Mediation

Under the right circumstances, mediation can be a successful way to resolve conflicts in a divorce.  The success of a mediation depends on a number of important factors.  The main determinants are the attitudes and approaches of the parties and the nature and complexity of the issues.  There are many potential traps in mediation, thus the parties opting for mediation need to go into it with their eyes wide open.  A divorce can be an extremely complex matter even when it appears to be rather straight forward.  A divorce is a financial transaction — a division of a partnership.  A mistake made in the transaction can have long term consequences that are irrevocable.

Candidates For Mediation

In order for the mediation to be successful, the parties must both be good “candidates” for the mediation process.  This means that the parties:

  1. Trust each other;
  2. Are not hostile personality types;
  3. Are both ready to end the relationship;
  4. Are both ready to resolve the issues;
  5. ARE BOTH WILLING TO LET THE OTHER SIDE HAVE 51% & NEITHER HAS A NEED TO WIN;
  6. Have not been victims of abuse in the relationship;
  7. Have essentially equal personal power in the relationship; and
  8. Have essentially equal access to and knowledge of the finances.

For mediation to be successful, the parties must define “fair” in a similar way.  Everyone claims to want a fair deal.  However, many people differ on what they feel is fair.  In fact, the definitions can be and usually are extraordinarily different – at least in the beginning.

Challenging Scenarios

If there is a business, complex tax issues, complicated trust or life insurance issues, separate property or tracing issues or other complex financial issues, mediation may be particularly problematic:

  1. How is a business valued in mediation?
  2. Is the family CPA “loyal” to a particular party, or will he or she fairly assess tax and other issues?
  3. Do both parties have access to the same financial records?
  4. Do both parties have similar levels of financial sophistication?
  5. Do both parties have the ability to understand the nuances existing in a family law transaction?
  6. Do both parties have comparable negotiating skills?

Preparation for Mediation

There are steps that can be taken to maximize the chances of success in mediation:

Meet with an experienced divorce lawyer before the mediation commences.  Discuss in detail any sophisticated financial issues before commencing mediation.  Make certain that the divorce lawyer has sufficient facts to be in a position to advise as to the range of reasonable settlement positions for each issue.  For example:

  • Child support 1000 to 1200 per month
  • Spousal support 5000 to 6500 per month for four to five years
  • Vehicles Kelley Blue Book value
  • Household furniture and furnishings – garage sale prices
  • House – Sell or Appraise
  • Collections – Equally divided or appraise
  • Prepare a financial basic balance sheet before first mediation session
  • Custody – Parenting plan alternatives

The divorce lawyer should be told what assets were owned by each party on the date of marriage and whether either party received any assets during the marriage by way of gift or inheritance.  These types of assets may be separate property.  If either party has commingled separate property with community property, a forensic accountant may be needed to trace the separate property in order for a party to be awarded the asset as separate property.  Community property is divided equally whereas separate property is awarded to one party.

Divorce lawyers can function as consultants or coaches for clients who wish to mediate their cases.  In order to provide meaningful and targeted advice, a divorce lawyer needs all of the relevant facts.  Without the facts, the family law attorney will be in a position to provide only general comments which may be more detrimental than beneficial.  Parties should not have the false security of thinking they have a divorce lawyer representing them while they are in mediation when the divorce lawyer does not have sufficient information to protect them from a meditated financial disaster.  Having all of the facts and being kept apprised of the events occurring during the mediation process allows the divorce lawyer to assist a client throughout the mediation.

Settlements are often driven, in part, by psychological dynamics that result in inequitable settlements.  A divorce lawyer can provide a buffer or sounding board that minimizes the pressure to accept an inequitable settlement based upon psychological dynamics.

It is generally thought that the more financially savvy party or the party with more power in the relationship ends the mediation with a better result.  Generally, that is the party who is pushing hard for mediation and is the party telling their spouse:

  1. Don’t hire a divorce lawyer
  2. We don’t need divorce lawyers
  3. Divorce lawyers will just waste our money
  4. We can come to a fair solution in a few sessions

Other times, the party pushing for mediation, threatens generally or specifically, that if his or her spouse does not go to mediation there will be dire consequences.

Working with a divorce lawyer before and during mediation is critical so that you do not make mistakes in arriving at a settlement.  It is critical to reach an equitable and acceptable settlement the first time around and not attempt to fit a bad deal.  Attempting to renegotiate a mediated settlement is generally not successful.  Before agreeing to the terms of a settlement, consult with a divorce lawyer.  Retain a divorce lawyer before the first mediation appointment.  It is critical to understand the issues, the law and a range of reasonable results before the process commences.  Calling a family law attorney for the first time after the mediation is completed is not the best course of conduct.

You may want to avoid real life mediated results like the following:

  1. Husband operated a community property manufacturing company and the community had substantial assets.  The husband achieved a mediated settlement where he received 90% of the assets in exchange for paying wife slightly more than reasonable spousal support.
  2. Husband, a CEO of a publicly traded company, agreed to pay to his wife 50% of all of his salary, bonuses, stock options and any other compensation until his wife’s remarriage or the death of either party.  He believed this was a normal main stream solution and that this is what was meant by 50/50.
  3. A well-known actor mediated his divorce and agreed to pay his wife approximately $7,000 per month in spousal support and approximately $7,000 per month in child support.  He also agreed to pay 75% of all income over $750,000 per year.  His career took off and a few years later his income increased to approximately $2,000,000 per year which resulted in him paying more support than his net after tax income.  He had a net negative income after taxes and support.
  4. The parties successfully mediated their divorce.  The result was the parties agreeing that the wife be awarded the majority of the assets and spousal support would be terminated in a few years.  The judgment was poorly drafted and the divorce court later ruled that the terms of the judgment did not terminate spousal support and allowed the wife to extend spousal support until her death or remarriage.

Had either client retained a divorce lawyer before the mediation appointment, these unfair and unfortunate scenarios could have been avoided.

However, if you are the party with the financial knowledge, the power and the control, mediation may be your best friend.

Consider the Possibility That the Mediation May Not be Successful

We have had many cases over the years where a client consults with us after a failed mediation.  During the initial interview we learn that the client walked away from an amazingly advantageous settlement not understanding why the terms were so favorable.  We have had cases on the other side of that issue where a client had entered into a disastrous settlement that they were seeking to set aside, which is highly unlikely.

Mediation can be used as a delay tactic.  The delay of the resolution of a case can be a very significant benefit to one side or the other.  During a delay, a party can make financial decisions or position assets that may impact the ultimate property settlement.  The timing of a divorce can be the most important component of a settlement.

Understand That Divorce Lawyers Settle Almost All of Their Cases

Frequently, one party will attempt to force mediation by pushing onto the other spouse, the agenda that all divorces have to be difficult, contentious and expensive.

Often parties opt out of mediation once they understand the procedure itself.  An alternative to mediation can be achieved by both parties retaining reasonable divorce lawyers who are proactive and solution oriented.  If the parties follow this approach they can obtain a mediated result that is cost effective, timely and fair to both sides.  This can result in the functional equivalent of a mediation without a mediator.  Retaining a divorce lawyer does not mean you are going to trial.  If you are referred to a divorce lawyer who has the reputation of being aggressive, the odds are you will not have a peaceful and amicable settlement.  Our website (How to Find a Divorce Lawyer) is designed to help you find the type of lawyer that you desire to retain.

Drafting Issues

If a settlement is arrived at, the terms must be documented in a judgment.  Significant skill is required to properly draft a divorce judgment.  A minor error can result in a financial disaster.  No judgment leaves our office without two lawyers reviewing it. Many mediators are not properly skilled in drafting.

Mediator’s Role

The mediator’s role is not to provide legal advice – it is to assist the parties in resolving the issues and to reach a full global settlement.  If a mediator does his or her job – he or she considers any “deal” intrinsically good.  The terms are not important to the mediator.  They are not to protect one side from the other or to steer the terms of the deal to be the equivalent to the results that would be achieved after a trial.  Rarely does a mediation result in a 50/50 settlement unless the estate is comprised of assets easily divided and easily valued like bank accounts and credit cards.

Inequitable Results

Often, in mediation, one party receives a disproportionate share of the assets and an unreasonably high or low support amount.  It is not the mediator’s role to protect the weaker or less informed party.  These type of results may occur due to a variety of factors:

  1. Intimidation of one party;
  2. Lack of understanding of financial matters;
  3. One party wants “it over” at all costs;
  4. One party has severe guilt;
  5. One or both parties fail to understand the meaning of the terms in the settlement agreement (Judgment);
  6. One or both parties have a lack of understanding of their rights under the law; or
  7. One party has better negotiation skills.

It is fair to say that often one party receives a significantly better result than would have occurred if the matter had been resolved with each side being represented by divorce lawyers.  If one side receives a significantly better result than a 50/50 deal, then the other side receives a significantly worse result than he or she would have received had a divorce lawyer been involved.

Summary

In a perfect world, the parties would meet with a mediator and settle all of their issues in two or three meetings in a three-week period.  However, there are many times when the result looks more like this:

  1. The mediation consumes months;
  2. The cost is triple what was projected;
  3. No deal is reached;
  4. The parties are more polarized than they were before the mediation commenced.

The decision as to how to end the marriage and resolve these issues is critical.  It is reasonable to consider all options, including mediation before embarking on one path.  If a person is informed of the pitfalls of mediation and has the guidance of a divorce lawyer, mediation may be a reasonable solution. However, it is a mistake to believe that mediation is always the right solution, always is the inexpensive way to get a divorce or always results in a fair deal.