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Discovery in High Asset Divorce

DISCOVERY IN HIGH ASSET DIVORCE

This article like all of my, Eric Roy's, articles was written primarily for my own benefit as I find this subject matter interesting. For a more thorough understanding of the subject matter I direct you to the rules of civil procedure directly. Additionally, there are numerous books which detail the subject matter more thoroughly.

When you are litigating a high asset divorce you need to get your hands on extensive documentation. With respect to discovery of documents, the first rule is that you need to get your documents fast. Do now wait around to conduct discovery. Begin collecting and analyzing data early on. When you make your requests you will of course have the option of making a formal request for discovery, such as by way of interrogatory or production of document or alternatively you can make an informal request over the phone or in writing for financial documents. Keep in mind when making this decision that if your opponent fails to produce a document following an informal request you may have little recourse. If you formally request from opposing counsel by way of interrogatory for specific financials which are then not turned over, well now you have fodder to argue fraudulent non-disclosure. If you prove this, the court may award your client the entirety of the omitted asset. Thus formal requests are probably the better route, assuming your client is on board with this.

When it comes to discovery in high asset cases you have a few options. Obviously, first and foremost get a detailed financial disclosure form from the other party. This is your starting point. After you obtain this disclosure form get working on your interrogatories and requests for production. You should have a few different sets of interrogatories ready to go depending on the situation. If you are dealing with an adverse party who is an employee then this will require one set of interrogatories. If the adverse party is a business owner then you will have another set of interrogatories ready to go. Although each of your interrogatory sets are standardized you will still do some tailoring dependent on your specific case. This will depend in large part upon the type of business the adverse party is engaged in. You need to get your hands on tax returns, loan applications, bank statements, brokerage account statements, retirement account statements, trust agreements, business financial statements, among others early on.

Whether to obtain your discovery by way of deposition or interrogatory is subjective to the practitioner. In my personal opinion, proceed first with interrogatory and then follow that up with depositions. Use the interrogatories as your starting point and then follow the rabbit holes downward with your depositions. Judges likely will not assume that inaccurate answers to financial questions in deposition are a result of deceit. Thus it will be difficult to nail your deponent with a strong impeachment at trial unless his or her answers are ridiculous.

As a general point keep in mind that if you can get your hands on loan applications please do. Loan applications are excellent because they reflect a financial picture of the breadwinning spouse which is consistent with your agenda. When an individual prepares a loan application, he or she does so by assembling financials in a way that demonstrates high net worth and large profits. The more favorable of presentation that can be made in a loan application the better financing terms extended. This is contrary to a tax returns. When financials are reported to the IRS they are reported in a way that demonstrates the exact opposite. These financials will show the lowest possible amount of income with the highest amount of expense. Thus tax returns reflect the worst possible picture if you represent the non-breadwinning spouse. Of course if you represent the breadwinner spouse then presentation of tax returns might be your agenda.

So when you draft your interrogatories be mindful of this. Request all loan applications. If you receive a denial of loan applications then do some investigation. See if the parties have a mortgage on a property. See if they refinanced a property. If they did either of these things then then they would have submitted a loan application. If the parties have bank accounts they likely secured their loans through that same bank as the one in which they bank at. Subpoena this bank for any and all loan applications as well as bank statements. There are of course investigators that can get you this information for a fee as well. Usually between $500 and $1000 in my experience.

Even after the opposing party has turned over their financial records you may still want to issue subpoenas. Send subpoenas to the opposing parties CPA. Subpoena the other parties' employer, subpoena their bank, subpoena the other parties' mortgage company for the loan application, subpoena any and all potential brokerage firms and financial advisors.

After you gather all of this information read it all thoroughly. Go through this information with your forensic accountant until you understand it perfectly. Then begin noticing depositions. If the material is complex or your deponent is savvy then have your forensic accountant with you at the deposition. If you are dealing with a third party deponent then include with your subpoena a list of documents for your deponent to produce. Then while at the deposition you can go over all of these documents with your deponent. Depose any individuals whom you think may be in cahoots with the opposing party. This may be the CPA, business partner, comptroller, and so forth.

Finally when you do your disclosures you will need to keep some things in mind. You don't want opposing counsel arguing in court that he never received X, Y, and Z documents from you and thus they are not property before the court. This can happen because opposing counsel is dishonest or more likely just because of communication breakdowns between the two offices. To protect yourself you should submit memos along with any and all disclosures. Be sure to bate stamp your disclosures. This way when you send over a series of documents you can attach a letter confirming the delivery of X, Y, and Z document, bate stamped y through z. In this same letter you should advise opposing counsel to respond immediately if they are not in receipt of all those bate stamped documents referenced in your memo. In the absence of a responsive letter it can be assumed that opposing counsel received your disclosures. This is more time consuming and expensive on your part but it is the proper way to do things. You always want to be the most prepared lawyer in the court room.

Categories: Family Law