Femme Finance

10.05.13

Divvying Up the Cash? Don't Hide a Thing

In an excerpt from her new book, 'It Doesn't Have to Be That Way,' celebrity divorce lawyer Laura Wasser explains why transparency is crucial to divorce in the digital era.

A client I’ll call Blair was the stay-at-home wife of a highly successful corporate executive—call him Doug—who spent a great deal of time traveling on business. Doug’s frequent, prolonged absences may have been one reason their marriage was unraveling, but Blair found another when she noticed a charge on the couple’s AmEx bill for $2,799, paid at what she knew to be a very fashionable women’s clothing store in New York.

Blair hadn’t been to New York in years, but Doug had been there precisely when the purchase was made. So Blair phoned AmEx customer service, identified herself as the joint holder of the account and the wife of the purchaser, and asked the agent to “remind” her what the transaction in New York was all about. It was for a single item, she was told: a Chanel clutch bag. Certainly a classic in the world of fashion accessories, but not exactly Doug’s sort of thing, and he clearly hadn’t bought it for his wife.

That evening, while Doug was showering, Blair scrolled through the backlog of calls on his phone and found a whole lot of calls to and from someone named Chanelle. A coincidence, despite the variation in spelling? Blair tapped “Call Back,” and a woman answered. Blair introduced herself and asked the woman if she knew Doug.

“Yes, I do,” said the woman.

“May I ask how you know him?”

“I am a professional call girl,” Chanelle explained. “I have had a relationship with Doug for more than a year.”

Blair took a moment to let this sink in. Then: “Do you by any chance have a record of the times you met?” she asked.

“Oh yes,” said Chanelle. “I have all of it. I keep it all on the iPad he bought me.” She paused. “I use the Mint app, so I can sync with my iPhone and my laptop as well.”

It was certainly gratifying to know that Chanelle’s recordkeeping could be accessed so easily and on so many devices. It also prompted Blair to put forth a proposal. “If I buy you an airline ticket and put you up at the Four Seasons Hotel, would you be willing to come out here to California and tell me all about it?”

“Business class?” Chanelle asked.

It would be, and Chanelle did, and the result for Blair was a detailed record of thousand-dollar-a-day assignations; lavish evenings at the legendary Petrossian restaurant, where Chanelle and Doug shared their appreciation of fine caviar; and of course the almost eponymous Chanel clutch for Chanelle. In all, Doug’s misappropriation of community property, which he did not deny, amounted to some $200,000, for half of which he of course had to indemnify Blair in the final divorce settlement.

The point of this story is not the divorce, however, but the fact that it took Blair a total of about six minutes to find out exactly what her husband was up to on all those out-of-town business trips. It is yet another reminder, if one were needed, that it is virtually impossible to hide anything you do in this age of e-mailing, Instagram, GPS- equipped smartphones, and all the rest of it. Ask David Petraeus, Eliot Spitzer, Anthony Weiner, and a host of other once-powerful figures. And especially where financial matters are concerned, when it comes to dissolving a marriage, any dissembling at all is strictly against the law—on penalty of perjury. You need to disclose fully and factually, which is precisely what the discovery process is all about.

The Purpose of Discovery

As its name makes clear, the discovery process is about bringing to light information, situations, and truths that might otherwise remain out of sight. Money is the primary if not the sole focus here. As Deep Throat hinted to Bob Woodward during The Washington Post’s Watergate investigation, following the money is essential; it will almost always take you to other underlying or latent realities.

But discovery is not just an exercise in sleuthing. It has a very practical purpose— namely, to enable you to make the case for the settlement you will ask for, and to provide you with the hard evidence that supports your case. I have been in situations where it was clear that one party really had no coherent facts to back up the claims made. In a recent case, for example, the opposing counsel insisted that since my client admittedly had an estate valued at $10 million, the departing wife was entitled to $5 million, not the $2.5 million we were proposing. It was an easy matter for me to demonstrate that my client had $5 million at the time of his marriage; he earned another $5 million during the marriage. His soon-to-be-ex therefore was entitled to $2.5 million, half of the community property earned during the marriage. All anybody had to do was look at the record. The documentation was as clear as Chanelle’s, and it told a straight story. Knock off a few zeros; the application is the same. As my CPA friends like to remind me, numbers don’t lie.

A straight story is what you want your lawyer to have when he or she goes into court to make a legal argument on your behalf. Discovery is the process in which you put that story together. What is learned in discovery will shape the story the lawyer tells to make your case and articulate the legal argument on your behalf.

So the cardinal rule for the discovery process is to put it all out there. Don’t hold any information back from your lawyer or, by extension, from the spouse you’re splitting from. Not the extra credit card you got for your own exclusive use and which you think is not really anybody’s business but yours, not the cash you pay for Botox treatments you would prefer to keep to yourself, not the minuscule income you received last year for a short story you sold to a literary review absolutely no one has ever heard of.

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For one thing, it’s a solid bet that anything you conceal will come out anyway. In this digital environment, it’s bound to; in fact, the longer something is concealed, the better its chances of going viral. That represents a considerable difference from a generation ago, when it was not unknown for parties in a divorce to indulge in creative accounting or the artful disposition of cash to avoid putting all of their financial cards on the table.

Perhaps as a result of those disinclinations to reveal the whole truth, family law has developed compelling rules of procedure for eliciting a broad range of information. When you fill out and sign one of the several form interrogatories we’ll discuss in a moment, you’re effectively under oath. As I don’t have to tell you, dissembling when under oath is a very bad idea and can have extremely costly consequences.

There’s a famous case of a woman who separated from her husband, bought a lottery ticket, and won a pile of money. The winnings definitely qualified as her own property, since she had purchased the ticket well after the date of separation, but inexplicably, she did not disclose the gain. Of course, the word got out, and the judge, while conceding that the lottery prize money was indisputably hers, nevertheless ordered her to pay half of it to her ex-husband in the final settlement— as a penalty for her failure to disclose.

One more thing: The public today is vastly more financially sophisticated than were our parents and grandparents. Dual-earner families, financial broadcasting 24/7 on television and the radio, and more people than ever before participating in such financial activities as stock market investing, mortgages, student loans—as well as in foreclosures and bankruptcies—mean that just about everybody is pretty familiar with how money works. It also means that people keep track of their finances in a way they probably did not a generation ago.

All of this—the broader knowledge about financial matters, the procedures for disclosure, and the fact that no reason or excuse for nondisclosure can beat out the technology of revelation—also means that trust really can be the engine of divorce in the twenty first century. Trust, it turns out, is the most cost-effective route to disengaging from your spouse, and full disclosure is its essence. When Doug owned up to his affair with Chanelle, it made it easier for Blair to believe he was owning up to everything else as well, that he wasn’t trying to hide things. That, in turn, made her less inclined to try to soak him for every penny no matter how long it took or what it cost either one of them— both financially and in terms of any civil feelings the two might ever have for each other. Whatever information you have, put it out there. It will cost you less and can gain you much more than you suppose.

From It Doesn’t Have to Be That Way by Laura Wasser. Copyright © 2013 by the author and reprinted by permission of St. Martin’s Press, LLC.