6 Lawyers' Fees and Costs

• Library: Premarital Agreements: Drafting and Negotiation (ABA) (2017 Ed.)

6 Lawyers' Fees and Costs

§6.01 Overview

Lawyers' fees in connection with a premarital or postmarital agreement are incurred at the negotiation and drafting stage and, again, at the litigation stage if there is a dispute about validity at divorce or after a death. Parties may also incur fees at death or divorce to implement the agreement, even where there is no dispute about construction, as well as where there is a dispute about their rights. Further, parties may incur lawyers' fees and costs to litigate issues not governed by the agreement, such as custody and support for a child, alimony where there is no waiver, or division of property to the extent not predetermined by contract.

A variety of circumstances may arise during a divorce proceeding that may call for some form of fee shifting:

• One party may seek an initial fee award to enable that party to challenge the validity of the agreement as a whole.
• Parties may disagree over the interpretation of the agreement insofar as it determines disposition of property or relates to spousal support. Because a premarital agreement is not necessarily self-executing, and indeed may require a further determination of rights upon divorce, a party may seek a fee award for legal representation even when validity of the agreement is not in dispute.
• The validity of the agreement as a whole may not be in dispute, but a party may challenge the validity of certain provisions, such as a spousal support waiver, and may seek a fee award to pursue the challenge.
• A party may seek a fee award for the part of a divorce matter that is not governed by the agreement, such as custody and child support, or alimony.

§6.02 Fee shifting in the absence of contract

In general, the so-called American Rule holds that each party to a legal dispute must bear his or her own legal fees and costs of litigation.¹ However, in the domestic relations arena, statutes and appellate decisions have carved out many exceptions to the American Rule so that, in the absence of a binding agreement waiving fees and costs, a judge may order one party to pay some or all of the costs and lawyers' fees incurred by the other party. Most significantly, in domestic relations litigation, in the absence of a valid contractual waiver, a court may be able to order the economically stronger party to advance monies to the weaker party to enable the weaker party to litigate the validity of the agreement, or may be able to award that party his or her fees at the conclusion of the litigation even when the challenge to validity fails.

Unlike in divorce litigation, statutory fee shifting in probate proceedings to permit an impecunious party to litigate an elective share claim against the estate, or to resolve other disputes about his or her rights, is not the norm. Rather, the American Rule requires a surviving spouse who seeks to challenge validity and take an elective share to bear his or her own fees.² If the challenger prevails, his or her right to fees will depend on the provisions of state probate law. Generally applicable statutes and rules governing fee shifting for litigation of a frivolous claim may apply when a party seeks unsuccessfully to litigate validity of an agreement after the death of the other party in the absence of a contractual fee-shifting provision.

§6.03 Enforceability of Contractual Waiver of Fees in divorce

The Uniform Premarital Agreement Act (UPAA) permits parties to contract with respect to a variety of subjects, including disposition of property upon separation, divorce, or death, and determination of spousal support, but does not expressly include lawyers' fees as a subject for agreement.³ A catchall permits parties to contract on any other subject "not in violation of public policy. . . ."⁴ The UPAA appears to permit inclusion of a waiver of the right to a fee award from the other spouse in a future divorce proceeding. An economically stronger party will generally benefit from such a waiver. The Uniform Premarital and Marital Agreements Act (UPMAA) permits a premarital or postmarital agreement to waive legal fees and costs.⁵

Most courts that have ruled on a fee request made by a spouse during a divorce proceeding to enable him or her to challenge the validity of an agreement have held a contractual fee waiver to control.⁶ Courts that have held a fee waiver generally unenforceable have done so on the theory that the party disadvantaged by the premarital agreement should not have to forgo the opportunity to litigate his or her claim due to lack of funds,⁷ or, that the obligation to pay lawyers' fees springs from the same nonwaivable obligation to pay spousal support during an ongoing marriage.⁸ In Florida, where case law predating Florida's enactment of the UPAA (effective October 1, 2007) rejected waivers of temporary spousal support, the courts have also generally held a lawyers' fee waiver unenforceable insofar as it may apply to fees incurred while the parties are still married.⁹ However, with the enactment of the UPAA, this body of law may have been abrogated. As yet, no appellate cases have answered this question. A 2005 case, Lashkajani v. Lashkajani,¹⁰ in which the Florida Supreme Court held a loser-pays provision valid, suggests Florida may be moving away from general rejection of comprehensive fee waivers. In New York, where a fee waiver is generally valid, courts have the authority to determine whether the waiver is unconscionable at divorce and to make an award over a waiver. This authority stems from the same statute that permits a court to evaluate a support waiver for unconscionability.¹¹

General invalidity of a fee waiver does not guarantee that a spouse will receive a fee award. The court will not be justified in making a fee award where the claimant is unable to show need.¹² General validity of a lawyers' fee waiver does not mean a court can never make a fee award. Some courts have held that a lawyers' fee waiver is not enforceable if unconscionable at divorce even where the agreement as a whole is upheld.¹³ Moreover, where a court deems a support waiver unenforceable, even if the agreement is generally enforceable, it may link it to a lawyers' fee waiver in...