Owning a business is challenging, extremely validating and, hopefully, very lucrative. A business owner’s divorce is, by far, the most difficult kind of divorce because the value of the marital portion of the business must be valued and divided. The people that ultimately determine the value of your business, judges, have never owned a business. The people that explain your business’s worth to the judge are lawyers who decided to play it safe with law school instead of investing in a business like you did. Finally, business owner divorces are rare. The vast majority of divorcing people are W2 employees with no business to divided in a divorce. 99% of divorce lawyers are focused on the employee divorce litigant NOT the employer divorce litigant. Therefore, I’ve compiled this list for you to ask your potential divorce lawyer and the answers you should expect from them. 1. “What Do You Think About A 503(L) For My Case?” This is, admittedly, a trick question. You just want them to have some kind of thought. This question determines if the divorce lawyer is sufficiently familiar with the Illinois Marriage and Dissolution of Marriage Act to know the clause that allows a judge to appoint an expert as a court’s witness to resolve financial questions. Any hesitation or vague answer from a lawyer about this basic issue is an immediate red flag. 2. “Would I Be Better Off With A 503(L) or a Controlled Expert? A 503(L) financial expert does not work directly on your behalf. They work for the judge (even if you’re paying them). A controlled expert works for you, exclusively. It should be no surprise that their estimation of your business’s value will likely be in your favor (that is a lower value or lower divisible enterprise value). Furthermore, you can hire and fire controlled experts without disclosing them to the other side (it’s considered attorney work product) until you get a result that you like (at least before the official required disclosure dates). The only advantage a 503(L) expert has is that they are cheaper because there is only one of them. 3. “What Kind Of Discounts Do You Think My Business Would Be Eligible For?” This is not a legal question but a business valuation question. Many divorce lawyers hire a business valuation expert, cross their fingers and hope for a good valuation. The valuations can be massively manipulated […]
