Family Law Reform Conference Report

Here are some notes about the things that struck me when attending the Divorce Corp. Family Law Reform conference, November 15-16 in Washington, D.C.

Joe Sorge opened the conference by framing some of the issues (slides). In his view, setting up a litigated winner/loser system is harmful to children because (1) it takes a long time, (2) tends to inflame tensions between parents, and (3) drains parental financial resources. Additional harm is done by having a single human being, the trial court judge, make all of the decisions regarding a child’s future (as a practical matter, because these are decisions of “fact,” a divorce court judge’s decisions are not reviewable by an appeals court). Why is the end of a short-term American marriage a mad litigated grab for kids, cash, and long-term financial support for apparently healthy working-age adults? Sorge, whose own former partner collected assets worth about $14 million from him in her first lawsuit against him, had to keep defending additional actions (seeking more money) for a 12-year period. He noted that Federal Law, via Title IV-D of the Social Security Act, provides financial incentives for states to establish a “dominant” parent and entering child support awards to be paid by the secondary parent to that primary parent. Necessarily there were explicit disincentives therefore for states to award shared parenting. Sorge thought that the divorce industry was an anachronism that persisted due to its use of some of its $50 billion in annual revenue for lobbying. He pointed out that in the 1970s only 30 percent of mothers worked while today approximately 70 percent of mothers do. “Women age 25-34 make 88 percent of what men earn,” Sorge pointed out. There is thus a system built on the assumption that women cannot or will not work embedded in a society where women, at least those who are not alimony and child support recipients, do generally work.

Sorge pointed to Sweden as a model. Divorce is generally an administrative procedure, akin to working with the IRS on taxes in the U.S. Only about 1-2 percent of divorcing couples end up embroiled in the legal system there. You can’t get rich having a child with a high-income co-parent. Child support is fixed, according to Sorge, at roughly 1/2 the cost of feeding and clothing a child. Each parent is responsible for half of this amount (currently about $4000 per year total, which means $2000 per parent per year). Although litigation is much cheaper in Sweden than in the U.S., it is discouraged by the country’s practice of making each parent pay his or her own fees, unlike in many U.S. states (such as Sorge’s California) where a $200,000/year plaintiff can get a $300,000/year defendant ordered, as a matter of routine, to pay the fees on both sides of the lawsuit (thus removing any incentive for the plaintiff to settle).

The first formal presentation was by Malin Bergstrom, a Swedish epidemiologist who used data from a national survey of 172,000 children aged 12-15 (slides). Due to the lack of financial incentive to seek sole parenting in Sweden, approximately 40 percent of Swedish children of separated parents live in a 50/50 arrangement. This plus the fact that she used a comprehensive national survey means that Professor Bergstrom worked from better data than any previous researcher on the every-other-weekend versus shared parenting question. Her results? An intact family is best for kids, but a 50/50 arrangement is pretty close in terms of the child’s mental and physical health. Children who lived primarily with their mother did substantially worse and children who lived primarily with their father were even more disadvantaged. Bergstrom noted that when a mother has pulled back to every-other-weekend (or less) in Sweden it is usually due to mental health or substance abuse problems.

The U.S. is unusual internationally due to the following factors: (1) there is no official custody presumption (i.e., children are up for grabs), (2) obtaining custody of children can be more profitable than going to college and working, and (3) litigation is the default process for a divorce or a custody and child support determination. No society in the history of humanity has ever devoted as high a proportion of its resources to custody litigation and wealth transfers via child support. I talked with Bergstrom a couple of times privately during the conference. She said that she hadn’t known anything about the U.S. system before coming to speak and was amazed that a society would set things up the way that we had. In response to the clinical psychologists who said that they wanted to be involved (paid) in every custody lawsuit to determine which parent had a narcissistic or borderline personality disorder, she said “Don’t you need to have a system for normal loving parents as well?”

One area that has been mystifying is why American parents fight so hard over custody and parenting time schedules that affect child support revenue. The fight plainly makes financial sense when $200,000 per year in tax-free cash is at stake (e.g., when suing a radiologist or dermatologist), but why when the numbers are closer to the USDA-estimated costs of child-rearing? And if kids are really as expensive as state child support guidelines suggest, why don’t married parents put most or all of their children up for adoption? For our forthcoming book on divorce, custody, and child support laws in the 51 jurisdictions nationwide we interviewed policy makers in a variety of states. An Illinois family law drafter (and also a working divorce litigator, as seems to be the typical arrangement nationwide (i.e., the litigators write the laws)) was presented with a hypothetical scenario of two physicians, each of whom earned $200,000 per year after taxes, with two children together. Assuming a 60/40 parenting time split, the loser would pay the winner $56,000 per year in tax-free cash. Assuming young children, therefore, the wealth difference for these two equal earners would be approximately $2 million by the time the kids aged out. The policy maker responded that the parents would not be motivated by this $2 million to seek to become the 60-percent parent as opposed to the 40-percent parent. “Child support does not compensate the parents for having children,” she said, taking the position that $56,000 was not nearly enough to pay the expenses of two children.

William Comanor, a professor of economics at UCLA, shed some light on the issue (slides). Economists have identified two main flaws in the typical state’s child support guideline numbers. The first is that the non-custodial parent, e.g., the one who takes care of a child 40 percent of the time in the above example, is considered to have zero expenses for housing, food, clothing, transportation, etc. The system as designed, therefore, gives the primary parent’s household a much higher share of the combined parental income than the secondary parent’s household even when the children spend a substantial percentage of their time with the secondary parent. Comanor did not address this issue, which has been previously covered by economists (see this 2013 report to the Massachusetts commission).

Comanor’s talk, and a forthcoming journal article, related to how people figure the actual cost of children in intact families, which is the starting point for many child support calculations (“Put yourself in the child’s diaper,” one California attorney said, saying that the relevant question for the judge is “How much would have been spent on the child if these two people, instead of just meeting for one night in a bar, had gotten married and stayed together until the child turned 18?”). Big components are food, housing, and transportation. How much does a married couple with one child spend on transportation for the child? The conventional approach has been to take what they spend on transportation and divide by three. Comanor used the same U.S. Census Bureau data regarding consumer expenditures that the USDA uses and found that the actual number is pretty close to $0: married couples with and without children (except low-income families with three or more children) spend about the same on transportation. Similarly for housing. Some approaches take the cost of a house or apartment and divide by the number of people occupying it. Other conventional approaches have been to estimate the housing cost of a child by looking at the marginal cost of a two-bedroom apartment compared to a one-bedroom apartment. Professor Comanor looked at what American couples, with and without children, actually do spend. It turns out that on average a married couple with no children will spend the same as a married couple with one child. Maybe a guest bedroom or den turns into a nursery but the actual dollars spent doesn’t change until the second child comes along. Similarly, spending on food is about the same before and after the first child arrives. Comanor finds that the basic cost of a child in an American household with less than $56,000 per year in pre-tax income is about $4300 per year, i.e., not very different from the Sweden child support number and about the same as what some Western states use as the starting point for child support (adding in an extra amount for luxuries if the parents’ income is larger than $15,000 per year or so). Comanor’s number is somewhat lower than foster care reimbursements in most states ($6000 to $8000 per year per child). That’s about 10 percent of the top of the Massachusetts child support guidelines (suing a $250,000/year earner yields $40,000 per year in tax-free child support), which means that a Massachusetts plaintiff could expect a 90-percent profit on child support revenue, assuming that the child’s clothes are purchased at Target.

[A smaller issue with child support guidelines is that spending by single-parent households may be overstated. Since child support is not “income” a single parent with a $50,000-per-year job who collects $50,000 per year in tax-free child support may fall into the “$50,000 per year” income category, though he or she would have a spending power closer to that of a person with $135,000 per year in taxable income. There would still be a lack of comparability if the example single parent were considered to have a “pre-tax income” of $100,000 per year because a married couple with $100,000 in income would pay taxes on all of it. Comanor wasn’t sure which conventional approaches, if any, were adjusted for these factors. His own analysis shows higher spending on children in “single households” than “married households” with the same “income”.]

Using OECD data on the amount of hands-on time put into child care by working parents (about one hour per day, averaging weekends and weekdays) and Comanor’s analysis of the Census data, obtaining custody of a child and collecting child support should be worth about $150 per hour at the top of the Massachusetts guidelines, for example (assumes two-thirds/one-third parenting time split and a $250,000-per-year income for the loser parent). The Bureau of Labor Statistics says that a “private nonfarm” worker in American earns an average wage of less than $25 per hour. Given that child support is tax-free and wages are taxable, a thoughtful custody and child support plaintiff should be able to earn at least 8X per hour compared to a W-2 employee.

Attorneys whom we interviewed both before and at the conference told us that allegations of child abuse are common whenever profitable custody of children is being sought. Dr. Joyanna Silberg (web site), in a panel discussion, noted that children are not being protected from actual abuse: “Family court looks at children as property for one side or the other.” What does this experienced therapist say about the custody evaluation or guardian ad litem process engaged in by psychologists nationwide? “It’s a game of chance whether a custody evaluator gets it right,” she said. Silberg noted that the divorce industry misleads with precise-sounding terms that are meaningless to psychology professionals. “High conflict is not a helpful label,” she pointed out. “You need to look at motives. A mugging is not a ‘high conflict wallet dispute.'”

[A Texas lawyer explained his theory for why the heavily funded child abuse prevention agencies weren’t more effective: “Child Protective Services gets a report on every father in high-income custody and child support cases. They love to go out and investigate upper-middle-class white men in safe neighborhoods and will spend a whole day with a father who is the target of a custody action. CPS social workers don’t like to go into housing projects where they might get their asses kicked.”]

The “extreme family law” position taken by a handful of attendees, including some attorneys, is that there is a constitutional right for a fit parent to associate with a child and vice versa. Therefore if a family court judge orders that a child spend the vast majority of his or her time with one parent, the loser parent need only walk into federal court and say “I want my parental role back, which means at least 50/50 parenting time.” Similarly for decision-making with regard to the child, the parent who loses a divorce and custody lawsuit shouldn’t be stripped of what is traditionally called “legal custody” and be forced to watch the winner parent and possibly a judge make all decisions going forward. I challenged this by asking “Given that there are rich New Yorkers who have been turned into every-other-weekend aunts or uncles and they can afford the best lawyers in the world, if it were as easy as going to federal court to get their kids back, at least half time, wouldn’t they have done it?” Law professors in attendance said that it was important to distinguish between the state trying to take away a child from a parent (Supreme Court has said that there are limits) versus a co-parent trying to take a child away, with help from a family court (there are essentially no limits). To some extent the Alaska Supreme Court seems to agree with the constitutional argument, ordering that trial judges stop picking a primary parent absent some sort of abuse or unfitness. But the litigators and law professors weren’t losing sleep over the federal courts putting some limits on state courts and statutes. One law professor said “Parents are voluntarily relinquishing rights and asking a judge to make a decision” to which another professor responded “well, at least one of them is.”

[One area that is less clear is the case where a judge picks time with a commercial care provider over time with a fit parent. Increasingly custody and child support plaintiffs have full-time jobs. Thus they are seeking “custody” or “parenting time,” and the child support revenue that accompanies each hour, during periods when they’re at a W-2 job. This leads to court orders for the child to be in a commercial day care, mostly paid for by the defendant parent, even when a defendant is available to take care of the child personally. James Dwyer, a professor at William and Mary law school in Virginia, said that this is an example of an area where there might be a successful constitutional argument.]

Stephen Erikson, one of the nation’s most experienced divorce mediators, explained what is happening in that corner of the family law world. He noted that “the court system creates a conflict over money and no incentive to end the conflict.” It is an adversarial system that quickly gets vicious because “courts teach fighting” and it doesn’t work well for divorce because “family problems are more complex [than the typical contract disputes for which courts were designed].” Couples who mediate are, according to Erikson, opting out of the child support system about 75 percent of the time. “They will fund a joint account in proportion to their IRS 1040 incomes,” said Erikson, “and pay the child’s direct expenses from that account.” Neither parent then looks to the other for payment of rent, food, and other household basics. (Note that opting out of the child support system in Erikson’s Minnesota means giving up a maximum of $22,500 per year (for one child) due to the state’s cap; opting out in neighboring Wisconsin could mean giving up millions of dollars, since child support is unlimited by design and formula.)

Attorneys agreed that everything depended on the family court judge and that results would vary hugely, even within the same state, with different judges. They also agreed that judges could be influenced by personal connections and campaign financing (in states where judges were elected). “A good lawyer knows the law; a great lawyer knows the judge,” said one speaker.

The conference featured people with diverse beliefs regarding fairness, justice, and the best way to resolve family law cases. After two days there were still a lot of differences of opinion, as might be expected given that attendees came from states and countries with radically different systems. The main point on which all speakers were able to agree was that child support should not be profitable “because it puts children in the middle.”