One of the things that comes up a fair amount in a mediation process is that you find a different level of financial sophistication and comfort between the two spouses. I would say that’s more typical than not. And this becomes more significant in a mediation process than in, say, a traditional divorce settlement process because each of the spouses is required to take a much more active role in mediation than they are in a traditional settlement negotiation.
Just to back up, in a traditional settlement negotiation, each spouse is hiring an attorney to represent him or her, and the attorneys really take the lead in the negotiation process.
So, if you have a very active client who really wants to be an active participant in his or her settlement process, you as the attorney are thrilled by that and happy to have that client take on as much of the work as possible, but you’re also essentially able as the attorney to do almost all the work for your client if that’s what he or she prefers, which is basically to allow the client to outsource the entire negotiation process to you.
Obviously, the client still has to make the ultimate decisions about what settlement terms work for him or her. But if the client really feels unsure and has trouble following the finances, the attorney’s role is to step right in and say, “I got this. This is how this works. This is my advice to you. I recommend you take this. I recommend you propose that,” and really to play the major role of carrying the negotiation for the client.
Whereas, in a mediation process, that’s not the role that the mediator plays. The mediator is there to help you understand the topics you have to talk about, to help you discuss those topics in a productive way, to help you hear each other clearly, to give you reference points for how other clients or how the law might resolve a particular issue. But the mediator is not able to carry the bulk of the work for either spouse in going through the negotiation process.
And this comes up a lot, or I should say, this comes up most acutely in the financial realm, so when we’re talking about how to divide assets or how to share responsibility for debts and also when we’re talking about support: child support, spousal support, what the payment amounts should be, how long they should last for, whether they should be variable based on what factors.
When you have two spouses in mediation who have differing levels of sophistication, for the spouse who is less comfortable financially, it’s going to be hard, if not impossible, to participate in the mediation with their financially sophisticated spouse and just the mediator.
So, what can you do about that? And does that mean that mediation is not a process that’s viable if there’s a real difference in sophistication around finances between the spouses? Well, no. Mediation can certainly work if spouses are in different places with regard to their comfort level around finances, but you have to be open to tweaking the process somewhat.
What can that look like? Well, for the spouse who is less comfortable with finances, at one level, or I don’t want to say one extreme, but at one end of the spectrum, the spouse could have their attorney, his or her attorney present in the room in the mediation for all of the sessions that deal with finances so that he or she, that spouse can really relax and know that, “Okay. Even if I’m not following exactly what we’re talking about with regard to this confusing private equity investment or this deferred compensation, which I still don’t get how it works, I know that my attorney is here and my attorney has got it and we’ll discuss afterward and he or she will break it down for me.”
That said, having one attorney in the room usually leads to having the other person’s attorney in the room, but not always. The other spouse may feel totally comfortable talking through finances without his or her attorney in the room and may be fine having the less financially sophisticated spouse’s attorney in the room for the mediation.
The sort of next level of assistance would involve having a neutral financial person in the room. That’s somebody who is not necessarily representing the spouse who is less financially sophisticated, but is there as a professional serving both spouses. So they’re not against the spouse who is more financially sophisticated, but they’re probably lending more support and assistance to the spouse who is less financially sophisticated in their role as a neutral.
Oftentimes, that’s somebody who is a CPA and can very easily run different kinds of income and cash-flow models for you and different models of how to divide assets and what that would look like for each spouse. So they can be very helpful in that way. But it can also be confidence-instilling enough for the spouse who is less financially sophisticated to have that neutral expert in the room and know that, “Okay. I’m not totally following this, but I know that I can count on this neutral financial expert to explain it to me to flag any issues that I should be aware of, and so I don’t feel totally alone in the room or unable to participate.”
And a third way to support the spouse who is less financially sophisticated, and by the way, these things are not mutually exclusive, is to have them at a minimum working with a consulting attorney outside the mediation room who is advising them about what the different assets mean and how they’re generally handled in a divorce. What incomes are reasonable to use for each spouse, how to figure out what amount of support to ask for.
And it depends on that spouse’s level of comfort as to whether or not they’re willing to be in the room without their own advocate or without a financial professional in the room there for them but feel comfortable enough just going in with their outside attorney’s advice to say, “Okay, we’ve reviewed the proposal,” which, say, that’s something that the less financially sophisticated spouse would not really be comfortable doing on his or her own, but they did it with their attorney and they can come back into the next mediation session and say, “We’ve reviewed your proposal, and here are the thoughts and here are the concerns that my attorney raised, and here are my own thoughts.”
So, there are absolutely ways to address a real distinction in levels of sophistication around finances within the context of mediation.
The one word of caution I want to give is that often spouses who are in a mediation process are there because they don’t want to go to court. They don’t want to involve attorneys. They don’t want to make their divorce expensive or acrimonious, all of which are laudable goals and understandable.
But you want to be really careful, especially if you’re the spouse who is more financially sophisticated, to not become too rigid about how a mediation process is supposed to look. For instance, that a mediation process is not supposed to involve any attorneys in the room because that’s not mediation. And if attorneys are in the room, well, then we might as well be negotiating through attorneys.
On the one hand, it’s understandable that the person who is comfortable with the numbers can struggle to understand the need for having an attorney in the room to talk through the numbers because they don’t struggle to go through the numbers.
But you want to just try to exercise some empathy for your spouse if you’re the more financially sophisticated spouse and be aware that this person does not have the same comfort with the finances that you do. They’re not going to be able to process proposals or spreadsheets you’ve put together in the same way that you are.
To go through mediation successfully, you need to structure the process in a way that is recognizing of both of you, both of your strengths and weaknesses, and that doesn’t throw the baby out with the bathwater, so to speak.
So, even though you might like the mediation process to have no attorney involvement, you can have a good mediation process with attorney involvement, and that’s often closer – if your goal was to have a mediation process with no attorney involvement, staying in mediation with some attorney involvement is often closer – to what you wanted to achieve than simply throwing your hands up and going through attorneys and saying, “Well, screw it. If we’re going to have attorneys involved a little, we’re going to have attorneys involved a lot.”
It’s an understandable reaction, but it’s almost like cutting off your nose to spite your face. Just because there’s some attorney involvement needed by your spouse, you don’t need to go be reactive and go in the complete opposite direction and say, “Well, forget it. Then we might as well negotiate through attorneys,” because remaining in the mediation process or working with some kind of neutral still helps both spouses stay more closely tied to the center in terms of their approach to issues and their positions around issues than they typically do if they’re just working with advocates and not in the room with a mediator.
My advice to you, whether you’re the spouse who feels less financially sophisticated or more, if you observe that there’s a big disparity between levels of financial sophistication and comfort between you and your spouse, and you want to be in a mediation process for the various reasons that I talked about earlier, you can do that, but you probably want to think creatively and talk with your mediator about how to structure the process in such a way that the spouse who is less sophisticated and less comfortable financially feels supported enough to be able to make the decisions, make the proposals, brainstorm different options that they need to do to make the mediation process work.
What will that take? What does it take for them? Is it an attorney in the room? Is it an attorney outside the room? Is it a financial neutral in the room? Sometimes people have a family member who is really financially sophisticated and they’re comfortable just consulting with that person. There are different answers for every couple.
Just be mindful that you and your spouse may have different needs to get through the mediation process in a way that feels comfortable to both of you and that the mediation process doesn’t have to look one way. It can accommodate different structures and it can adapt to meet the needs of both spouses.
That was our mini-episode on how to handle a big disparity in terms of financial sophistication between spouses in mediation. I hope it was helpful for you.