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Inadequate Discovery in Matrimonial Actions

By Michael B. Solomon and Itamar Yeager
June 30, 2008

With the advent of fee dispute arbitration, many litigants are quickly becoming more informed about their lawyers' responsibilities. This has led to significant court actions with regard to discharging attorneys 'for cause,' where the attorneys forfeit their fees. In the context of inadequate financial discovery, at least one court has already allowed a client to discharge an attorney for cause, despite the court's view that the attorney did not commit actionable malpractice. Smith v. Smith, Index No. 01-07091 (Sup. Ct., Suffolk Cty., 2007).

Obviously, it is the rare case in which financial discovery is not warranted. For example, where one party to the action is engaged in a professional practice or a business, the value of that practice or business becomes extremely important. This is especially true where the titled spouse claims that some or all of the practice, license or business valuation is separate property.

Oftentimes, the fringe benefits of owning and operating a practice or a business are not readily apparent on the surface. For instance, there may be various additional benefits and personal expenses that the practice or business paid on behalf of the titled spouse. These extras often included premiums for family medical insurance coverage, unreimbursed family medical expenses, automobile expenses (including lease and installment loan payments, insurance, repairs and maintenance), travel expenses, dining and entertainment expenses, telephone and cell phone expenses for personal and home telephones, life insurance premiums, retirement accounts, withdrawals for petty cash, and other expenses, including salaries to family members. In many of these situations, the non-titled spouse often subsumes his or her career to the practice or business 'owner' who likely is the more significant earner of the two.

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