What is flarpl?
Posted on April 30, 2014
By: David L. Miller
Where am I going to come up with the money to hire an experienced family law attorney to represent me in my divorce? This question is asked by many spouses who have just been served with divorce papers, or who wish to end their marriage. The majority of the time, a client with less financial ability than the other spouse will borrow the money family law attorneys require before accepting a case (i.e., the “initial deposit”). The lender is usually a parent, sibling or good friend. However, for many people, this is just not possible.
So, do you represent yourself against the experienced family law attorney your spouse hired, or do you simply agree to whatever terms are offered to you? Well, you may be in luck. The California legislature realized that it is extremely unfair for one spouse (i.e., the spouse with the superior financial ability) to take advantage of the other in a divorce situation merely because they had the ability to hire a family law attorney while the other did not. The legislature recognized that a family law action is perhaps the most serious legal action the majority of residents will ever participate in because of the issues involved. For instance, the divorce action will effect when and under what circumstances you will see your children, where you will live, how much take-home pay you will have in the years to come, and how your retirement benefits will be divided, just to name a few.
To level the legal playing field, the legislature created a law that permits a spouse to grant a lien on their home in favor of their family law attorney. This is known as a “Family Law Attorney’s Real Property Lien,” or FLARPL. Here is how it works.
Let’s say you found a family law attorney you would like to represent you in your divorce. The attorney quotes you the amount of the initial deposit and their hourly rate. They explain that each month you will receive an invoice detailing the work performed, and how much was deducted from your deposit to pay that particular invoice. They further explain that when the deposit is gone, you will be required to make a “supplemental deposit” or pay as you go (e.g., each invoice is paid as they are received). Otherwise, the attorney will withdraw from the case and leave you to represent yourself or find another attorney.
If you are unable to come up with the initial deposit and/or the supplemental deposit later in the case, you may wish to ask the attorney if they will accept a FLARPL. In essence, you are promising to pay the attorney for the legal services they provide and securing your promise by granting them a lien on your home (i.e., a promissory note secured by a deed of trust). If the attorney is willing to wait for payment, they will determine if there is enough equity in the property to cover the amount of the promissory note. For example, the attorney asks for a promissory note in the amount of $20,000. The attorney determines that the home has a fair market value of $700,000 and a mortgage of $200,000. This leaves $500,000 in equity. As long as the home is community property, you as the client have a $250,000 interest in the equity. The attorney would be satisfied that adequate security exists in the home to secure your promissory note. The FLARPL would only attach to your interest in the property.
The attorney would then prepare the necessary documents which include certain mandatory disclosures required by the California Rules of Professional Conduct. These rules exist to protect the client, not the attorney. You would then be given the opportunity to have the documents reviewed by an independent attorney of your own choosing to ensure that your rights are being protected.
Once you understand your rights and responsibilities under FLARPL, you sign the necessary documents and return them to the attorney. A Notice of FLARPL would then be sent to your spouse and the court to provide an opportunity for a spousal objection to be made. If no objections are made within 20 days of the notice, the attorney would record the lien in the county recorder’s office. The attorney would then represent you throughout the divorce proceedings without worrying about being paid for their services.
Usually, at the end of the divorce proceeding and following the division of property, the client is in a position to pay their legal bills. This may occur because they receive 50% of the savings accounts, deferred compensation accounts, IRA’s, liquidation of other assets, etc. Sometimes, the former family residence is sold to a third-party because neither spouse wants the home, or because neither spouse can afford to keep it. In any event, once the client pays their legal bills, the attorney releases the lien on the property and the lien no longer exists.
If you find yourself in the unenviable position of needing a family law attorney without the present financial ability to hire one, consider asking the attorney if they would accept a FLARPL. Many attorneys are not comfortable accepting a client’s case using this payment method. Some simply are not able to wait to be compensated for 6 to 9 months. If you are lucky enough to find an attorney willing to use a FLARPL, just remember they are doing you a favor at a very serious moment in your life. It is these types of attorneys who generally care about your situation, and who will prove this to you during your case.
David L. Miller is a Partner with Kring & Chung, LLP‘s Irvine office. He can be reached at (949) 261-7700 or [email protected].