When a Law Firm Partner Divorces

Allow Discovery

The partner should consider suggesting the use of informal discovery to assist his or her spouse in obtaining the information he or she wants or needs.

For example, allow the spouse's lawyer to contact the human resources manager of the law firm for the partner's income and benefits information, or the managing partner for partnership information. If the partner's compensation structure is complicated, the partner may offer to have a conversation with his or her spouse, both lawyers and the managing partner to explain the structure to the spouse and his or her lawyer. Such transparency with the partner's spouse and his or her counsel may provide enough information such that there is no reason to involve the law firm.

In some instances, even with transparency from the partner, the spouse will seek information directly from the law firm. A spouse may request documentation about the law firm, partnership agreements, any compensation agreements and organizational documents. These documents are discoverable to determine the past, current and future income of the partner, the value of the partner's interest in the law firm, and the amount of any liabilities. All of this information may be necessary to determine equitable division, alimony ' if applicable, and child support ' if applicable.

Determining Value of Partner's Interest in The Firm

Additionally, determining the value of the partner's ownership interest in the law firm becomes part of the analysis. Sometimes, valuing an interest in a law firm case can be a costly and time-consuming endeavor. The parties may first seek this information from the law firm in hopes that the law firm has an internal valuation system. Having the law firm place a value on the partner's interest may save time, money and effort. It is more likely than not that the firm will have a partnership agreement that defines how ownership interest is calculated.

If the law firm does not have a methodology in place to value the partner's interest in the law firm, the parties will seek additional documentation from the law firm to conduct a valuation. Those documents may include: financial statements, such as general ledgers, profit and loss statements, balance sheets and tax returns; other financial data, such as budgets, business plans and schedules of officer compensation; other operating data, such as brochures, organization charts, and list of locations; and legal documents, such as articles of incorporation, bylaws, leases, loans and other company documents, such as contingent liabilities. On occasion, the deposition of key personnel in the law firm may be requested.

The law firm should bear in mind that divorce litigation is unique in that it involves many pieces of information sought from multiple sources. For example, if the law firm provides an e-mail account for the partner or provides the partner with a cell phone, the partner and the firm should anticipate requests to view both of those accounts. Prior to providing that information to the partner's spouse and his or her lawyer, establish a plan to protect client confidentiality. It might be beneficial to have a special master review the documents from the partner's e-mail account prior to the e-mails being released to the spouse. The special master can be tasked with reviewing the e-mails and determining which, if any, are privileged. Additionally, the special master could review the phone records to determine which phone numbers belong to clients, and which do not, to protect the identities of the law firm's clients.

Even if the law firm does not provide the partner with a cell phone, the partner's phone records may be requested. If the partner has ever communicated with a client from his or her cell phone, the partner must protect the client's confidentiality.

Confidentiality Order

Prior to providing any information to the partner's spouse and his or her attorney about the law firm, protection must be in place that will control the visibility of the discoverable materials. A comprehensive confidentiality order is essential to this process. It is imperative that the confidentiality order protect the partner, the law firm and the clients of the law firm.

For example, the confidentiality order should define confidential information, state who is bound by the confidentiality order, and determine how to dispose of the confidential information at the conclusion of the case. Although family lawyers often prepare confidentiality orders, the law firm should approve the confidentiality order to ensure it provides the necessary protection for the law firm and the clients of the firm.

Being transparent with the law firm about the status of the case, and what information is being requested will have a major effect in minimizing the impact of the personal business on the partnership. The partner should inform the managing partner in the law firm as soon as possible of a potential divorce or other family law litigation that might involve the law firm. The law firm will need as much time as possible to assess the situation and determine how to protect itself and the clients of the firm. Understandably, the law firm will be wary of allowing another person, like the partner's spouse, to have access to the firm's private information and documents. The law firm most certainly will be concerned about protecting client confidentiality.

The Firm's Role

A law firm is hopefully driven to succeed, and be profitable. Aggressive steps are often taken to ensure that happens. Making special accommodations for a valuable partner going through a divorce may seem like a good idea at the time, but it requires careful thought and consideration before going down that path. Before deciding whether to make certain exceptions, consider whether the firm is willing or able to make these same accommodations to all partners in divorce situations that arise in the future. It is important to think about the law firm as a whole, and how the decision to make an exception in one particular case may affect the greater good ' and future viability. The path of special accommodations can be a slippery one, and likely never undone. The most prudent course is to never put the firm in the position to be forced to make that choice.

It is important for the law firm to consider each person individually as each situation is different. Some circumstances may require significant involvement from the law firm to preserve the law firm and/or the relationship with the partner. Other situations may require little or no involvement from the law firm. It is not advisable for the law firm to put its head in the sand and ignore divorce litigation. It is also not advisable for the law firm to insert itself into a partner's divorce unless it is necessary. Rather, it is important for the law firm to assess each matter individually to determine what involvement, if any, the law firm should have in the litigation.

Conclusion

Divorce is common. Thousands of people go through divorces every year. Those individuals are still able to maintain their employment and run successful businesses. Divorce is not the kiss of death for a partner or a law firm. It may cause some distractions, or it may be a total non-event in the life of the partner and the law firm. Accordingly, a case-by-case analysis of each circumstance is critical to understanding how the situation should be handled.

Robert D. Boyd and Brooke M. French are family lawyers with Boyd Collar Nolen & Tuggle in Atlanta. They may be reached at [email protected] or [email protected], respectively.