The Times, July 11, 2008 Tom Bawden in New York
America's credit crunch is putting the squeeze on the marriages of New York's superwealthy as a record number of couples with $10 million or more in assets sue for divorce. The New York lawyer Raoul Felder, who works exclusively with the very rich — he represented Larry Fortensky in his divorce from Elizabeth Taylor — told The Times that his company's caseload had soared from 250 to 300 in the past year. This is the biggest jump since 1980, when New York state law was changed to add four new grounds for divorce to the sole existing one — adultery.
The impact of the credit crunch has slashed what were once multimillion-dollar bonuses to virtually nothing for many Wall Street executives, hedge fund managers and property developers, while thousands of others have lost their jobs in the property crash.
One New York divorce lawyer said one client was worried that his wife would leave him if she found out that his net worth had fallen from $20 million (£10 million) to $8 million after he suffered huge losses on property and other investments. To keep his wife he was trying to mask his declining fortune by borrowing to pay for her clothes and holidays.
Kenneth Mueller, a pyschotherapist in the East Village area of New York, who works with many Wall Street bankers and property magnates, said: “The credit crunch is starting to become a really big issue — especially for the moneyed classes. Once you can't act out with money you start fighting.
“It's like drinking, or gambling, or sexing your way out of feelings, but with a fabulous family vacation or great clothes or wonderful meals — money can become an addiction that masks the reality. When that goes, reality has to be faced and accusations start flying.” Nancy Chemtob, another New York divorce lawyer, said that since November she has been receiving a couple of inquiries a week relating to divorce cases motivated by the credit crunch, compared with virtually none before. The sudden rise in Mr Felder's caseload, which forced him to hire an extra lawyer in May, is not confined to New York.
Jeremy Morley, a family lawyer representing wealthy people in the US and abroad, said that the number of inquiries from potential clients had increased by nearly 40 per cent in the past year.
He puts much of the new business down to the economic downturn, which, he says, “makes people nervous and more inclined to change their lives”.
Lisa Thomas, a family therapist, based in Denver, Colorado, has also noticed how love among the rich can ebb when the money falls short. “If you don't have a pony show going on 24-7 you have to look at the relationship and that can be very scary. The toys were a distraction, but now they may be running out and, though once we used to love each other, I'm not sure if we do anymore,” Ms Thomas said.
Not that anyone would admit their divorce is motivated by money, probably not even to themselves. Mr Felder, who represented Rudolph Giuliani, the former Mayor of New York in his recent divorce, and Mike Tyson's former wife, Robin Given, in hers, said: “Money's really all that it's about, the husbands know it, but the wives will never say it. I've been doing this for years. I know, the judge knows, though you can't prove it. “One giveaway is when the wife has no specific grounds for divorce. If the husband suddenly starts hitting her, then that's totally understandable. But if they are vague about their complaint and just say things like 'it's not working out' then you know,” Mr Felder added.
Under the revised New York law, couples can sue for divorce on the grounds of cruel and inhuman treatment, abandonment, prison for three or more years and separation for at least one year. Lack of money is not yet deemed to be a legitimate reason.
$240m annual wage of Manhattan's top hedge fund managers in 2006
$200,000 average Wall Street bonus last year
11 per cent average amount of bonuses spent on watches and jewellery, according to survey last year
40,000 estimated number of positions lost at financial companies since the onset of the credit crunch