I recently interviewed the director, Joe Sorge, of a new documentary called “Divorce Corp” about the perils and problems of the current family law system. Here is a snippet from the full Divorce Corp interview:
ROBERT PAGLIARINI: In a divorce process, there are the parties that are getting divorced (the husband and the wife), and then it’s their attorneys as well. Divorce is a $50 billion per year industry, and I’m assuming that a lot of those dollars are not necessarily flowing through to the couple getting divorced, but they’re actually going into the hands of the attorneys. Is that correct?
JOE SORGE: Absolutely right. The $50 billion has nothing to do with the amount of money that’s in the form of alimony or child support. Each year, there’s $44 billion of alimony and child support being awarded from one side to the other; that’s not included in the $50 billion number. The $50 billion number comprises attorneys’ fees, expert witness fees, psychological evaluations, custody evaluators, guardians ad litem, amicus attorneys, minor’s counsel, court fees, fees for the court reporter, etc.
There’s just an enormous expense in the adversarial litigation process, and that money is going into the pockets of private individuals who do quite well. The average divorce attorney can charge anywhere from $150 an hour to $1,000 an hour for their time, and if we compare that to the average wage of an American worker (approximately $15 or $20 an hour), we’re talking about 10 to 20 to 40 times the amount of money that the average American makes.
I believe in free enterprise, and I don’t begrudge people for charging whatever they believe that their time is worth – provided that our government hasn’t created a monopoly for them. And unfortunately, I think in the family law system, not only do the laws favor these professionals charging very large amounts of money, but there’s actual favoritism and collusion within the system where certain people that become friendly with the judges are favored and are given business where there’s no checks and balances on what they charge.
If the judge hires an attorney to represent your children in a custody battle, the parents have to pay that attorney. Whatever that attorney asks, the parents have to pay, and the judge is the only person who gets to decide whether those fees are acceptable or if the attorney is overcharging.
Well, unfortunately, in our family law system, those attorneys can make campaign contributions to the very same judge who is looking over their invoices. They can throw fundraisers for the judge, take them on junkets, hire the judge’s spouse to work in the same law firm as the hired attorney, etc. So it’s just a setup for corruption. If it’s not outright corruption, then it’s definitely a level of insider collusion that would make Wall Street and the investment banks look like angels.
ROBERT: There were so many times when I was watching this film that I almost yelled out, “This can’t possibly be true. It can’t possibly be this way.” And of course, it is. Judges are publicly elected and you can have attorneys donate to their campaign, and then oftentimes those same attorneys get some pretty nice rulings in their favor. The system is so seedy and has such potential for abuse!
The people who really are hurt by all of this are not only the parents getting the divorce, but it’s the children. The children going through this are almost pawns in this entire process. They’re used and sort of used against each other. Can you talk a little bit about how the children are used in this process?
JOE: Yeah, this is the greatest tragedy for the entire divorce process. And it’s called family court, right? You’d think that they should be concerned with how the children really end up. And they all use this platitude called the best interests of the child. The judge is supposed to be acting in the best interests of the child and looking out for what the judge considers the child’s best interest.
The problem is that there is no definition for what the best interests mean. Does it mean that your child should read books or play football? Should your child take piano lessons or join the cheerleading squad? Should your child spend most of their time with their friends, learning to socialize, or should they be doing their math homework? These are difficult questions to ask, and I think only the parents can make those decisions.
To take a judge, who has 5 or 10 minutes to determine what is “in the best interests of the child,” and then make life-changing decisions, not only for the parents, but for the children, is absurd. These judges will hire custody evaluators to try to determine who the better parent is and direct the children to spend the majority of their time toward that parent. But I think the best parent is both parents, because both parents have different things to contribute.
Of course, I’m not talking about a parent who is physically abusive; I’m not talking about parents who might be sexually molesting their children. Those are crimes, and those are crimes that absolutely have to be dealt with. But I’m talking about just differences of opinion about what parents think is the best for the child, and nobody knows these children better than the parents do, and each parent has a different skill set that they can bring to the equation. So these children really can benefit from exposure to both parents.
Unfortunately, our system is set up in a way where everybody makes money – almost everybody makes money if the children are taken away from one parent and put predominantly in the care of the other parent. Let me explain why I say that they make money.
First of all, our system provides for something called child support, which is a stream of payments that go from one parent to the other parent, depending upon – essentially, who makes the higher income is the payor, and the person making lower income is the recipient. The idea was that this was supposed to provide for the needs of the child when the child is in the care of the lower earner.
Well, the formulas unfortunately also factor in the amount of time that each parent gets to spend with the children. So if you have the children 100% of the time, you would receive twice as much child support compared to having the children half the time. And if you’re the payor, you would pay twice as much if you have the children none of the time as you would if you had the children half the time.
We’re not talking about small amounts of money. We’re not talking about $100 a month, $200 a month in most cases. We’re talking about 30% to 60% of after-tax take-home pay, and that’s a lot of money for most people, especially if they have to pay alimony on top of that and then try to support themselves in a new life. So this causes parents to fight over how much time they have with the children because it dramatically influences their standard of living.
What you get, you couple that dynamic with the adversarial system, where people say bad things about each other in order to win, and what you get is a terrible battle between the parents that spills over to the children. The way it spills over to the children is in terms of parents trying to lure the children over to their side by bribing the children, by disparaging the other parent, involving the children in this conflict. Whether they do it outright or they do it subconsciously, there is a natural tendency for the parents to try to “win” the children over to their side.
And that’s not healthy for the children, because they hear things about the other parent that should never be said; they’re lured with temptations that a healthy parent wouldn’t be putting in front of them; they’re sent to meetings with “custody evaluators” who ask them all kinds of probing questions about their parents. Sometimes, if the judge smells money, that one of the parents has money, they’ll hire an attorney to represent the children, and that attorney then meets with these children and asks them questions about their parents and their environment, comes and visits the home. Whatever these custody evaluators and attorneys have in terms of personal biases come and factor into which way they recommend the judge custody should go.
The other area that promotes this polarization of parenting is that the federal government provides matching funds to the states for every dollar of child support and alimony that is collected by the states. The intentions were originally good; back in the ’70s, not a lot of child support was being paid, and so the federal government provided these incentive dollars to the states to collect more and more child support and to help them fund collection agencies that would go out and hunt down payors and try to get them to pay their child support.
Unfortunately, what that has done is it has encouraged the states to keep collecting more and more levels of child support. Well, you can’t collect child support unless you award child support or alimony in family court. If the awards were to go to zero, the collections would go to zero, and the states would lose this federal matching money.
The judges all know this; the judges’ pensions are dependent on the state’s remaining solvent, and as we went through a couple of years ago, there was a lot of question about the solvency of our states. In fact, I think it’s still a big issue; it’s just not discussed as actively right now. So any loss of significant amounts of revenue to the state is something that could cause the states to default on their pensions.
The entire court system is populated by people who expect to get retirement pensions someday, and they don’t want the state to go bankrupt or to somehow have to give everybody a haircut on their pensions, and so they’re incentivized to keep this gravy train going. And the only way you keep the gravy train going is if you assess that there’s a disparity in income between the parents, and you assign one of the parents the majority of custody time. If you were to give equal custody to both parents as a routine, the amount of child support being paid would drop dramatically, and the federal matching funds would drop dramatically.
So I think all around, our system is set up to not encourage shared parenting and to financially incentivize battles that help the professionals and help the judges and the other court employees who are part of the system.
ROBERT: So what can people do to initiate change? I watched the film, and at the end of it I was enraged, but I didn’t know what steps to take. What should viewers do to help change this system? It seems quite a daunting task.
JOE: Help us out. I’m not asking for money. We’re funding this all ourselves because we’d like to see reform take place. I’m organizing a reform conference November 15th and 16th in Washington, D.C. where I’d like to hear from people who want to speak or attend the conference. Contribute your ideas on how we can reform the system.
So come to our Facebook page or particularly our website, www.divorcecorp.com. On that page, in the menu, there’s a reform page. Just sign up to our email list, and we’ll keep you informed about various reform efforts going on around the country. We need political support. I’m not asking for money; I just want political support and people saying, “Yeah, there’s something wrong with the system and we need to change it.”
We need to get that message out to our political leaders, so eventually, we’re going to be asking for our followers to do a letter writing campaign to Congress, to the various state legislatures, and try to get reform of these antiquated laws.
ROBERT: Excellent. So the first step is really simply to go to divorcecorp.com and sign up. It couldn’t be an easier call to action on the listeners’ part here. So with that, I will leave this, Joe. Thank you again for “exposing the divorce industry,” is the tagline for the film, and I really believe you’ve done that successfully.
Now it’s I think the harder process, and that is actually changing it. I know you’ve got some amazing ideas about how specifically to change it, and I look forward to bringing you on again and maybe talking about those in more detail.
About the Independent Financial Advisor
Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.