framework to say to our clients, “This is what we can spend. Let’s make every dollar count.”
Ultimately, the goal of family law isn’t just to get a good result for a client at the end of the case; it’s to help that client move forward with his/her life post-divorce as well. A litigation budget, when used wisely and in good faith, can be one of the most effective tools for ensuring clients come out on the other side of divorce with their financial well-being intact.
Utah Family Law, LC | divorceutah.com | 801-466-9277