Sunday, February 5, 2023

A Mere Expectancy

In a divorce action involving a plaintiff with little or no income and a defendant who was a partner in an international law firm with a net yearly pay of approximately $4 million, the Connecticut Appellate Court affirmed the conclusion that defendant's potential retirement benefits were too speculative to be considered

The plaintiff

At the time of the marital dissolution, the plaintiff was fifty-seven years old and in fair health. He has a bachelor’s degree from Trinity College, a master’s degree in business administration (MBA) from the Wharton School, University of Pennsylvania, and a master’s degree in public administration from the John F. Kennedy School of Government at Harvard University. Notwithstanding these academic credentials and a history of substantial employment, earning, in some years, several hundred thousand dollars, the plaintiff has not worked for an employer since 2001 and had no earned income at the time of the dissolution...

The court found that the reasons given by the plaintiff for his lack of employment since then were without merit.

The defendant

the defendant also was fifty-seven years old. Educated in Canada, she holds MBA and Juris Doctor degrees from the University of Western Ontario. At the time of the marital dissolution, she was a partner in a large international law firm. Her annual gross income is approximately eight million dollars, and her annual net income is approximately 50 percent of her gross income.

At issue

With that legal backdrop in mind, we next turn to the facts at hand. As noted previously, the defendant is a partner in a large international law firm. During trial, the defendant offered the expert testimony of Mark Harrison, a certified public accountant and attorney who previously had testified in marital dissolution actions as a forensic accountant and valuation expert. Pursuant to his engagement, Harrison examined the law firm’s partnership agreement that came into evidence. The agreement provides, in relevant part, that a partner who has reached the age of fifty and completed at least ten years of service, may retire and receive a stream of payments, subject to certain limitations and caveats. As an initial matter, Harrison noted, the provisions for retirement payments set forth in the partnership agreement are not funded and are not carried on the firm’s books as a liability. Rather, retirement payments are disbursed from the firm’s future earnings. Harrison found it significant that the provision for retirement payments is subject to termination or reduction at any time by a vote of the firm’s partners. Harrison pointed out, as well, a provision in the partnership agreement reciting that the payments to a retiree could be adjusted by the firm’s compensation committee and the concurrence of a certain number of partners on their determination that the payments are no longer fair to the remaining partners or the firm, or are otherwise inappropriate or inequitable to the former partner. Retirement payments also could be adjusted, deferred, or simply not paid, if the payments to retired partners exceed a certain percentage of the firm’s income. In that event, the partnership agreement provides, payments to retirees may be deferred and not paid for up to five years and, if the payments cannot be made during the period of deferral, the obligation of the firm to make payments could be extinguished forever. Distinguishing the partnership retirement provisions from a qualified pension plan, Harrison characterized the defendant’s potential to receive retirement payments from the firm as ‘‘the epitome of a mere expectancy."

The court

On the basis of the facts adduced at trial regarding the defendant’s potential receipt of retirement income, we do not disagree with the court’s conclusion that this potential source of income is too speculative and, therefore, represents a mere expectancy that cannot be categorized as property for purposes of equitable distribution pursuant to § 46b-81.

The court also affirmed the alimony award to plaintiff. (Mike Frisch)

| Permalink


The most important fact here is that the lawyer is getting eight million a year.

It reminds me of what Dean Roscoe Pound wrote in his book The Lawyer From Antiquity to Modern Times [1953]. Defending lawyer self-regulation, he devoted several pages to a development of his thesis that for a profession to exist three elements must be present: organization, pursuit of a learned art, and a spirit of public service. Concerning the gaining of a livelihood, that was the main if not the only purpose of a trade, but in a profession it was merely incidental.

Posted by: George Fleming | Feb 6, 2023 9:08:09 PM

Post a comment