Divorce negotiations can feel like Whack-A-Mole. There are so many issues. And they are interconnected so if you change one the others change. For example, if alimony goes up, child support goes down. One tool I have in my divorce toolbox is liquidated damages. That means reducing disputes to a dollar amount.
A Typical Scenario
Let’s say I represent a husband in a divorce. He moves out of the marital home into an apartment and the wife still lives there. She wants to know who is going to pay the bills until they reach an overall agreement or the divorce judge decides at trial. She worries he will cancel her health and auto insurance.
The husband has his own expenses to pay now and wants the wife to pay her own living expenses.
Each spouse is angry and feels the other is to blame for the separation.
Liquidated Damages Offer and Demand
After some back and forth with opposing counsel, I suggest we convert the various disputed issues into a single dollar amount.
I ask opposing counsel how much money the wife is requesting each month. This is the “demand” because it is the amount the wife is demanding the husband pay.
Then I ask my client how much he is willing and can afford to contribute to the wife’s expenses until we settle or go to trial. This amount is the “offer” or the amount he is offering to pay the wife to settle.
Ceiling and Floor
Now we have established a ceiling and a floor for settlement negotiations.
Next we try to negotiate a liquidated damages number somewhere between the offer and demand.
This simplifies the dispute and takes some of the emotion and blame out of negotiations. The parties are also able to bring more certainty and stability to the future and plan their budgets accordingly.