Money and Finances Archives | Page 8 of 8 | Collaborative Law Institute

October 24, 2013

Part 4: Skilled attorneys are essential to a successful Collaborative Divorce. A Collaborative Divorce is one in which the husband and the wife each retain a lawyer for settlement purposes only. When attorneys are required to work for settlement only, it is critical that they have the skill to negotiate successfully without the threat of going to court. Attorneys are generally trained to advocate for clients through use of argument and a variety of legal strategies, including the threat of court. Collaborative Divorce removes those tools from their toolbox, requiring the attorneys to use other, less damaging, conflict resolution methods. While the Collaborative Commitment–the agreement that the attorneys will withdraw if the matter goes to court–is designed to rein in some of these instinctive legal tactics, the withdrawal agreement by itself is not enough. If the attorneys are not skilled in helping clients achieve settlement without the use of arguments or threats, they may fall back on some of these old habits. In those situations, the Collaborative Commitment will not necessarily lead to better outcomes. Collaborative negotiating skill is, in my humble opinion, a rarer and more difficult skill for attorneys than argument and threat. So, how do clients find attorneys who possess this skill? In general, it is a combination of research and intuitive judgment. Through research most clients can find attorneys in their community with training and experience in Collaborative Divorce. In addition, most Collaborative attorneys will provide either free or low cost consultations to allow clients to gauge, first hand, whether they have the commitment and skill required to help them achieve success in a Collaborative Divorce. Finding the most suitable Collaborative attorney is, in many cases, only part of the equation. One of the great advantages of Collaborative Divorce is the ability to work with other professionals who are, in most instances, better suited to help clients achieve the best outcomes, and often at a lower cost. While divorce is a legal process, there are financial, parenting and communication elements that may, in the end, be more important and more complex than the legal elements. Having financial professionals and mental health professionals on the team that help clients achieve success in these areas, could be the most important factor in helping them achieve a better outcome. This information will be discussed in the upcoming blogs. However, if you want information on this now, go to www.collaborativelaw.org and www.ousky.com. Read Part 5, here.

October 23, 2013

Part 3: Collaborative Divorce helps create better outcomes by requiring commitment at the beginning of the process. A Collaborative Divorce is one in which the husband and the wife each retain a lawyer for settlement purposes only. One of the reasons that the process works well is that it causes both parties to make the necessary commitment early in the process. Almost all divorce cases, (approximately 95%) settle out of court. However, too often the settlement comes after the parties are near the point of financial and emotional exhaustion, sometimes creating flawed settlements and resentment. Many people reach a point of committing to a settlement only when they are nearly out of money, or they are told by their attorneys or the judge that moving forward will not be successful. These reluctant settlements, while better than a trial, come at too great of a price and can lead to a rocky future for the family. In a Collaborative Divorce, both parties and their attorneys sign a Participation Agreement at the beginning of the process that challenges clients to focus on commitment to settlement before they are financially and emotionally drained. Because both parties are asked to engage their attorneys for settlement purposes only, they are forced to think about their commitment to settlement at the very beginning of the case, and not “on the courthouse steps.” Both clients understand that each of them must make a commitment at the beginning of the process. Early commitment from each party leads to better settlements that are made before financial and emotional resources are fully exhausted. Early and deep client commitment is a big part of why people often get better outcomes in a Collaborative Divorce, since skilled Collaborative Professionals can help them commit, not only to settlement, but to other important matters, such as improving skills in the areas of parenting, communication or financial acumen. However, this is only a part of the equation. In order to be successful, committed clients need to be guided by professionals that are skilled in helping them achieve the best outcomes in this new environment. This information will be discussed in the upcoming blog. However, if you want information on this now, go to www.collaborativelaw.org or www.ousky.com. Read on to Part 4 by clicking here

October 22, 2013

Part 2: Having lawyers that are fully committed to settlement creates better outcomes. A Collaborative Divorce is one in which the husband and the wife each retain a lawyer for settlement purposes only. Hiring a lawyer for this defined purpose has some risk. The success of Collaborative Divorce is based on the fact that, in most cases, the benefits far outweigh the risks. In order to understand why this is true, let’s look at the basic risks and benefits. Risk: At the beginning of the case, both parties and their lawyers sign a Collaborative Commitment stating that the lawyers must withdraw if either spouse decides to fight in court. Therefore, the Collaborative Commitment creates a risk that you will need to switch attorneys during the divorce process. Indeed, that is the very idea behind the commitment. How significant is the risk? In my experience of around 500 Collaborative Cases, the parties have had to switch attorneys approximately 5% of the time. By comparison, in my experience practicing in the traditional model (cases where the lawyers can go to court), the parties switched attorneys, or the attorneys withdrew from representation for other reasons, almost 5% of the time. So, in reality, the risk that clients need to switch attorneys by starting in the Collaborative Process may not be significantly greater than in a non-Collaborative case. Benefits: The most significant benefit from the Collaborative Commitment is that the attorneys are free to focus all of their attention on more creative settlements. Removing, or at least significantly diminishing, the threat of court, opens the door to interest-based negotiation. Instead of using argument, accusation and threats of court, which are taken off the table, the attorneys advocate for their clients by using creativity, empathy and the development of shared goals. What clients seem to want, in almost all instances, is a form of advocacy (meaning protection of true interests), without creating animosity. In traditional practice, I sometimes felt like a bull in a china shop, unable to go in and help my client get what he or she truly needed, without risking damage to fragile, but important, things like the ability to co-parent and communicate effectively. Collaborative Divorce, by removing court as an immediate threat, allows me work to help my clients with far less risk to the relationship and other intangible goals. Of course, the success of Collaborative Divorce can depend on more than just the Collaborative Commitment. Specifically, the best outcomes in Collaborative Divorce are achieved with a) a high level of commitment by the clients and 2) the skill of the professionals. The keys to success in those areas will be discussed in the next two blogs in this series. For immediate information in these areas go to www.collaborativelaw.org or www.divorcechoice.com. Check out Part 3 of this series, here.

June 21, 2013

A recent article in Time Magazine called The End of Alimony discusses some of the potentially unfair and unrealistic outcomes that can result from the current family legal system. The example highlighted in the article discusses a second wife having potential responsibility to her new husband’s ex-wife for alimony payments. The article looks at both sides of the equation – the new wife having unforeseen and unwanted obligations and the first wife having financial struggles and dependence on this additional source of income. It is no doubt a complicated issue. Many issues in divorce are complicated. The challenge in court cases is often to balance the rights of the participants with the need for efficiency and structure in the law. Courts do not always have the time and resources to give every case the attention it needs to find unique and realistic resolutions. Unfortunately, there are rarely one-size-fits-all resolutions. Collaborative law provides an alternative. In divorce, the collaborative law process provides for unique outcomes that are tailored to the individual situation of the couple. A good collaborative team can gather the information needed and then take a 360 degree look at resolutions to take unforeseen circumstances into account. Where the courts may have formulaic outcomes in mind, collaboration can lead to outcomes that can change as circumstances change. Alimony or spousal maintenance, for example, does not necessarily need to end upon remarriage (as the law often presumes). Perhaps the parties agree to look at the realities of new partnerships and see if there are ways to find resolutions that take everyone’s interests into account? The resolutions may not be perfect, but they are reached together with all stakeholders at the table.

June 13, 2013

Wow, the phrase “First vs. Second Wives” makes me cringe. There is so much wrong with it, or at least so much to dislike or be uncomfortable about. Let me count the ways (Keep in mind that this is in the context of Spousal Maintenance). It implies that there will be another wife after the first, which is a fair assumption, but still. It implies that the first and second wives will be at odds with each other over money, which is unfortunate and sad to think about. It implies that the husband, at least in his first marriage, is the breadwinner. In our culture of perceived independence and self-sufficiency, it may strike us as dependent and therefore inconsistent with current cultural standards. It uncomfortably reminds us that many spouses, most likely the wife and often for good reasons, give up career and educational advancement, and so their future financial independence and self-sufficiency, to stay at home with children for the benefit of the greater family. Then, if they divorce, they are in big financial trouble without consistent and lengthy financial support from their ex. I’ve seen many couples divorce where the breadwinner doesn’t want to or just won’t acknowledge the homemaker’s non-financial contribution to the family and opportunity cost of being out of the workforce or taking a lower-paying, more flexible job. I’ve also seen many cases where the homemaker never left home after the kids were older, when it would have been more appropriate to find employment, because re-entering the job market was likely the original marital intent. There is an interesting article in Time magazine’s May 27, 2013 edition titled “The End of Alimony” and a short radio segment, along eerily similar lines, on NPR titled “Alimony Till Death Do Us Part? Nay Say Some Ex-Spouses.” The basic premise of each is that there is growing momentum (but I’m not aware of any such movement in Minnesota) to limit Alimony court awards, or what we in Minnesota call “Spousal Maintenance.” The irony cited is that while ex-husbands used to be the only ones against Alimony, now second wives are also organizing to do away with Alimony, which their husband’s are paying to their ex-wives. The result, it is argued, makes for a pretty large constituency which legislators ignore at their own political peril. There is no Spousal Maintenance calculator in Minnesota. Instead it is a case-by-case, facts-and-circumstances analysis. One of the hardest, and grayest, part of the law in divorce is Spousal Maintenance. It often feels like pulling teeth to get a higher-earning spouse to even acknowledge that the lesser earning spouse has any reasonable financial need. Striking a balance to reach a fair outcome is the key. Traditionally trained attorneys, in my opinion, often do a terrible job addressing Spousal Maintenance. Just bringing it up is likely to start a battle that is out of proportion to the reasonableness of the request. That’s why Spousal Maintenance is a great issue to address with a Collaborative Divorce, because at the beginning of a Collaborative Divorce the attorneys and other professionals help the spouses identify their financial resources and shortfalls by analyzing their budgets in relation to their incomes. They also help the lower earning spouse explore their future career options (including going back to school) and therefore their reasonable financial need. The answer is not usually “yes” or “no”, in black and white. The initial answer is almost always “let’s evaluate this”, which is appropriate given the complexity of the question and the importance of the answer.