Stephen Kolodny is the managing partner of Kolodny Law Group in Beverly Hills, California. Considered one of the most preeminent attorneys in family law, he is also well experienced with many high-stakes and high-profile clients and divorces. He is co-chair of the National Family Law Trial Institute and has been a valuable member of Family Lawyer Magazine’s advisory board since its inception. Stephen and his colleagues have been responsible for training over a thousand family lawyers on being better advocates for their clients. www.kolodnylawgroup.com
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What do high-profile clients with lots of assets look for when they’re choosing a family lawyer to represent them? Are they choosing the lawyer or are they choosing the firm?
They’re looking for the lawyer, but they also want to know there is a firm supporting that lawyer in handling their case, which can be quite complex and involve a lot of trial preparation.
My firm has a niche practice in terms of being known for high-conflict litigation, which is what we specialize in. Although, as a result of specializing in high-conflict litigation, we also tend to settle a lot of cases because it’s understood that we’re prepared to go to court if our clients don’t get what they want.
High-profile people are looking for lawyers who have knowledge about business, business assets, added-value assets, and who will present a strong litigation posture so their position will be assertive. There are a significant number of high-asset people who are interested in settling their cases and many of them come to my firm because they know I have the background and the ability to try the case if the settlement doesn’t work.
Is there anything you do as a family lawyer to deal with high-net-worth cases and/or complex child custody cases that may be required above and beyond a regular family law case?
The answer is in my firm. I have 50 years of personal experience, most of which involved complex and high-conflict litigation, valuation cases, child custody cases, relocation cases, and the presentation of complex and difficult evidence. I have a large resource group that allows me to select, for example, in the relocation case of a former president of the Paris Bar, expert witnesses and valuators that range across the country from Philadelphia to experts in other countries. We have the ability to access highly competent experts. We have lawyers that have great experience and training in preparing these cases and determining what the appropriate litigation strategy is to maximize the result for our clients.
In order to properly represent your clients, do you need to have an interest in business and read the Wall Street Journal, for example? Or do you just need to know the law and other experts who you can tap into?
A big part of being able to understand and strategize the best way to present the case is having a background in and knowledge of business. I have training in business administration, and a degree in business administration.
In the early years of my career, I tried all kinds of cases from sole jury trials to criminal jury trials involved in setting up and running businesses. Having that basic background knowledge of what the real world is like, as opposed to just learning something in law school, is a great aid to our ability to represent clients and properly strategize the case.
However, it is critically important to have resources around the world and around the United States. It’s not just calling someone out of a book, but calling someone that you have worked with and know is capable of getting the job done. I have that knowledge through my extensive time involved with the International Academy of Matrimonial Lawyers and the American Academy of Matrimonial Lawyers. I know lawyers in virtually every civilized country of the world who I can call on to assist us as well as provide us with experts in a far-reaching range of areas.
How did you build relationships with experts in business valuation and forensic accounting? What was the process to train yourself and your staff to be able to identify which professionals to work with?
It’s a difficult process. It’s something you acquire over the years dealing with people. One of the criteria of my firm is that we will not deal with expert witnesses who are willing to deviate from the facts to try to foster or support our position.
Developing these relationships is the product of being in the business for a long time, being personable, and having contacts with them both in and out of the profession. You develop a reliance on their truthfulness, and you have to work with them so that they are good witnesses in the courtroom. It’s one thing to be a good accountant; it’s another to be a forensic accountant who can testify as compared to one who can just put together numbers.
I recently used an expert from the East Coast in a business valuation case and the judge said the expert’s ability to teach him was the finest that he’s experienced in his 30 years on the bench. Knowing how to recognize who the person is and how they deliver their message to the court is the result of experience.
What options have you suggested in creating settlement agreements that are unique to high-asset and complex child custody cases regarding parenting plans, insurance, or support payments?
I have to give credit to your organization for alerting me to something I wasn’t aware of, which was the ability to acquire disability insurance for the purpose of making support payments in the event that someone becomes disabled in the future. That’s something I hadn’t thought of and it is a fabulous idea. For a long time, we have been using life insurance to replace the support obligations that would be lost in the event of death.
Several years ago, I created the concept of putting together an annuity with bonuses along the way for not filing modification proceedings in paternity cases where one party didn’t want to have contact with the mother of their non-marital child. The mother would receive extra payments periodically every few years as an incentive not to modify, which would run up legal fees and risk public exposure of their non-marital child.
Many years ago in Los Angeles, we came up with the idea of having reduced alimony payments or spousal support payments in the event that the supported spouse remarried. It was to encourage people who were getting high support amounts to remarry if their reluctance was termination of their support. We suggested that reducing the support by 50% for the first couple of years, and then reducing it down to 25% a few years after that, would encourage people to get married, significantly reduce the support obligation, and reach termination of the support in the not too distant future. Those are the kinds of ideas we’ve come up with over the years that are a little bit out of the box.
What are the risks of taking on high-stakes divorce cases and how do you mitigate those risks?
I was hired a couple of years ago to assist in a $110 million malpractice case against a lawyer for settling a case in litigation – a settlement the wife didn’t like for various reasons. The stakes were astronomically high – $110 million is a significant amount of money. Fortunately, we were successfully able to get a defence verdict or award on each and every point the wife raised. Something that uniquely fits the skillset of family law attorneys, rather than malpractice lawyers, is that we understand what it takes to try a case to conclusion in a family law court and what the weakness of those cases are.
Providing for mandatory arbitration can also help to mitigate the risk. Almost everyone in Los Angeles has modified their arbitration agreements to require the arbitrator to follow the evidence code and the statutory and case law of the state. The arbitrator can’t make a willy-nilly decision because they feel sorry for someone.
These are some of the things we do to mitigate risk. Of course, malpractice insurance is necessary in real life and in some cases involving hundreds of millions of dollars, there simply isn’t enough insurance.
Does your firm have to provide something extra aside from your knowledge, experience, and contacts in dealing with high-net-worth divorce cases?
Yes. These are usually clients who surround themselves with people, either intentionally or by force of their personal nature, who say yes to them all the time. It’s very important to have the communication skills to discuss issues with them, to reason with them, and to get them to see a different point of view than what is often their desire to punish someone who opposes them. Communication skills, being responsive, having empathy and understanding, and having people available in your office that are ready, willing, and able to communicate with them at the drop of a hat every time they call. It doesn’t need to be me, but somebody needs to hear what they have to say and provide assurances. That goes a long way in keeping these cases under control.
Are these clients who are used to having their own way all the time?
You don’t get to be worth $500 million by other people controlling your life. Many high-net-worth people and celebrities are used to getting their own way when they want their own way. They’re used to having people at their literal beck and call. You have to be able to manage those kinds of clients to have a successful practice dealing with celebrities and high-net-worth individuals.
Do you have to be more available than most family lawyers dealing with regular divorcing clients?
In fact, I am, because that’s who I’ve always been. However, it doesn’t mean that it’s required. I have to train and be careful in the selection of the people I hire to be available to communicate with the client. It doesn’t mean I always have to be there, as long as someone is there who responds in an intelligent, empathic, and understanding way.
Do you think you would be less successful if you weren’t so passionate about what you do?
Three weeks ago, I was at the Court of Appeal and I apologized to justice for my passionate argument. The presiding judge of the court said, “Mr. Kolodny, it’s actually a pleasure to see someone who comes in here with some passion for what they say, rather than just droning on in monotone.” I am very passionate about what I do. I think what I do is very important and it’s very important for the clients. You need to develop a passion and understanding for their case, and a passion to argue it in its best way.
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