Understanding Financial Implications of Today’s Divorce Options
Divorcing couples in today’s complicated modern world can face vastly different scenarios. Financial situations vary widely from case to case, as do reasons for the divorce and degree of cooperation between parties. Because of this reality, there is no one “right” way to recommend you approach divorce proceedings. Rather, it is best to consult an attorney to find out what your options are so you can decide what would be wisest in your particular case.
What are your options?
Mediation involves a neutral mediator that oversees negotiations between both parties, who often consult with their attorneys throughout the process. This option is becoming increasingly used because it allows the family to determine how their unit and relationships will be reconstituted going forward.
Collaborative Practice is also growing in popularity due to its emphasis on more constructive use of resources such as optimizing time by avoiding Court and lowering expense through holding team meetings that utilize the expertise of professionals skilled in law, mental health, and finances. Both parties can share the cost of expert professionals rather than having to hire their own individually.
Traditional litigation involves the filing of divorce papers through the Courts. Because decisions are made by the Judge or suggested by the attorneys, clients rarely feel they are in control of the process or outcome; rather, they are swept along.
The bottom line is usually what causes couples to choose one resolution process over another. Although the cost of each method can vary drastically, it is important not to overlook potential hidden charges and non-monetary costs.
Mediation: The least costly path
Mediation is usually the least costly path to take, since the costs of professional involvement are minimized. I do strongly recommend that both parties consult and work with their attorneys throughout the process, in addition to using the mediator. While theoretically a couple could go through mediation with minimal professional intervention to help them sort through issues, having advice from the right sources is imperative. Even if attorneys are working with the clients on the side, they are not typically present in the room, which also saves on cost. The downside, of course, is that much can be lost in translation when the client tries to relate the outcome of the meeting to the attorney later. Mediation does move quickly, since there are only three schedules to coordinate and the divorcing parties dictate the pace, but clients should be careful not to move so quickly that due diligence is not completed and thoughtful decision-making followed.
Collaborative Practice: Balancing cost and complexity
Collaborative Practice is definitely costlier than mediation, with a retainer fee typically required, but it can often be the most effective route for a couple to pursue if they have a complicated situation and would benefit from a lot of support and insight. In most marriages, one person oversees finances more than the other. In cases like these, the one in the dark financially needs support and education as he or she is brought up to speed to understand the consequences of certain decisions. In other scenarios, one party may operate out of guilt, feel intimidated by their spouse, or be conflict-averse. These individuals would benefit from CP to help level out the playing field and remove any power imbalance. The presence of a neutral family law coach/facilitator in negotiations helps to keep an eye on these types of issues. CP usually moves somewhat slower than mediation, since there are a minimum of five schedules to coordinate (two parties, two lawyers, and a mediator) and there is a combination of logistics, finances, and human emotions to work through.
Litigation: Often the most costly route
Litigation at first glance can appear to be less expensive than Collaborative Practice, but experience has shown that initial retainer fees often drastically underestimate total costs involved. For example, an attorney might ask for a $5,000 retainer up front, but when all is said and done and the case is settled, the legal bill is more like $15,000. Attorneys do not mean to deceive their clients when they quote ballpark litigation costs, but they usually do not account for factors such as the other party’s quirks, the other party’s perspective on the case, the other attorney, or how crowded the court is the day you go. As attorneys push to settle the case, the costs can quickly mount. While 99% of divorce cases do settle, the road is often much more complicated and costly than one expects/hopes it to be.
Granted, some clients have no choice but to go to litigation, if the other spouse decides to go that route. And keep in mind that if litigation results despite other efforts, it is still not a failure for the CP or mediation process, since the less-prepared party may have had a chance to become more informed and prepared before facing litigation, and some issues may have been resolved which will minimize the need for Court involvement to address the remaining issues. One thing to keep in mind is that after temporary orders are filed, certain assumptions kick in and usually set the tone for what happens later. Often clients lose their bargaining power once the Courts get involved.
Experienced dispute resolution professionals can help.
Regardless of how you decide to proceed, it is important to realize from the start that there are several different avenues to approach your divorce. Divorce is not easy for anyone involved; being informed about your options, including how they may affect your wallet, will empower you to make the best decision for your family as you all move forward together.