A prominent U.S. law firm, Blank Rome, with twelve offices around the world, is being sued in New York by a divorce client who alleges that the firm was more interested in protecting their corporate client, Morgan Stanley, then looking out for her best interests.
Kristina Armstrong was married to Michael Armstrong, who was head of capital markets and international and domestic private wealth management at Morgan Stanley. Ms. Armstrong’s court action alleges that Blank Rome failed to advise her they were representing Morgan Stanley in a $400 million transaction and took steps to protect her husband in their divorce case. The court document reads:
“Mr. Armstrong sat at the controls of Morgan Stanley, which employed and paid Blank Rome millions of dollars in legal fees, thus allowing Blank Rome to be the ultimate “puppet master” as Blank Rome could control Ms. Armstrong’s divorce litigation in a manner designed to protect Morgan Stanley.”
The lawsuit suggests that during the divorce litigation her lawyers failed to seek possession of Mr. Armstrong’s securities license, the “single most important economic asset at play” in the divorce which she values at $12 to $16 million.
Mr. Armstrong denies knowing of any relationship between his wife’s lawyers and Morgan Stanley and the firm vigorously denies their former client’s allegations.
What is interesting about this case is that it appears as if Mr. Armstrong’s professional credentials, namely his securities license, may be property that is divisible in the event of marriage breakdown. Indeed, New York is one of the few jurisdictions that places a value on a professional degree acquired during the marriage. Its lifetime value is calculated by experts, who charge big fees for their valuation services.
So, if you have credentials as a lawyer, doctor, securities trader, MBA, architect and presumably other professional designations, this qualification will be monetized and a payment will be made to the professional’s spouse. In one case the career of an opera singer was valued and divided between the spouses.
Not surprisingly, this law is widely criticized and no wonder…. in one case a wife’s nursing degree was valued at $$850,000 and after subtracting her student loans the court ordered her to pay 25% of the value to her husband over a period of 396 months. At the appeal level the value was changed to a mere $155,000 but the wife was still required to pay 25% to her ex-husband. The most common reaction to this law is ” I have to pay my spouse money that I have not yet earned?”
Yes, that’s about right, and that is in addition to any spousal support order. Happily for Canadians, while some lawyers have tried to press for a division of career credentials, Canadian courts have resisted the notion that a career can be valued and monetized with a payout to one’s partner.
Lawdiva aka Georgialee Lang