Very early on in the process of a divorce you need to decide what to argue about, and to do that you need to answer the following questions about each issue you and your spouse are likely to disagree on:
To make good decisions you also must remember that how much you have already spent on an issue is irrelevant in making a sensible decision about whether to continue fighting over the matter. How much you have already spent is what are called "sunk costs" in economic terms and there is simply no way to recover them -- they are already spent and do not justify spending anything more. The question whether to spend more is determined simply by running through the same questions above, and how much you have already spent does not alter any of the questions or any of the answers.
Example
Let me run through an example
in a divorce setting. You want to prove that the small business you
started was operating well before the marriage and that if did not grow
at all during the marriage, so your spouse is not entitle to any share
of the business. Your attorney has advised that it would cost $1,000
to get an accountant to review the records and prepare a report and to
testify, and your attorney also has advised that if the report supports
your claim, with the particular judge your case is going before, you have
about a 90% chance of winning, but without the report you are almost certain
to lose and the judge is likely to simply divide the interest in the business
even between you and your spouse. To you the business has a total
value of worth $5,000 -- you would be willing to sell the business for
that amount. Your attorney also tells you that the added legal fees
for the fight are likely to be another $300.
At that point you run the math as follows: Value ($5,000) x Likelihood of success (90%) x Outcome if successful (100%) = $4,500. If you don't fight that issue the court is likely to divide the business in half, giving you a one half interest in the business, or in other words making an award to you of roughly $2,500. Subtracting the first figure from what you would get if you did nothing, and you have a figure of $2,000, meaning that is what the fight is worth. Since the cost of fighting is the combination of the accountant's charges and your added legal charges, total $1,300, fighting over this makes sense. (Except that you also need to assign some value to the emotional strain of the fight. If you are not going to be bothered, then the numbers are unchanged. If fighting with your spouse about this is going to be seriously upsetting, then you need to assign a cost to that emotional trauma in order to make a sensible decision. If you are one of those people who gets a perverse sense of pleasure from conflict, then you might assign a positive value to the fight and adjust the numbers accordingly.)
Sunk
Cost
Now, to understand sunk costs, let's
assume that in the same hypothetical, after the account does his work,
he says the records were incomplete because some of them were on computer
tape that apparently was not saved properly and some of the data could
not be read. He says the data on the computer tape can be recovered
from a special service he knows of, but that it will cost you another $1,000.
What does that do to the equation?
Hard as it is for some people to believe it does absolutely nothing. You still look at how much more it will cost and how the expense will effect your prospects. The cost is exactly the same as it was before. Nothing has changed. The results are identical.
Now suppose that you have the added effort made to recover the computer data, you are told that the information still could not be recovered. You and your attorney sit down to see if there is any other way to do the say thing and he tell you that you can probably get the same sort of information by taking depositions of a couple of former employees and clients, but that this would cost an added $1,350. What does that do to the equation? Well, run it again, replacing the original $1,300 cost figure with the new $1,350 cost figure and you still end up with your efforts worth while. The value of fighting remains unchanged at $2,000 (the difference between the one half of the business you would expect with no fight and the $4,500 you get by multiplying the $5,000 value of the business times the 90% probability of winning and then subtracting the $2,500 which is the value of one half of the business from the $4,500 you get when you multiply the value times the prospect of winning).
It might be tempted to say that you've already sunk $2,300 hundred dollars into the matter, so it makes no sense to through another $1,300 into the fight... or you might be one of those to think that since you have now spent $2,300 on the fight so you can't give up now.
These are common emotional reactions... but they are not rational. Once the money has been spent, it is spent. It no longer makes any sense to consider it, not one way or the other.
Now what happens if another business owner says they would like to buy your business, but that instead of offering the $5,000 you thought it was worth, you are offered $35,000. Well, sort of changes the picture, doesn't it?
Assigning
a Value
You may well think that certain
issues, perhaps child custody would head the list of matters to consider
in deciding what issues to contest, that they can not have a monetary value
attached to them, that the issue is worth "all the money in the world."
Well, this sounds nice, but unless you're Bill Gates, you do have
to of have make decisions that put dollar values on things that are not
bought or sold at the mall. It may be difficult to do, but until
you put actual dollar values on issues, you will never be able to make
sensible decisions. Of the five questions, you are the only person
who can answer the first and the last of those questions.
Your attorney is likely to be able to give you a good idea of your chances of winning or losing on each issue, and if you review the matters with your lawyer, you can make sound decisions on how to approach the divorce.
Also keep in mind that the costs of a divorce and the costs of particular issues in a divorce include more than the legal expenses. Fighting in a divorce is likely to make if hard to give as much attention to your children as you would otherwise, will cause you to lose time at work and perhaps hurt you professionally, take an emotional and perhaps even physical toll on your life and make it much harder to get along with your spouse after the divorce on issues involving the children. That may not seem very important now, but you will soon need a good working relationship with the person you might now hate with a passion.
Answer the questions and you will make sensible decisions, including when to negotiate or mediate instead of litigating. Fail to answer them and you're likely to end up with a far more expensive divorce than it ought to be, with very little more to show for the expense than you would have had without it, and hard feelings which will never leave between you and a person you once cared enough about to marry.
While as a trial attorney
I am essentially a hired gun, and I enjoy it, you need to remember that
in a gunfight, at least one person ends up dead, often one ends up dead
and the other ends up seriously wounded, perhaps permanently crippled...
and people on both sides are paying hefty sums to the gunslingers.
Often It makes much more sense to negotiate than litigate. When you
negotiate, you may not be very happy with the result, but you are at least
satisfied enough to reach an agreement -- if you litigate the matter fully
and have a judge decide it, the odds are neither of you will be happy with
the outcome.
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