The Economics of Divorce, Part I

If you are considering divorce, the best advice I can give you is don’t do it. Divorce is difficult for people financially and emotionally. It is common to go into debt when you divorce. It is very expensive to hire an attorney, but this is just one of the many additional expenses you incur when you divorce. Many people are puzzled as to why it can cost so much to get a simple divorce. I want to discuss the economics of family law attorneys and why attorneys can charge so much. I admit the information I am giving you is probably not important for you to know. Economics is not a subject that people enjoy. I know, I taught economic for over thirty years. But economic theory helps to explain how family law attorneys can charge so much, and how I can charge so much less than other attorneys and make money. Supply and Demand does not equal equilibrium - so there is a shortage of family law attorneys.

Start with supply and demand. In a competitive market, you have supply and demand, and equilibrium. This is where the cost is determined in a competitive market. But we do not have a competitive market because we have a shortage of family law attorneys, so we do not reach equilibrium. If we had a truly competitive market, I believe that the price to hire a family law attorney would be $1500 to $2500 (which is what I charge). A shortage of family law attorneys means that the price is artificially high. Think about hand sanitizer and toilet paper during the pandemic. Why there is a shortage of family law attorneys: 1. Most attorneys don’t want to practice family law – it is not a popular area of the law. You very rarely see attorneys from ranked law schools practicing family law. Look at the law schools that family law attorneys attended. Most of the time, they attended the lowest ranked law schools. 2. Low bar pass rate in California. The bar pass rate in California is the lowest in the country. This affects students from poorly ranked law schools as they are much less likely to pass the bar. Again, most family law attorneys come from poorly ranked law schools. If California had a higher bar pass rate, there would be more attorneys - and more attorneys practicing family law. This would naturally bring down the cost. The California Bar Association determines how many people pass the bar. Its membership is made up of practicing attorneys. The Bar Association’s policy is that fewer people should pass the bar. This means that the people who benefit from the policy are the ones making the policy. It is not hard to see how the cost of an attorney is artificially high. 3. It is expensive to start a family law firm with big offices, support staff and other amenities. The way most attorneys practice law does not work well with family law. Attorneys want to charge top dollar. To do this they need large offices with large conference rooms. These offices are expensive and require long leases. You need support staff, copy machines, phone lines. All this is unnecessary in family law. But this is the model most firms follow. This drives up the amount the attorney must charge. It also drives up the cost to enter the field - limiting the number of attorneys available and driving up the cost to the client.

4. Most attorneys don’t have the skills to handle the emotional aspects of family law. Family law lawyers face threats and violence more than any other field of the law. You are dealing with people going through a very difficult period in their life. there is no way to keep emotion out. surveys show most new attorneys do not want to deal with these issues. 5. Law school is expensive; and many new attorneys have large student loans. Family law does not pay well. If you work for a family law firm, you probably make less than your plumber. Or a teacher or a nurse. There is little chance to move up unless you can open your own firm. All this creates a shortage of attorneys and because of this shortage, you pay more than you would in a competitive market. This is where I see the opportunity to make money. My target is the 80% of people who need services but cannot afford them or struggle to pay for them. The way to serve these clients and tap into this market is to do things differently. Cut expenses. Avoid the problems that create the conflicts that people have with their attorneys. Work with your clients - and enjoy the job more. I don’t use billable hours so I have no incentive to pad your bill. The pressure is on helping the client – not billing the client. I don’t have to have uncomfortable conversations with my clients about unexpected bills. Of course, I have an advantage. I don’t ever have to work again. I have enough money to live well the rest of my life. But I enjoy family law. I not only want to do more and charge less - but it is my hope to show this is a viable economic model and more attorneys will offer affordable legal representation to people who need their services.