For Comment: Final Versions of the AOC Draft Forms

In my earlier post entitled “New Emphasis on Attorneys Fees” (March 14, 2011), I discussed the new forms for attorneys fees that the Administrative Office of the Courts (AOC) was tasked to implement, pursuant to the recommendations of the Elkins Task Force.

Final versions of these AOC draft forms are now available for comment.  You can easily view them on my website, http://www.privatejudge.org.  Just follow the link in the navigation bar that says “Attorneys Fee Presentation AOC.”  There you will also be able to review the
AOC’s own discussion of these changes.

With these new AOC forms, we do indeed see a significant policy change, soon to take effect (as of 1 January 2012), with respect to attorneys fees in Family Law cases.  An
unrepresented party will be able to request fees in advance for the purpose of
obtaining counsel.  This means that a financially disadvantaged party will be able to request that funds be taken out of the pocket of the other side in order to reduce that party’s available litigation funds and achieve representational parity.  Also, the expense of litigation for both parties will be realized early on and the funds necessary to hire an attorney will be made available more readily to both sides.

I suggest you to take the time to peruse these draft documents either at my website or at the AOC website, http://courts.ca.gov/policyadmin-invitationstocomment.htm, where you can also register your comments.

Please note:  the deadline for registering online comments is June 20, 2011.

Posted in Attorneys Fees, Education About Dissolution, Family Law | Tagged , , , , , , , ,

What do “Private Judges” Do?

First of all, full disclosure:  I myself am a Private Judge.  For six years now as a Private
Neutral, I regularly get hired to do Private Judging.  So naturally I am in favor of it, and I will explain why in this post.

But make no mistake:  my positive opinion of Private Judging is also based on my considerable experience in this area.  From 1997 to 2005, I worked as the Family Court Settlement Officer for the Superior Court of Santa Clara County.  In that role, I would see 5 or 6 marital dissolution cases a day and be appointed the parties’ “Temporary Judge” or “Judge Pro Tem” (an older name for “Private Judge”) for the purpose of conducting settlement discussions.   During this period of my legal career, in other words, I worked as a Private Judge many thousands of times.

For this reason, I am in an excellent position to explain both what this work is and what it is not.

A blog I recently read (www.simplyappalling.blogspot.com/2005/06/hire-your-own-judge-youll–help-system.html) implied that hiring a Private Judge to handle a marital dissolution case is something that only the wealthy or the privileged few would do.

This is simply not correct.  Though there are indeed additional costs incurred in non-courthouse proceedings that are not incurred in courthouse trials, these additional costs, contrary to what one might think, almost always result in an overall cost savings for the litigants.

Why is this so?  Because the cost of hiring a Private Judge is more than offset by other kinds of cash savings–and sometimes quite substantial ones at that. (More on this in what follows.)

So Private Judging is not simply “for the wealthy.” Rather, it is for almost anyone whose income or assets exceed the level of “very modest.” It is also for those who want to
control their own solution without being held hostage to or dominated by the other party, and it is for those who  don’t want to engage a private attorney for representation.

In other words, Private Judging is indeed for almost anyone.

So now, let us begin with the basics:  what exactly is a “Private Judge?”

As stated above, “Private Judge” is simply another name for the formal legal job title of “Temporary Judge.” A Temporary Judge/Private Judge (a.k.a. Judge Pro Tempore) is an
attorney who meets specific California legal qualifications and who is appointed by the parties with the consent of the Court.  Within the parameters of her/his appointment, a Temporary Judge/Private Judge generally has the same responsibilities, authority and roles as those of the full time, courthouse judicial officers, including being bound to the judicial code of ethics.

How does one go about hiring a Private Judge?

The appointment of a Private Judge begins with the parties themselves filing with the Court an agreed court order known as a stipulation and order for “APPOINTMENT OF TEMPORARY JUDGE,” or “Stip” for short.   In this Stip, both the type of work and the scope of authority of the Private Judge are clearly defined.

By the agreement of the parties, a Temporary Judge can be limited in jurisdiction to one or more types of issues (substantive) – such as Real Estate Sale, Child Custody, Attorney
Fees, Discovery, Tracing Retirement Accounts, Allocating Stock Option and RSUs,
etc. — or to a particular scope of authority (procedural)–e.g., All Purpose (unlimited) scope of authority, Settlement only, Case Management only, Referee only, etc.

Once parties have embraced an individual in the role of Private Judge, they are committed to using the PrivateJudge according to the stipulated terms of her/his employment.

What exactly does a Private Judge do? 

In general, Private Judges provide neutral, third party input on probable solutions to legal matters.  This input can be determinative and binding, or simply advisory and educational, depending on how the order of appointment is drawn.

Private Judges also have the ability to give litigants and parties practical guidance whenever this is needed or appropriate.   For example, a Private Judge might advise parties about motions, hearing orders, settlement recommendations, and trial and judgment matters.  She/he might provide other kinds of assistance as well, such as assistance with difficulties between clients, between attorneys and even between clients and attorneys.

Drawing on a broad base of experiential antecedents, as well as on possible, unconsidered options within various legal parameters, Private Judges are adept at providing creative
solutions to the legal matter at hand.  The combination of their legal expertise, managerial skill and analytical perspective keeps the adversarial process moving along and on track
to a final, judicially-approved court order.

In short, Private Judges, just like conventional courtroom judges, address the considerations of both sides, but unlike conventional courtroom judges, Private Judges are much more welcoming of party-input when it comes to the crafting of a final agreeable,
compromised solution.  In this respect, parties working with a Private Judge often have more autonomy than they would have in a court trial when it comes to determining a final outcome.

Also, Private Judges are often able to work in a much more timely and efficient manner than a conventional judge would be able to do, simply due to the fact that their case loads are in the tenths of a percentage of those handled by the regular judicial officers.

How much does a Private Judge cost?

Typically, Private Judges charge an hourly rate, in the same manner as other legal professionals.  However, because the cost of hiring a Private Judge is shared equally by both parties, it is usually less than the cost of a representational attorney.

Of course, what one finally pays to hire a Private Judge is always affected by the actual hourly rate and by the services provided.  For example, the degree of the Private Judge’s active involvement, the amount of preparation required and the kinds of formal procedures used (telephone-conference, web meeting, face-to-face meeting) all will bear on the final cost.

Whatever the cost of a Private Judge turns out to be, this cost must always be balanced against the ultimate cost-savings that Private Judging brings.

Private Judges are typically expert in the field of law that pertains to the cases they try.   They are able, therefore, to size up the facts of a case quite quickly and move swiftly from a perspective of conflict to a perspective of resolution.  This efficiency factor saves parties hourly rate costs and lengthy waiting times that are typically associated with conventional courtroom proceedings (e.g. attorneys resolving disputes with filing a motion, and response, which usually takes 2 hours per side; waiting 6 to 8 weeks to get to a court hearing date; waiting around almost half a day for the judge’s attention and then having only 20-30 minutes of hearing time with a Judge whose background is not at all in
the field that relates to the legal matter at hand.)

For motions, the expected savings will be approximately $3000 to $5,000 per side; for contested cases, the savings are usually in the range of 25-33%.

Private Judges also cut down on some other key elements of attorney costs.  For example, they can accept letter of pleadings indicating the issue in conflict and the factual background for this specific case, thereby avoiding formal pleadings and drafting, and saving 2 hours of attorney time.  Private Judges can also engage in a teleconference for a hearing, thereby saving 6-8 hours of attorney preparation and travel time.

And usually, Private Judges have heard the issue at least 50, if not 2000 times before.  But even if they have not, their familiarity with the legal context of the disagreement means that they will be able to address the conflict succinctly and directly, either giving an indicated decision on the spot, or guiding investigation and factual development in a
productive direction.

To summarize…

Almost all people engaged in dissolving a marriage can look forward to these advantages from using a Private Judge:

  • Cost savings
  • Expertise
  • Convenience
  • Privacy / public avoidance
  • Rapidity
  • Greater party autonomy

By providing parties with savings of cost, time and psychological or emotional trauma, as well as with more autonomy in determining the terms of a final divorce agreement, Private Judging is definitely a route that many divorcing couples will want to consider, either
with attorneys or on their own.

©2011 James Frederic Cox

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Trust Accounts and PayPal: Caveat Counsel

Allow me to share with you a cautionary story about PayPal and an attorney’s trust account.

In a recent marital dissolution case, by stipulation, an attorney placed the proceeds from the sale of a house in a trust account, for the benefit of both parties.  The account was opened under the attorney’s name and in the social security number of one of the beneficiaries.  It was formally established that authorized withdrawals from this account could be made only on written agreement or by further court order.  As the monthly statements for the account were received, the attorney-trustee routinely sent copies to opposing counsel and to both parties, thereby discharging his fiduciary responsibility.

On one of the monthly statements, the trustee discovered 5 unauthorized transactions, all of which related to a PayPal account that had been connected to this trust account.  There were two de minimis deposits, a subsequent withdrawal of the combined deposit amounts, and several  separate $5000 withdrawals.

Investigation disclosed that all 5 transactions had been accomplished automatically, entirely independent of any bank staff involvement.  The bank, thus, was not at all able to limit this activity.  Apparently all that was needed to initiate these automatic procedures was for someone to provide PayPal with the account number and relevant social security number, and for PayPal to verify the account’s existence through sequential deposits and a withdrawal.

Upon realizing what had happened, the bank promptly re-deposited the funds and changed the account number, but then, strangely, refrained from working further with the attorney about the issue.  Luckily, the funds withdrawn in this instance were small, and did not exceed any possible absolute minimum to which either party could lay claim; but certainly, the situation could have been much worse, given that there had been–and still were–no limits or restrictions to keep further withdrawals from happening.

And so, in wake of this incident, I strongly recommend that both attorneys and client-beneficiaries be very circumspect with trust fund account numbers, and keep a very close watch for unusual account activity.  It is also a good idea to engage in advance with your financial institutions to find out what, if any, provisions are in place to prevent this type of potential problem.

©2011 James Frederic Cox

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New Emphasis on Attorney Fees

At a recent Administrative Office of the Courts (AOC) training session, I and Commissioner Louise Bayles-Fightmaster made a presentation on attorney fees in family law cases.  Commissioner Bayles-Fightmaster served on the Elkins Task Force, and continues to serve on the Task Force implementing committee.   Pursuant to the Task Force recommendations, several changes have been made in the statutes pertaining to, and the practical management of, attorney fees.  Guiding these changes is a strong policy push, as Garrett Dailey puts it, to ‘award fees early and frequently’ in order to ensure parity between the parties and equal access to justice.

To effectuate these changes, the AOC was tasked with implementing a new court rule and brand new forms for attorney fees.  At the AOC training session, draft versions of the new forms were made available for discussion and comment.  Final versions of these forms will be released for comment on 20 April 2011. 

You may view the AOC draft versions of the new forms right now on my website, at www. privatejudge.org.  After April 20, final versions of these forms for comment will also be on my website.  Feel free to take the time to register your comments with the AOC through its web site, http://www.courtinfo.ca.gov/invitationstocomment/acommentform.htm. 

Of particular note is the fact that an unrepresented party can now request fees in advance for the purpose of obtaining counsel. Thus, a financially disadvantaged party will now be able to request that funds be taken out of the pocket of the other side, thereby reducing that party’s available litigation funds, achieving representational parity, establishing early on the cost of litigation for both parties and in the end, coming up with the funds necessary to hire an attorney.

Also important is that the requirement in FC 2032 has been softened so as to allow the court more latitude in dealing with attorney fees in instances of complex litigation.  The court can now clearly authorize the appointment of a CCP 639 Referee to determine the issue of fees.

The substance of the presentation is on my website under AOC presentation if you wish to review it in more detail.

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Handling Real Estate in Dissolutions

In dissolutions, the single most valuable asset of the parties is typically the family home.  This asset gives rise to a number of issues that the parties must address in settlement, or that the court must address in trial.

First and foremost is the issue of net value (equity) in the property.  By comparing the current valuation to the outstanding obligations secured by the property, the parties must determine whether their real estate is an asset or a liability.    There are several ways to determine the value of the property:  a real estate agent’s Competitive Market Analysis (CMA); the parties own opinion of value; the value of other local properties and current listings; and a formal appraisal by a certified residential property appraiser.

Appraisers aim for accuracy, but since their work entails valuing a unique piece of land and construction, their accuracy will vary in pre-determining what a willing buyer would pay to a willing seller in full possession of all the facts in an arm’s length transaction.  Typically, the appraiser tries to be as accurate as possible, recognizing at the same time that his/her accuracy range will always be about plus or minus 5%.  On a $500,000 home, for example, the accuracy range would be from $475,000 to $525,000.

Given this situation, it is fair to say that an appraisal of real property will always be incorrect.  It might be high or it might be low, but it will never simply be ‘right.’  Nonetheless, an appraisal of real property does indeed constitute an independent and unbiased determination of value.

Though the Santa Clara County Family Law Bar does not endorse any particular appraiser or appraisal company, certain local appraisers have been called upon repeatedly in determining real estate values in dissolutions.  In general, there have been good results here and acceptable proficiency.

After determining a value for their property, the parties must then move on to adjust that value for specific conditions.  An appraiser assumes that all systems and features of a house are in normal, serviceable and working condition.  However, such is seldom the case.  In fact, at the time of sale, there are usually additional costs in the range of $5,000 to $15,000 due to the fact that during escrow, the parties are routinely obliged to deal with imperfections in any of the six big home conditions: pest, roof, structural, plumbing, electrical, and heating/cooling.  To assess with clarity the impact of any deficiencies and to arrive at a more accurate assessment of final real estate valuation, a party should obtain inspection reports and repair estimates.  The costs of such inspections are usually less than $1500.

Once such value adjustments have been made, the parties can then compare the property value to the secured obligations and thereby determine if the net is positive (i.e., has some equity), valueless, or negative.  Each result here will engender a different perspective on how to handle the real estate in the dissolution.

The following discussion applies only to situations in which there is positive or zero equity in the property.

When there is a non-negative determination of real estate value, the home will either have to be sold to a third party or to one of the spouses (a ‘buy out’ of the other party’s interest).  Both of  those alternatives lead to the question of what the appropriate price would be between the parties, as it is usually impossible to divide a home in kind between the former spouses [you take the upstairs and I’ll take the main floor; I’ll trade you a bathroom for the den.]

Since costs of sale occasioned by the ‘buyout’ or transfer of real property (i.e., the family home) to one party are considered speculative expenses, they are usually not allowed in determination at trial.  However, since a buyout represents a cost savings to the bought out individual (i.e., the Seller) and an assumption of future cost on the part of the payer (i.e., the Buyer), it is appropriate for both Buyer and Seller to split the benefits in relation to these costs of sale.

Elements to consider are these:

Accuracy of valuation as discussed above.

Amount, degree and effort in upgrading any deficiencies in the condition of the house.

Administrative costs of sale, which include non-recurring closing costs, execution costs, and inspection costs. These often cost the Seller between $600 and $3000.

Property transfer tax, which in Santa Clara County is 1% of the sale price.

Commissions for real estate agents.  Though the typical arrangement is 6% of the sale price, it is usually easy to negotiate a reduced commission that is between 4.5% and 5.5% of the sale price.  Normally, 3% of the commission is allocated to the Buyer’s agent and the remainder to the Seller’s agent.  The commission is discounted further by 0.5% if a single agent double-ends the entire transaction.

All the aforementioned costs and estimates add up to about 7% of the sale price and the total effect here is that the party being bought out (i.e., the Seller) saves between 2.5% and 5% of the sale price.  Thus, it is appropriate for the Seller to discount his/her demand for his/her share of the proceeds of the sale by $5,000 to $10,000, unless specific repair costs are proved.

©2010 James Frederic Cox

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Understanding the Dissolution Process in Santa Clara County

In Santa Clara County, people can find out about the dissolution process from a number of different sources.

The first and perhaps best source of information is the Superior Court Self Help Center, co-located with the Family Court Facilitator at 99 Notre Dame Avenue, San Jose, CA 95113.  Not only are attorneys available there to give general guidance and answers, but the walls are literally papered with form packages, handouts, and brief guidance.  The down side is that a user line forms every morning, and there is literally a capacity limit to the amount of work the center can do.  Also, the staff is limited in amount of specific guidance they are allowed to give, as they do not undertake representation or establish a lawyer-client relationship.   They have a website, scselfservice.org, that ties in to the other online Court and State legal resources.

To learn about the law and processes involved in dissolutions, there are a number of self-help books on the market.  Most can be checked out from the local library, or purchased in the local bookstores.

The book that I personally know best is called How to Do Your Own Divorce in California, which is re-published each year with new forms.  It is published by Nolo Press, http://www.nolotech.com/CA/dyod.html, which has a whole series of legal self-help books in California.

The first 50 pages or so of is a nice summary of the law of dissolution for background.  The rest of the book is dedicated to tear-out forms and samples that are useful in the normal case.  There is also a CD with editable copies, including a pretty standard Marital Settlement Agreement sample.

There are also at least two other books specific to California and even Santa Clara County: Here’s How to Get a Divorce in Santa Clara County by Robin Yeamans, and  Divorce Handbook for California: How to Dissolve your Marriage without Disaster by former Judge  James Stewart.  I have no doubt they are very good, and I do not endorse or recommend one over the other.

The legal statutes and rules that apply to marital dissolution in California are available online (mostly through the state court sites).  These would be the Family Code, and the pertinent Rules of Court, and in each county, the implementing local Rules for Family law.  For a secondary “encyclopedia” of family law to look up answers, I usually go to The Rutter Group (TRG) treatise by Hogoboom and King.

©2010 James Frederic Cox

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