Divorce in the United States is certainly nothing new—according to the American Psychological Association, between 40% and 50% of all married couples in this country will eventually find themselves separated on a permanent basis. It's also no secret that divorce is a costly endeavor—Forbes estimated that the average cost of a contested divorce ranges between $15,000 and $30,000, most of which is spent on legal fees.
Obviously, these numbers can vary wildly depending on the situation—if you're a trend-setting socialite who is divorcing your hedge-funder husband and want to get the biggest possible settlement, you're probably going to have to pay a great deal for the privilege. This, of course, demands the question: If you're the type of person who wants to "kick him between his legs and bring him to his knees," what does that type of contentious divorce action end up costing you?
The answer, as it turns out, is about $4.2 million.
The Cost of a Bitter Divorce Battle: Breaking Things Down
The aforementioned socialite is Lara Schmidt Trafelet, who spent an average of about $16.2 million per year while married to hedge-fund manager Remy White Trafelet. When their divorce proceedings began, it quickly became clear that a lot was at stake—the couple reportedly had a fortune in the neighborhood of $200 million, and Lara wanted it all. Or she wanted at least all she could possibly get her hands on.
She quickly enlisted the help of forensic accountants from Cipolla & Co. to help her do precisely that, at which point a team of best-in-class professionals had to analyze over $600 million in spending from 13 different bank accounts over a significant period of time. Not only did the firm set up a dedicated "war room" to give as much attention as possible to this situation, but reportedly they also had a team of people working around the clock in an effort to make sense of 18 years' worth of spending.
That's when Lara received her bill in the mail. The firm hit her with costs of about $75,000 per week for their troubles, totaling $4.2 million. The firm insists the price was "more than fair" because the couple's finances were unique and, well, complicated.
Lara Schmidt Trafelet disagreed with that assessment, to put it mildly.
Lara claimed that because she's an unemployed spouse in a hotly contested divorce situation, she couldn't afford to pay the fees. The forensic accountants at Cipolla & Co., who had just spent ages wading through documents that proved she used to spend over $16 million per year on her own, weren't buying it.
It's also important to note that Ms. Trafelet was awarded a $4.1 million war chest from her soon-to-be-ex-husband, which was specifically to be used to pay for legal fees during the divorce.
Yeah, she still wasn't having it.
In most situations like this one, the vast majority of accountants will begin their activities with an engagement letter that details their fees and where that money will be going—which is exactly what happened here. They will also require their clients to make a series of payments along the way toward the outstanding balance to continue to fund their accounting efforts—which, to be fair, Trafelet paid.
However, she can still fight. And fight she will.
Ms. Trafelet is currently suing to stay an arbitration proceeding over the fee dispute—suddenly, she thinks it would be better if a divorce judge resolved the matter on their own. The firm said she "is simply attempting to avoid her financial obligation."
In what is maybe the most clear-cut example of "Look, I'm doing the best I can here," Ms. Trafelet's attorney in her lawsuit against Cipolla & Co. said, "Our legal documents speak for themselves, and this issue will ultimately be decided in a court of law."
We're quite certain that it will.
Lee Reams II, writes for CountingWorks, a accounting professionals news and advice website. Reach him at [email protected] or on LinkedIn.
About Lee Reams II
I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.
