Mediation is a voluntary and confidential process in which an impartial, trained third party helps disputing parties reach a mutually agreeable settlement. You go into the mediation organized and prepared to COMPROMISE. But there are pitfalls, so read on.
Mediation can be conducted by one professional acting in the guiding role, and this mediator may be an attorney, a retired judge, or a financial planner. A mediator’s qualifications vary widely. Choose your mediator carefully. My recommendation is that you use an attorney or retired family law judge who knows the law when you mediate. A financial planner should also be involved to help resolve the financial issues such as the division of income and division of assets and liabilities.
I think mediation is best after you have done all your discovery on all the assets, analysed historical spending, and created a realistic post-divorce budget that includes your future housing plan. Mediation can also be an ideal process for custody issues because it is less contentious than court proceedings.
Let me give you a detailed example:
Jason and Joy are getting a divorce after a 20 year marriage. They have 2 teenage sons age 14 and 16 and a daughter 7 years old. Joy has not worked outside the home since her first child was born. Prior to his birth, she worked as a dental assistant. Jason is a Manufacturer’s Representative for a large construction firm. He travels 60% of the time and has become involved with an associate from work. Joy is angry, disillusioned, and fearful for her future. Jason wants to deal with the “facts” and get on with his life. He wants to be involved in the children’s lives, however, knows he cannot have the children half time. The children want nothing to do with the new girlfriend and are angry with Jason.
Jason and Joy are in the ninth month of their divorce process. They have a court date in 3 months. In Washington state a settlement conference is required before they go to court. No one wants to go to court, however, they are only communicating through their attorneys these days. Jean is short of money each month paying for all her legal and financial services. Jason just wants to get his personal and financial freedom. He feels Joy spends too much money on the children and herself. He is tired of paying all the bills and she now gets a set amount each month for child support and maintenance. At the beginning of the marriage, he was paying all the household bills.
Joy has seen a career adviser and financial planner. She has decided to go back to school for three years and get her accounting degree. She may go on to become a CPA. She likes bookkeeping and hopes she can work from home providing accounting services to small businesses. She has decided to downsize her family home to a more financially manageable house for herself and the children. She found a house in the same neighborhood so the children will not need to change schools. This has been a slow and difficult decision for Joy – she started out wanting to stay in the 7,000 square foot home keeping her house cleaner and gardeners. She is now ready to invest in her career.
Joy is 47 years old. Initially, she wanted 12 years of maintenance and 60% of their joint assets. Jason made a commitment when he married her and the children and he “needs to pay” was her attitude. Jason is 50 years old and says he is tired of being the money machine – he works hard, travels, and has been a good provider, however, he wants his freedom. His new girlfriend is 35 and they have “fun together and no hassles.” He is willing to provide for the children, but on a budget. He has wanted Joy to go back to work for a long time as they had always planned. He thinks she needs to “get a life.”
I think you get the picture. Jason and Joy each go to mediation with their attorneys. Jason and his attorney are in one room and Joy and her attorney are in another room. Each of the attorneys have provided the mediator with an opening letter making their recommendation for a settlement. A huge notebook sits in each conference room with all their supporting documents which the mediator has reviewed prior to the meeting. Remember, these mediators charge $300-400/hour. Joy has her financial planner attending the mediation to help her “own” a compromise before the day ends.
The mediator comes in and introduces himself and goes back and forth between the two rooms. He starts by giving his overview of their case and trying to get some agreement on the valuation of all of the assets. This can take some time if there are issues about separate property, valuation of a business, or date of separation. Eventually, the mediator will ask one side to make an offer – he/she then goes to the other room and tries to sell it or make adjustments. The mediator continues this process until there is an agreement. I was involved in 3 of these mediations in the last two weeks. They all settled in 8-15 hours. Yes, 15 hours in a room at one time is a VERY LONG TIME. The mediator definitely earned his money that day.
Joy and Jason did settle. She convinced him that her post divorce plan was workable – they did sell the family home and she was able to buy a new house. She took most of the house proceedings and put a large payment down to keep her monthly payments manageable. She did enroll in school to become an accountant. Joy will receive 5 years of maintenance while she is in school and for 2 years after while she finds a full time job or develops her own business. They split the retirement accounts 50/50 and Jason received their vacation home. Joy is investing in her career and fulfilling her role as the primary caregiver in the family. Jason has his freedom. He has been seeing his children more in the time of separation than when they were married and is slowly developing a relationship with his sons and daughter. Jason has a 3 bedroom condo that he is renting nearby.
Mediation did work for Jason and Joy – it took several months before they could consider a mediation setting to resolve their conflicts. They settled because they knew their financial issues BEFORE going to mediation. They were each prepared to make compromises and did just that.