FIVE MORE TIPS FOR MORE EFFECTIVE RULE 8.05 FINANCIAL STATEMENTS

March 14, 2011 § 9 Comments

I posted here ten tips for more effective financial statements.

Here are a handful more to use in your quest for financial statement perfection:

  1. Number the pages.  It saves the fumbling around as the witness and the court are trying to orient themselves to your questioning.  And use the page numbers in questioning the witness:  “Ms. Smith, look with me at page 3, line 6.”  That’s a lot clearer and easier for a witness to follow than asking “Now you say you spend $200 a month on clothes for yourself; how did you come up with that?” 
  2. Add or delete categories to meet your needs.  Your client spends $65 a month buying yarn and other materials to feed her knitting habit.  Why not replace an unused catergory like “Transportation (other than automobile)” with “Hobby Expenses.”  It would be a whole lot clearer than lumping it in with household expenses or something else, and will make it easier for your nervous client to understand while testifying.
  3. Don’t list a deduction as “mandatory” when it is not.  Deductions required by law, such as taxes and social security are excluded from adjusted gross income for calculation of child support.  Voluntary contributions, such as 401(k) deductions, health insurance premiums, and the like are not excluded from income.  When you list voluntary deductions as “mandatory,” you are at worst planting false information in the record, and at best confusing the record.  Your client does not know the distinction.  This is part of practicing law: advising your client how to properly fill out his or her 8.05.
  4. Attach a current pay stub.  Pay stubs are a marvelous source of information.  Quite often clients (and attorneys, I am sad to report) miscalculate income.  A current pay stub, preferably with year-to-date (YTD) info is a great tool to check the income figures.  Pay stubs also show the true amounts of overtime, bonuses, deductions for insurance and other items, andd retirement contributions. 
  5. Tailor your 8.05 to the case you are trying.  In a divorce case, you can have one column of figures showing your client’s current expenses, one showing the household expenses before the separation (to show standard of living), and a third column showing her anticipated expenses following the divorce.  In a modification case, add a column on both the income and expense side showing what your client’s income and expenses were at the time of the judgment you are seeking to modify. 

Of all the documents you admit into evidence at trial, the 8.05 is the one that the judge will study the closest and spend the most time poring over.  Make it a workhorse for your case.

THE BEST DEFENSE IS A BOILERPLATE

March 4, 2011 § 8 Comments

boil•er•plate. n 3.  Inconsequential, formulaic or stereotypical language.

Here is the SECOND DEFENSE from a pleading styled Answer and Defenses to Complaint for Divorce filed last September in my court:

The facts having not been fully developed, the [defendant] would affirmatively plead any and all affirmative defenses as may be applicable in this action:  accord and satisfaction; antenuptial knowledge; arbitration and award; assumption of risk, condonation, connivance, contributory negligence, consent, discharge and bankruptcy, duress, estoppel, failure of consideration, failure to mitigate damages, fraud, illegality, insufficient process, insufficient service of process, injury by fellow servant, laches, lack of capacity to commit the offense, license, payment, pre-existing injuries or damages, provocation, reconciliation, recrimination, reformation, release, res judicata, statute of frauds, statute of limitations, waiver, and any other matter constituting an avoidance or affirmative defense.”

Whew.  Fortunately, after a spate of such monstrosities having been filed last fall, they dropped off drastically after I threatened to require hearings on all of those defenses before any temporary hearing.  After all, don’t we need to know whether the adultery was a result of an injury by a fellow servant before we proceed?  Or was the plaintiff contributorily negligent when the defendant slipped off to the Motel 8 in Philadelphia with his paramour?  We need to know these things.  Or, I guess we need to know them because they were pled.

Some of these defenses, foreign as they are to chancery court, do stir the imagination …

  • Accord and satisfaction should be available when the defendant claims that the plaintiff should be happy with her Honda automobile.
  • Assumption of risk.  If you knew she was crazy when you married her, well …
  • Failure of consideration.  Most people are pretty inconsiderate of each other in the context of the hostility that leads up to a divorce, but should that be a defense?
  • Failure to mitigate damages.  My personal favorite.  Shifts the whole burden of blame, doesn’t it?
  • Laches.  So much for the public policy of Mississippi that encourages folks to stay in a marriage as long as possible.
  • Lack of capacity to commit the offense.  This is actually a viable defense to some marital offenses involving biological functions, but how does it apply in equitable distribution?
  • Pre-existing injuries or damages.  Another one with some wondrous possibilities.  “She hasn’t been harmed by my moving in with my girlfriend and leaving her penniless because she was already broke.”
  • Release.  As in “Please release me; let me go, I don’t love you any more?”  Nah.
  • Res Judicata.  Don’t laugh.  There are possibilities here for folks who have remarried each other after a prior divorce judgment.
  • Statute of frauds.  Since Mississippi did away with common-law marriages in 1956, this one is a long shot today.
  • Statute of limitations.  The lawyer who discovers how to make SOL apply in a divorce case will have struck gold.
  • Waiver.  “But she told me it was okay for me to go out with Doris.”

Maybe you can come up with some imaginative offensive or defensive theories of your own.  If they’re as goofy as these, though, you’d probably be better off keeping them to yourself.

PAY ATTENTION TO JURISDICTION AND VENUE FOR DIVORCE

February 15, 2011 § Leave a comment

Before a Mississippi Chancery Court can consider whether to grant a divorce, it must make four fundamental findings:

  1. That the parties were married to each other (subject matter jurisdiction);
  2. That the parties are properly before the court by process and notice (personal jurisdiction);
  3. That the action is filed in the appropriate county (venue, also called “venue jurisdiction”); and
  4. That at least one of the parties meets the statutory residency requirement, and that residence in Mississippi was not obtained in order to get a divorce. 

These are commonly referred to as the “jurisdictional facts,” and you can not even get to address whether there are grounds, or equitable distribution, or any other divorce issues unless the jurisdictional facts are established in the record.

If you are in doubt about the proper venue of your action, consulting MCA § 93-5-11 will give you the answer. 

All of the above may appear elementary to you, but it is astonishing to me how many contested divorce cases I see presented where neither attorney establishes even one or more of the jurisdictional facts, and there are many where none of them are mentioned.  In some cases, I have invoked MRE 614(b) to get the information myself into the record; after all, if I lack subject matter jurisdiction or venue is improper any action I take is void, and if I lack personal jurisdiction any action is voidable.

Remember that your pleadings are not evidence.  Just because you pled it does not put it into the record.  If you don’t establish jurisdiction on the record so that the judge’s finding of jurisdiction is supported by evidence, you are leaving your client’s judgment vulnerable to attack by the disgruntled other party.

ANOTHER NAIL IN THE GOODWILL COFFIN

February 8, 2011 § 2 Comments

“Goodwill” is the term used in accounting to describe the “prudent value” of a business over and above that attributable to the value of its assets, such as its reputation with customers and the value of its brand.  An example would be the value that Coca Cola’s planet-wide brand recognition adds to the company’s value over and above the value of its assets. 

Ever since the landmark decision in Singley v. Singley, 846 So.2d 1004 (Miss. 2002), in which the supreme court reversed the court of appeals and held that goodwill is not to be considered in business valuations for divorce, the courts have wrestled with the breadth of that decision.  Singley, which involved a dental practice (in Meridian), accurately reflects the way professional practices are valued by valuation experts, who consider that the value of a professional practice depends heavily on the participation in it of its principal, so that it has no goodwill.  The question lingered, however, as to how the court would apply the no-goodwill concept in other business valuations.

It is beyond the scope of this post to analyze Singley’s progeny, the most notable of which are Watson v. Watson, 882 So.2d 95 (Miss. 2004), and Yelverton v. Yelverton, 961 So.2d 19 (Miss. 2007).  If you’re going to handle any divorce cases involving a busines, you will have to acquaint yourself with those decisions.

This post address the latest pronouncement on goodwill, which comes in the case of Lewis v. Lewis, handed down by the supreme court on February 3, 2011.    

Lewis, which was before the court on certiorari from the court of appeals, involved valuation of a business enterprise jointly owned by the divorcing husband and wife to develop residential real estate.  The court of appeals had reversed and remanded for the chancellor to correct errors in the valuation of the business.  On cert, the supreme court, by Justice Randolph, upheld the court of appeals’ reversal and remand in part, but reversed the court of appeals to add that the trial court was precluded from considering goodwill in its analysis of the valuation.  

In a cogent dissent, Justice Kitchens pointed out that Singley and the cases following it had correctly appled the exclusion of goodwill to the professional practices involved in those cases.  The business in Lewis, however, was not a professional practice.  Kitchens urged the court to recognize that Singley should be limited to solo professional practices or businesses that are closely analogous. 

Justice Randolph referred sympathetically to Justice Kitchens’ dissent, pointing out that he had raised similar concerns in his own dissent in Watson to no avail.  He pointed out that, if Singley lacked clarity on the point, the court’s decisions in Watson and Yelverton laid aside any doubt, and that goodwill is not to be considered.  He went on to say that “Stare decisis demands this result.”  Waller, Carlson and Graves joined Randolph in the opinion.  Lamar and Chandler concurred.  Only Kitchens dissented.  Pierce did not participate.    

Our appellate courts have not been presented with a business valuation involving nationally or even regionally recognized business entities based in Mississippi on a par with companies such as Viking, or Mississippi Chemical, or Structural Steel or Yates Construction.  In such a case, it would be difficult to understand how the court could overlook “enterprise goodwill” as opposed to the “personal goodwill” in the precedent to this point.  Yet our case law now is that any form of goodwill is to be ignored in valuing businesses in divorces.

CORROBORATION PROBLEMS = DIVORCE PROBLEMS

January 11, 2011 § 3 Comments

I posted here about how crucial it is for the proof of grounds in fault-based divorces to be corroborated. 

In Ladner v. Ladner, decided December 14, 2010, the court of appeals again emphasized the strength of the corroboration rule.  The court stated at ¶ 10 the familiar principle that “The corroborated testimony must show conduct that ‘endangers life, limb, or health, or creates reasonable apprehension of such danger, rendering it impossible for [the other] spouse to discharge the duties of the marriage, thus destroying the basis for its continuance.'”     

Deborah Ladner charged her husband Philip with habitual cruel and inhuman treatment  She testified that Philip had been abusive toward her and assaulted her.  She offered into evidence two police reports and two rpotective orders, which both the trial judge and the court of appeals found not to be corroborative because all of the information they contained was provided by Deborah.  The appellate court also found uncorroborative a statement in a police report that the parties’ son was afraid of his father, and that Philp had broken his daughter’s door in anger because those showed only a troubled relationship with the children and did not corroborate Deborah’s testimony about violence directed at her.  The court reversed the chancellor’s decision granting Daborah a divorce on the ground of habitual cruel and inhuman treatment. 

Justice Carlton in her dissent would have found the testimony adequately corroborated to grant Deborah a divorce on habitual cruel and inhuman treatment.  She quoted from Professor Bell’s treatise that the corroborating evidence need not be sufficient in itself to establish the ground, but only needs to be enough for the court to conclude that the plaintiff’s testimony is true.  

An interesting twist in this case is that the chancellor granted both parties a divorce.  He granted Deborah a divorce on the ground of habitual cruel and inhuman treatment, and he granted Philip a divorce on the ground of adultery.  Philip had raised the issue that it was improper for the chancellor to grant dual divorces, but the court of appeals held that issue to be moot, based on its reversal of Deborah’s divorce.

There are several points chancery practitioners need to come away from this case with:

  • No corroboration = no divorce.  The requirement of corroboration is alive and well, and you need to be sure you have a corroborating witness or two lined up to support your case.
  • Self-corroboration will not work.  The information Deborah submitted to corroborate her claims that she generated was found not to be corroboration, and that makes perfect sense.  It’s easy for a party to generate police reports and file charges to build a case.  Those kinds of documents are nothing more than her own statements, so they corroborate nothing. 
  • The corroboration has to be linked to the conduct charged.  Deborah’s proof about her son and daughter was not tied to conduct directed at her.  Maybe the result would have been different if the son had testified that he was afraid of his dad because the son saw him threaten or physically mistreat the mom; if the door-breaking incident had been tied to a rampage in which Philip manhandled Deborah, that may have been the link she needed.

The easiest thing in the world is to tell your client, “Be sure to bring a witness to court who can back up your testimony about how he mistreated you.”  That’s a ticket to failure, though.  You need to investigate and identify who are the witnesses and what is the competent evidence that will make your client’s claim.  It is no less important than discovering the value of that securities account or uncovering that hidden bank account.

TRANSFER OR DISMISS?

December 8, 2010 § 5 Comments

It was long the law in Mississippi divorce cases that venue is jurisdictional, and that an action filed in the wrong county had to be dismissed, and could not be transferred to the appropriate county.  See, Carter v. Carter, 278 So.2d 394, 396 (Miss. 1973).  Venue in a Mississippi divorce is said to be “exclusive” because the divorce statutes define where venue lays.  The action must be brough exclusively in the county specified.  Where venue is exclusive, it is jurisdictional.    

Against this backdrop, the Mississippi Supreme Court decided the case of National Heritage Realty, Inc. v. Estate of Boles, 947 So.2d 238 (Miss. 2006), reh. den. February 8, 2007.  The case involved an estate opened in Tallahatchie County, which was the county where the decedent formerly lived before relocating to a nursing home in Leflore County, where she subsequently died.  The chancellor found that venue for the estate was properly in Leflore County, and had ordered that the estate be transferred from Tallahatchie County to Leflore.  The Supreme Court, by Justice Easley, ruled that the venue statute for estates is exclusive, and, therefore, jurisdictional.  In the absence of jurisdiction, the chancellor was without authority to take any action, even a transfer.  In the absence of jurisdiction, his action was void and not merely voidable.  Justice Easley at page 248 based his reasoning on the established divorce venue law, to which he analogized the estate venue statutes. 

The only problem is that the divorce venue statute, MCA § 93-5-11, had been amended in 2005, a year before the Boles decision, to add the following sentence:  “Transfer of venue shall be governed by Rule 82(d) of the Mississippi Rules of Civil Procedure.”  MRCP 82(d) reads, in part:

“When an action is filed laying venue in the wrong county, the action shall not be dismissed, but the court, on timely motion, shall transfer the action to the court in which it might properly have been filed and the case shall proceed as if originally filed therein … “

Justice Easley’s opinion makes no mention of the amendment.

From time to time I get requests from lawyers to transfer a case, usually from Lauderdale to Clarke County, although I have been requested to transfer to other counties.  This occurs primarly with out-of-district lawyers who are unfamiliar with the fact that some people with a 39301 zip code and a Meridian address actually reside in Clarke County, or some folks with Collinsville addresses actually reside in Newton or Neshoba, or with Daleville or Lauderdale addresses actually residing in Kemper.  The predominant type of case lawyers want transferred involves the Structured Settlement Protection Act, MCA § 11-57-1, et seq.  I presume they prefer transfer over dismissal because dismissal requires filing a new petition and starts over the law’s technical notice and time requirements. 

So how can we reconcile Boles and MCA § 93-5-11 and MRCP 82(d)?

In the absence of any definitive guidance from the appellate courts, here is my interpretation:

  1. If the case is not a divorce and venue is exclusive (i.e., defined in the statute upon which your action is based), then the case can not be transferred.  It must be dismissed and refiled. 
  2. If venue in the case arises under MCA § 11-11-3, the general venue statute (which has been held to be applicable to actions in chancery court where there is no exclusive venue statute), the case may be transferred per MRCP 82(d).
  3. If the case is a divorce, it may be transferred per MCA § 93-5-11, but see the caveat below.

Some observations based on the above:

Cases under the Structured Settlement Protection Act may not be transferred because MCA § 11-57-11 includes an exclusive venue provision.

An action solely for an injunction is under the general venue statute because MRCP 65 does not define venue for the action.  A Rule 65 action may be transferred.

Although the statute expressly authorizes transfer of a divorce, consider the ramifications before you do it.  The divorce statutes include an exclusive venue provision.  Under Boles, an action filed in the wrong venue in  an exclusive venue case is void ab initio, meaning that the chancellor has no authority to take any action other than to dismiss.  The court lacks subject matter jurisdiction.  Price v. Price, 32 So.2d 124 (Miss. 1947).  Lack of subject matter jurisdiction is a defect that may be raised at any time, even years after the fact, because the action of the court lacking jurisdiction is void, and not merely voidable.  Would you want to risk having your client’s divorce set aside somewhere down the road by the other party who is disgruntled with the outcome?  If I were the attorney, my preference would be to take the safe path and dismiss the case with improper venue rather than transfer it.

[I hope this is a helpful starting point for Frankie and colleagues at MC Law]

AN ALIMONY TAX CONSEQUENCE YOU NEED TO CONSIDER

November 12, 2010 § Leave a comment

Internal Revenue Code § 71(f), provides that when alimony payments last three years or less, they will not likely be treated as tax deductible, even if the divorce judgment specifically states that they are deductible. 

You need to talk this over with a CPA to get some guidance before you draft your PSA or have your client testify, for example, that she wants 24 months of rehabilitative alimony.  This is one of those “tax consequences” of the award that is one of the Armstrong factors that the court is supposed to consider.  If you don’t put evidence in the record about it, you won’t have to worry about it because the trial judge simply won’t give it any thought.  Your client may call you later and ask for some financial assistance, though, and it probably won’t be a pleasant conversation. 

As with all IRS rules, I am sure that there are ways to draft an agreement to avoid the problem, and, of course, the amount of alimony can be adjusted up or down to accommodate the tax effects.

This IRS rule underlines the importance of including in your property settlement agreements a disclaimer that you have not provided any tax advice, and that the parties have been encouraged to get tax advice from a qualified expert.

MANAGING CLIENT EXPECTATIONS

October 18, 2010 § 4 Comments

One of the challenges of being a Chancery practitioner is keeping your clients’ expectations realistic.  And I’m not talking only about expections regarding outcome.  I’m talking expectations about you, your firm, the court and the legal process itself. 

The Pincus Family Law firm in Columbia, South Carolina has a page on its web site that may just be a home run in addressing client expectations.  You may find something useful here.  I’ve copied and pasted the text for you:

  

CLIENT EXPECTATIONS (REALISTIC OR UNREALISTIC)

ABOUT US: 

We do not work on the weekends and do not provide emergency numbers for the weekends.  There are times we may look at and answer your email over the weekend, but this is generally the exception and not to be relied upon by you that we are accessible on weekends.

Do not think we are perfect.  We make mistakes.  We are competent attorneys and paralegals, but we make mistakes.  We will correct a mistake if we find it or if you point it out.  Please do not yell at us, accuse us of not doing our job, or insult us over a mistake.

We will return phone calls in the order they are received and based on the priority of the situation.  If you leave a message, your message will be passed on to the attorney.  Calling three or four or multiple times in a day will not get your call answered any faster.  Email is the quickest way to get a response from an attorney.

Attorneys work by appointments only.  Please do not show up at our offices to speak with an attorney without an appointment. 

Please utilize our paralegals to answer your questions and give you status reports.  Our paralegals are very experienced and can, most of the time, respond to your request.  We bill our paralegal time at less than 50% than what the attorneys charge so take advantage of their experience and knowledge.

ABOUT OTHERS:

You may not get any consideration from your spouse for anything you have done or will do because you are nice.  You are encouraged to be nice, be cooperative, but don’t expect to get anything favorable in return for it.

Most of the research you do about your case online or the advice you get from friends will be incorrect or not applicable to your case so you should not compare what is happening on your case to what you find online or what friends or family may tell you.  As your attorneys, we are the only reliable source of information regarding the process and status of your case.

The opposing attorney may be very aggravating and frustrating to you because he or she may accuse you of things you have not done, may be litigious (wanting to fight about everything), may drag his or her feet with moving the case forward, or may be non-responsive to requests from this office.  It is unrealistic to expect that we can control how an opposing attorney handles his or her file or practices law.

The legal pleadings (Complaint, Answer, Counterclaim, etc.) are legal documents filled with allegations that must be pled (and some that are merely made to posture for a client).  Do not expend any emotional energy (get angry or upset) on the text of legal pleadings drafted on your behalf or your spouse’s behalf.  It is not worth it.

We cannot control the court’s schedule or docket.   The courts schedule cases as they are processed and in line with the thousands of other cases filed.   You will not be happy with the time it takes your case to get through the system.  There are thousands of family law cases filed in Lexington and Richland counties each year and most contested cases take several months, sometimes more than one year, to finish.

What you can expect during a Trial (Contested Case)

COURT APPEARANCES—Bonnie and Monet generally work files together although one attorney may be your “lead” attorney.  Therefore, at court appearances, it may be necessary for one to cover a court appearance for the other.  We will try to give you advance notice if your “lead” attorney will not be attending a court appearance, but sometimes the scheduling decision is made at the last minute.

SUBPOENAS—the other party can send a subpoena to any third party that MAY have information about you, your spouse, your business dealings, your employment, your education, your children and the like.  Banks, lenders, business partners, educational facilities, stock brokers, teachers, churches, etc. can all be issued subpoenas for any records they may have regarding you.  We can do the same.  There is very little we can do to stop this so be prepared to deal with the frustration you may experience.  If there is a legitimate reason to try and stop the subpoena, which there rarely is, we can file a motion to do so.  Unless the information is privileged in some fashion, the third party will have to disclose the information requested.

DEPOSITIONS—the other party can issue a notice of deposition to any third party witness.  This means that a third party can be required to give testimony under oath usually in one of our offices.  The purpose of depositions is to find out information and to find out ahead of time what a person may testify to in court.  You and your spouse could each be deposed for the same reason.  We can issue notices of depositions as well.  A fact witness is entitled to a fee of $25 to appear and professionals (doctors, psychiatrists, etc) are entitled to have their time paid for to appear (by the party that deposes them).  A court reporter must be present and is paid to attend as well.  The attorneys are paid to attend as well.  Depositions are costly.

NOTHING HAPPENS QUICKLY—generally, contested cases take several months to move through the court system.  A complicated custody or equitable division case can take one, sometimes two, years to complete.  The courts are always full and there are several steps that have to be taken before a trial will be set, for instance, mediation, a guardian ad litem investigation, discovery, depositions, pre-trial hearings and motion hearings.  It takes a long time to move a contested case through the court system and this will likely be your number one frustration.  We will do all we can to move the case forward, but you will still be frustrated with the time it takes to finish a case.  Please prepare yourself ahead of time and please do not take this frustration out on us or my staff.  We are doing everything we can to move the case along.

DISCOVERY—this is the “formal” name for exchanging information through subpoenas, written questions (interrogatories) and request for documents.  Discovery has its own set of rules and deadlines which we will inform you about during the process.

CHILDREN—Marital problems are terribly difficult for children.  Do your children a favor and do not “poison” the minds of your children against their other parent.  Do not speak about their parent’s faults to children.  Do not complain to your children about how much child support you are paying or how little child support you are receiving.  Visitation with parents is NOT a bargaining chip or game.  Each parent is entitled to visitation privileges with their children.  Children are not your property.  They are not your pawns.  They are absolutely not your messenger.  They are innocent individual human beings that need both of their parents, not just the “best” parent.

ADULTERY—Do not become romantically involved with someone other than your spouse if you are still legally married (even if you are separated)! During marital litigation you should behave as though a detective and camera crew were following you and recording you and your conversations at all times.

CHILD CUSTODY CASES—You should behave as though a detective and camera crew were following you and recording you and your conversations at all times.  Do not do anything that you would not perfectly happy with a Family Court Judge seeing, hearing or finding out about when the Judge is deciding your custody case.

ATTORNEY’S FEES—in a child custody case, you could spend the price of a car in attorney’s fees.  Most contested custody cases run upwards of 10-20 thousand in fees paid out over the course of the case.  This usually includes attorney’s fees, guardian fees, psychological fees and expert witness fees.  In a complicated equitable division case, the cost can be significant and sometimes more than a custody case depending on how much property there is to value and the difficulty of valuing assets.  Even a very small business can run $2,500-$5,000 to value if there is a dispute as to the value.  A small equitable division case (which means there is a home, retirement, credit card debt, and other property or debts to divide) can run $5,000-6,000 in attorney’s fees over the life of the case.  The most expensive part of the case is going to be trial preparation and attendance costs.  That is why a trial retainer (an “up front” payment) is required in all contested cases.  You will see this in your fee agreement and we reiterate here that a trial retainer is required for continued representation.

Thanks to the LegalEthicsForum.com for this.

FIVE SIMPLE STEPS TO PROVE ATTORNEY’S FEES

October 13, 2010 § 7 Comments

You would think that the award of an attorney’s fee would get special attention from both the client and the attorney.  After all, the client is looking for some help with the financial burden, and the lawyer representing him is looking for some assurance that she will be paid.  And one of the best ways to impress your client favorably is to hang your fees on the opposing party.

In many cases, though, I find that the lawyer takes a sort of slap-dash approach.  Sometimes the lawyer confers with the other side and reaches a low-ball stipulation about a reasonable fee.  Or the lawyer takes the witness stand (one of the very few occasions when an advocate is allowed to testify per Rule 3.7 of the Rules of Professional Conduct) and offers some general testimony in vague terms about a ballpark figure.  Or the lawyer simply asks his client what she paid him and apparently thinks that will suffice.

Proving a reasonable attorney’s fee is actually a fairly simple process, but you need to cover all the points to make your client’s claim airtight.  Before we talk about what you need to prove at trial, though, be sure you’ve done what you need to do before trial to lay a foundation for your claim:

  • Record your time as you move toward trial, and have your time record printed neatly.  You will need it for your testimony in court.
  • Be sure there is a prayer for a reasonable attorney’s fee in your pleading.  You are asking the court to take your opponent’s money, and that requires due process.

Now that the preliminaries are in order, here are the five steps to prove attorney’s fees:

  1. Be sure to have your client testify about his or her ability to pay.  In divorce cases, ability to pay is the most critical consideration, and if you do not establish your client’s inability to pay, she will not be eligible for an award of an attorney’s fee.  Deen v. Deen, 856 So.2d 736, 739 (Miss. App. 2003); Bates v. Bates, 755 So.2d 478, 482 (Miss. App. 1998).  Even in a contempt case, where inability to pay is not required, you are wise to offer testimony about the financial effect of the contempt and the resulting attorney’s fees on your client, since an award of an attorney’s fee is not mandatory in contempt.  Suess v. Suess, 718 So.2d 1126, 1129 (Miss. App. 1998).  Remember that the ethical rules do not allow you as an advocate to testify about the contested merits of the case.  If you are going to prove your client’s inability to pay, you will need your client’s testimony. 
  2. Testify yourself about the prevailing rate charged by attorneys in the district.  The award must be reasonable, and one of the key touchstones for reasonability is the usual and customary rate charged by attorneys in the district.  But the prevailing rate is not binding on the court.  The judge may award a fee at a greater or lesser rate if the circumstances warrant it.  If you charged a rate different from the prevailing rate in the district, what rate did you charge and why?  And if your rate exceeded the prevailing rate, what is your justification for doing so?  Make your record.
  3. Put into evidence an itemization of the time you devoted to the case.  Here’s where that itemized statement comes in.  Identify it and ask that it be admitted into evidence.  Before you do, though ask yourself:  Is it credible?  Does it look like a genuine fee statement that one would tender to a client for payment, or does it look like something you scratched together 5 minutes before setting foot in the courtroom?  Are the times reported credible?  Does it reflect charges for “one competent lawyer,” or are there charges included for others?  Before you ever get to trial, pore over your statement and subject it to your own cross examination.
  4. Be sure to capture all the time in the case.  Ask the court to take judicial notice of the time spent to that point in the trial, and estimate for the record how much more time will be needed to complete the trial.  Estimate also the total number of hours that will be needed for any post-trial matters, such as drafting a judgment or preparing proposed findings of fact and conclusions of law.
  5. Address each and every one of the McKee factors.  You can read more about the McKee factors here.  The McKee factors govern the amount of the award, but as a practical matter, if you don’t prove them there is nothing in the record to determine what is reasonable, which means that a reward of zero is most likely.  No matter how badly you and your client want that attorney’s fee award, if you don’t include proof of the McKee factors, you likely won’t get it.

TRIAL BY CHECKLIST: INCOME TAX DEPENDENCY EXEMPTION

October 11, 2010 § 9 Comments

A practice tip about trial factors is here.

The Mississippi Supreme Court ruled in Nichols v. Tedder, 547 So.2d 766, 775 (Miss. 1989), that the Chancellor may award the dependency exemption for income tax purposes to either parent as part of its determination of child support. 

If your client wants the court to award her the tax dependency exemption, it will take more than just asking her what she wants the court to do.  In Louk v. Louk, 761 So.2d 878, 884 (Miss. 2000), the Mississippi Supreme Court laid out the factors that the Chancellor is required to consider before making the award.  They are:

  1. The value of the exemption at the marginal rate of each parent;
  2. The income of each parent;
  3. The age of the children and how long the exemption will be available;
  4. The percentage of the cost of supporting the children borne by each parent; and
  5. The financial burden assumed by each parent under the property settlement agreement in the case.

In Laird v. Blackburn, 788 So.2d 844, 852 (Miss. App. 2001), the Court of Appeals added a sixth:  the value of the non-economic but valuable contributions made by the custodial parent.

Although I have often heard parties testify that they wanted the court to award them the exemption, I have never heard any testimony on factor 1. 

It seems to me that if you fail to put on the requisite proof, you run the risk that the judge will simply say that the proof did not support such an award, or, if the trial judge does award it, that the Court of Appeals will take it away or put your client to the considerable expense of having to retry the issue so that the trial judge will have the evidence necessary to adjudicate it.

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