By Scott Levin, Guest WriterCyndi Lauper was on to something when she sang, “Money Changes Everything.” When it comes to marriage and divorce, money most certainly does change everything. Yet, when people think “divorce,” they think “attorney” (understandably so, although it would save money, time, and stress if they thought “mediator” instead). Unfortunately, the divorcing parties usually don’t think “financial expert” until it’s too late.
If they do, most people—even high net worth individuals—assume that an existing accountant, financial advisor, or business appraiser will have the financial issues covered. Not so. That’s where having a Certified Divorce Financial Analyst (CFDA)—a licensed divorce financial expert who ideally possesses a hefty business background—is critical to the process.
What Is Divorce Mediation?
Divorce mediation is a process for negotiating and resolving conflicts with the help of a neutral third party. Unlike in contested cases handled by litigation attorneys and resolved in trials, decision-making rests in the hands of the parties in mediation, as opposed to the discretion of your lawyers or a judge.
In the context of divorce and family law, the most effective mediators are licensed family law attorneys who limit their practice to mediation and conflict resolution and do not litigate cases. An experienced mediator facilitates discussions and negotiation in a structured process to help you identify and understand issues; obtain and exchange necessary information; generate ideas and options that help you move beyond impasses; and, in the end, reach mutually acceptable binding agreements. The mediator then drafts the Marital Settlement Agreement on the same scope of issues as in a contested divorce, including child custody, division of assets, and spousal support. This allows both parties to have more control over the outcome and future and to conclude the divorce process in a fraction of the time of litigation with significantly lower stress and financial costs.
When it comes to finding the right individual to navigate a high net worth divorce, the more C’s the better. With a background as a CEO, CFO, licensed CFDA, and a one-time divorce litigator turned mediator and Chief Peacekeeper™, my financial literacy places me in the unique position of successfully mediating financially complex, multi-million-dollar divorces. Ideally, couples will engage a family law mediation attorney who is also a CFDA to help navigate the divorce process. This combination of legal and financial expertise who is also committed to an amicable outcome through mediation is the best way to approach the divorce process.
More information here:
Physician Divorce: How to Survive and Thrive
How Does Divorce Mediation Work?
Generally, people facing a high-stakes divorce assume things must get ugly and a team of litigators must be brought in. However, an expert mediator with an advanced financial background can work to keep things civil while delving into complex finances. They will understand if the numbers are amiss or suggest hidden assets by combing through heaps of business financials and complex personal assets.
I recently mediated a high net worth divorce involving real estate developers, and the assets were completely tied up in property and businesses. With my help, we clearly set forth a process for valuing these assets in a way that created buy-in from both sides and eliminated doubt as to nondisclosure, and these efforts led to a successful outcome and amicable settlement involving more than $25 million in value. Many think or presume that high net worth cases aren’t capable of being mediated, but with the right professional who has a financial understanding, these couples can resolve the division of significant assets in this setting.
What to Expect During Divorce Mediation
Scenarios like the one above expedite the overall mediation process. Why?
First, a neutral party ensures both spouses clearly understand the financial implications of the divorce. It avoids anyone being blindsided and, thus, enables more productive conversation. Second, with both parties believing in the accuracy of the financials—especially if one spouse has been overseeing the bulk of the finances—they place greater trust in the entire mediation process. Once that happens, getting to the divorce finish line is much quicker as the parties have greater trust in signing and upholding the final agreement.
Collaborative Divorce vs. Mediation
In a mediated divorce, about 15% of the people end up back in court. Conversely, about 60% of litigated divorces end up back in court, generally related to finances. Even if the parties originally had an expert litigator, the lawyer is trained in law—not finances—and the attorney is not going to double-check their client’s work. Only the most glaring anomalies are likely to be questioned. The whole process is mired in doubt and mistrust, and eventually, that path leads back to the courtroom and additional expense.
More information here:
Navigating the Finances of Divorce
How Much Does Divorce Mediation Cost?
It’s common knowledge that one of the traits many high net worth people have in common is that they don’t like to waste money. A mediator, on average, will cost a fraction of a litigated divorce. If there is a tremendous amount of financial data involved in the case and I bring in an additional financial expert to help cross-check the numbers, the two of us combined will still cost less than 10% of a litigated divorce.
If the divorce ultimately has to go to court, at least the financial due diligence will have been done at a fraction of what a law firm would charge to find outside experts. Those are savings that allow other experts to be brought in as needed. The math in favor of finding a mediator with an astute financial background becomes impossible to ignore.
Emotional Savings When Using a Divorce Mediator
Given my passion for keeping the peace, I’d be remiss not to mention the huge emotional savings associated with mediation. I once asked a client, a successful business owner, who wanted to make things contentious if he’d 1) rather be sludging through the swamp for the next two years (the average timeframe of a litigated divorce), or 2) rather be sailing in the boat he ultimately retained. He chose Option 2. He wisely decided to look forward instead of spending two years staring at the wrongs of the past, saving himself emotional bankruptcy.
On another occasion, I asked a set of divorcing spouses if they really wanted to stand in front of a judge and slog through their expensive travel and personal care needs and exorbitant spending on extracurricular activities and travel sports. While I can certainly appreciate all these expenditures and make no judgment, ask a judge in an over-taxed court system if they truly care about tennis camp for the family and if they can stay truly neutral throughout the conversations. A mediator with layers of financial expertise who isn’t making judgments about expenses was clearly the way to continue the divorce process, and the parties didn’t experience the anxiety of their lives being exposed and judged in court proceedings.
How Long Does Divorce Mediation Take?
A mediation attorney is more available to help expedite a resolution. Most couples complete the mediation process in just a fraction of the time required for an attorney-negotiated settlement, collaborative law process, or contested litigation. While the time frame depends on the parties, mediators can help resolve cases in just a matter of weeks or months.
When Is Divorce Mediation Not Recommended?
Mediation has so many benefits—including a shorter timeframe, reduced emotional drain, minimal financial strain, more control over the outcome, child-focused discussions for parenting plans tailored to your family and kids, confidentiality, and more.
Sometimes people assume that the only way to handle a divorce with a high-conflict partner is to lawyer up and get a shark. In reality, this approach leads to enormous financial and emotional costs. In almost all cases, you can achieve a better divorce through a cooperative process, not a combative one. It is possible to mediate with narcissistic personalities if you plan and prepare by learning how to step away from the dance of conflict so you can create the stable, joyful, and fulfilling life you and your children deserve.
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Is Mediation a Good Idea in Divorce?
Mistakes are always costly—none more so than in divorce. Having an experienced mediator with expert financial experience can help avoid costly mistakes. Moreover, it frees up time and mental space so divorcing spouses can equitably move forward and still enjoy a life they worked hard to build, although it may be a different version of that life. And while all may not have gone exactly to plan, certainly all parties can agree that this scenario is much better for the bottom line.
Have you ever used divorce mediation before? In hindsight, did you wish that you had?
Re: “How Much Does Divorce Mediation Cost?”
I found it greatly annoying that you didn’t answer your own question. Is it an hourly fee, flat fee, % of assets? What are those fees? If your fees are a trade secret, what is an expected range of fees in your community? Is there an upfront retainer involved? Is payment required throughout the process or is there one big bill at the end? Who is responsible to pay the mediator? Do you disclose your fees to potential clients or play coy with them also?
Thank you! Wish I had known about this as my best friend went through an ugly (from what she says) divorce from an apparent megalomaniac narcissist, although I doubt the spouse I view as a villain would want full transparency and honesty in the process. Long ago my mother did financial investigative work in such cases; however I always figured that the numbers were way bigger than I or my acquaintances would ever encounter.
I think everyone should, if not preparing and executing a prenup, at least work through how they would part should they ever. Aside from the selfishness some have against the ex-spouse, folks who would shortchange their children are really appalling. However I sense it’s often the next spouse urging that the new set of kids is being shortchanged, and read the memes about moms allegedly spending child support on hair and nail care while their kids’ shoes have holes in them.
I urged my kid to do one, but the cost kept them from bothering. Hopefully though thinking about it got her in the mindset of what might be owed to the lower earning partner especially if he becomes a stay at home parent. (I also gave her college roommates “The Price of Motherhood” for graduation gifts.) She recently advised him she’d expect way more than they currently tolerate should he give up his paying job, so she’d rather have the money from his paid work- and pay a house cleaner and eat take out- than be angry he isn’t doing much cleaning or cooking.
A generation earlier I had taken sabbaticals to calm my anger that when we both worked I had the lion’s share of home care. My son-in-law is definitely in a different generation than my husband!
It’s unfortunate and sad that some physicians need these divorce services. I wonder if long hours and high emotional demands at work make physicians more likely to divorce than other professional jobs. Also perhaps having to spend their twenties in the hospital makes them less savvy and experienced when it comes to partner choice compared with those who had a lot more free time.
Docs are actually less likely to divorce, especially 2 doc couples. Instead of ~ 50%., the divorce rate for a two doc couple drops as low as 10%.
Will a Certified Divorce Financial Analyst (CFDA) review and negotiate postnuptial agreements? Or do they only work through attorneys? Thanks