The Downside of Divorce Mediation

By 03/20/2012all

The high cost of divorce is common knowledge. Urban legends abound of couples who fight so long and hard that they ultimately lose the assets they are fighting over to the payment of lawyer’s fees. The fear that a divorce litigation will result in financial calamity motivates many people to seek alternatives to litigation. Mediation has tremendous appeal because it discourages conflict and appears to avoid what most people assume is the underlying cause of the problem — lawyers. Of course, mediation can, if successful, reduce legal bills. However, the ultimate financial and human cost to one or both parties can be far greater, since mediated agreements tend to be simplistic and unenforceable memoranda, where issues are settled based on suggestion rather than sound legal advice.

Ironically, the real question is not whether an attorney should be used — even mediators customarily refer their clients to attorneys at the conclusion of the mediation to review the agreement. The real question is when (and how) to use an attorney. The basic problem with mediation is that the client is told to seek an attorney’s advice concerning the mediation agreement after the agreement is done. This makes little sense, of course, since you need a lawyer to tell you what your rights are before you make an agreement that compromises those rights. Just as importantly, since any agreement must balance the parties’ competing interests, it makes little sense to use a lawyer when that balance has already been struck.

Many people assume that they will learn their rights during a mediation, and that, if the mediator is impartial, he or she will guide them to the best balancing of their rights and interests. Unfortunately, the first assumption is false, and neither assumption works in practice. Even assuming that the mediator is a skilled attorney, inherent conflicts of interest doom him to giving ineffective counsel. First, a mediator cannot (and usually will not) give legal advice. The attorney-mediator who gives one of the parties legal advice is essentially making that person his client. If the mediator were to give thorough advice concerning the law, and how it applies to the issue being discussed, clearly the person receiving that advice would have an advantage that the other person at the table would lack. Even if the mediator felt that he could do this impartially (by, for example, telling each party the law as it applies to each of their respective situations, and how it might support their competing interests), the ethics rules governing attorney and mediator conduct forbid it. An attorney (even one who is performing a mediation) is ethically forbidden from representing two persons who are potentially adversarial. The situation is loaded with latent conflict that bars the attorney-mediator from doing anything that would create even the appearance of conflict of interest.

More importantly, the mediator has a built-in conflict of interest between the objectives of mediation and the objectives of providing legal counsel which work against him giving good legal advice. Think about it — as a practical matter, the mediator is motivated to make a deal, since his success in any particular case, as well as his reputation as a competent mediator, depends upon deals being made. The last thing he wants is for the parties to know everything they can expect to receive under the law, since legal rights often conflict. Once the parties learn of their conflicting rights, they are less likely to agree to a solution than if they did not know their rights.

A common enough hypothetical situation illustrates this problem: Assume a couple has three children– two teenagers and an eleven year old– and the parties have already agreed that the children will live with the Wife after the divorce. Assume they own their home, but they have a mortgage. Assume further that the house is worth $400,000, that they owe $300,000 on the mortgage, and that there are no other major assets. Finally, there is no extra money–- once the Husband is living elsewhere, he will have to live with his parents if the house is not sold. In this hypothetical, the Wife wants to stay in the house until the children are all out of college, at which point the house would be sold and the proceeds split between the parties. In a mediation in which the parties received no (or little) legal advice, the Husband might quickly agree, based on the children’s interests. However, if he had been advised of the law, he would have learned several things: First, that although courts will often put off the sale of a marital residence until all the children are finished with school, courts will seldom, if ever, grant exclusive occupancy post-divorce until children are out of college. At best, they go until high school is completed. Second, our hypothetical Husband would have learned that courts do not just consider the children’s interest in remaining in the home after a divorce. If the children (or one of the children) is too young (i.e., not yet even in the teenage years) the interest in maintaining the stability of the children’s home environment is offset by the interest of the Husband in liquidating the parties’ major asset and getting his share now, rather than waiting many years. In short, the mediator has no motivation to tell the parties their legal rights where they conflict, since a Husband who knew all of this, might well disagree with the Wife’s plan. Although she might compromise with the Husband on this point, she might not. The point is, every added opportunity for disagreement reduces the chances of a quick and easy mediation.

What makes matters worse, is that mediation is often conducted in a way that masks the problem, so that the parties are not even aware that they are not being told their rights. This is inevitable since people who are unrepresented in a mediation naturally look to the mediator for answers to basic questions, and mediators feel equally compelled to provide basic answers. However, basic answers usually tell only part of the story, and fail to mention every part of the rule that would apply in a situation.

For example, in a case where there are children, one or both of the parties will typically ask the mediator how much child support is supposed to be. The mediator will typically answer (in New York) that the Child Support Standards Act requires the non-custodial parent to pay a set percentage of income for child support. Usually, the percentages are listed (17% for one child, 25% for two children, etc), but little else is mentioned. The result of this exchange between the party (or parties) and the mediator is that the parties now think they know their rights and obligations regarding child support. But they do not, because it is not that simple. The Child Support Standards Act is a long and complicated statute. There are numerous statutory factors that could cause a deviation, upward or downward, from the percentage amount. There is an income limitation (currently $136,000 of combined income; revised 1/31/14 to $141,000) that operates as a limit in some cases, but not (as practical matter in the courts) in other cases. There are many other nuances that might apply in a given situation. None of this information is conveyed to the person who gets a simple answer to a simple question, but that person is led to believe that he/she knows his/her rights. Frankly, that person is now worse off than before. Instead of getting legal advice, he/she just got bad legal advice.

Of course, the mediator cannot provide more than basic answers to the parties’ questions, because anything more than a basic answer is giving legal advice, which is bad both for the mediator’s business and for the mediator’s license to practice law.

All is not lost, if the parties take the standard advice of the mediator and take their mediated agreement to separate attorneys to “review” the agreement before they sign it. Often, the mediator (even an attorney mediator) will not even prepare a complete document, so attorneys are needed to make the basic outline into a legally binding agreement. At this stage, assuming they know to ask, the parties can finally get legal advice — the same legal advice they did not know they were not getting during the mediation. But there is one small problem —- the deal has already been made. Now it will be difficult for either party to open the negotiation again, since this could cause both parties to want changes, and the entire deal may come undone. Of course, a deal can often still be rescued by competent counsel, but this begs the question —- have the parties saved any money by mediating now that attorneys have been hired to negotiate and draft a new agreement?

Far more common, unfortunately, is that the parties decide not to re-negotiate a mediated deal, and resign themselves to keeping the uninformed deal they made with the mediator. Even in this situation, however, the attorneys must draft an enforceable legal document from the mediator’s outline. This adds an unexpected expense that may leave some people feeling cheated by the mediation process. It may be a necessary expense, because even comprehensive agreements drafted by mediators (these are becoming more popular), are often, in my experience, poorly drafted. This is not surprising, since the mediator has no interest in the enforceability of the agreement. Often, terms are simply listed, as if the mere mention of a party’s obligation is enough to ensure that he or she will cooperate. Frankly, this is completely naive, since the first purpose of a legal document is to be enforceable against somebody who later decides not to cooperate, who may need to be brought to task with a contempt motion or other punitive measure. The first thing such a person does is look for loose language through which to slip. Often mediator-drafted documents are easy pickings. The end result–- the time and money the client intended to save at the outset by using a mediator ends up being spent later on in litigation attempting to enforce obligations which were not clearly defined. (see, “One Bite at the Apple” under the Articles tab, above, for a more in-depth discussion of settlement agreements).

One reason for sloppy draftsmanship, I suspect, is the lack of an attorney-client relationship between mediator and an aggrieved party. Without it, a client has no right of action against the mediator.

Fortunately, there are other alternatives to litigation that save both time and money, but do not leave the parties wondering what their rights are, or whether their agreement will be enforceable. Although lawyers get blamed for the high cost of divorce, if used intelligently, an attorney is a valuable negotiating partner who will work to insure a fair and effective settlement is reached, at a reasonable cost.

How exactly do you use an attorney intelligently? The first step is to pick the attorney intelligently, a process which is really not that different from buying a car, or picking a contractor intelligently. First, know what you want. Just like you would not purchase a two-seat sports car to transport the whole family, you should not seek an attorney who emphasizes aggressive litigation tactics if you want somebody to help you settle your case. Spend some time researching the options. Many attorneys maintain a robust presence on the internet. Start with the attorney’s website, and look for indications of how the attorney will approach an uncontested divorce negotiation. Once you have found some good options, schedule interviews. Many attorneys offer free consultations. This is a great opportunity to see if an attorney appears both knowledgeable and experienced with settling cases. It also does not hurt to ask for an estimate of the attorney’s total fees.

Once you find a good fit, ask the attorney to outline a plan for the negotiation. This usually involves preparing a basic financial disclosure form (called a Statement of Net Worth) that is very similar to the disclosure form that many mediators use. A four-way conference would follow, with the parties and their attorneys meeting to discuss and negotiate a settlement. Here again, this is very similar to a mediation. The critical difference, of course, is that the parties each have an attorney at the meeting. With the right attorneys, the issues are addressed fairly and candidly, without posturing and threats, and a settlement is reached with both parties knowing their rights, and only compromising where necessary. Finally, one of the attorneys would draft the settlement agreement, while the other attorney reviews it and, as necessary, proposes revisions to the language. In this way, the parties get an enforceable document that faithfully captures their agreement.

Hiring an attorney does not need to lead to an expensive litigation. If both parties are serious about avoiding litigation, the right attorneys can save the parties time and money, both now and in the future.