High value divorce: were you advised that mediation is not suitable?

By Euan Davidson

euandavidson@godalmingfamilymediation.co.uk

5th March 2014

As a mediator and qualified solicitor, I am all in favour of clients seeking legal advice in parallel with the mediation process and then feeding this advice back into the mediation process so I am certainly not about to claim that lawyers are not useful but it never ceases to amaze me how often clients tell me that their lawyer has advised them not to consider mediation as mediation is not suitable for their high value divorce case. Sometimes the lawyer will focus on the fear that the other party will not fully disclose all of their assets. Other times, the lawyer will claim that the mediation process is far too “wishy-washy” or “fluffy” to deal with these sorts of cases. The lawyer will also at times claim that mediators do not have the skills or experience to deal with the types of issues involved.

I therefore thought that it might be helpful to deal with these issues from a mediator’s perspective:

1. Disclosure

Contrary to what anyone might try to claim, a solicitor or barrister has absolutely no more power than a mediator to ensure that either party will disclose fully. It is true that a lawyer might feel inclined to write a strongly worded letter to the other party demanding certain documentation and threatening court action if it is not provided but at the end of the day the only way to try to force disclosure is to seek a court order about this issue. On the other hand, during the mediation process, one party can simply ask the other party to voluntarily disclose the missing documentation and the mediator can explain in clear terms the implications of failing to reach agreement about the level of disclosure being provided, including in relation to the potential legal and emotional costs of seeking a court order about this rather than seeking a practical, proportionate and timely solution within the mediation process. From my experience, it is extremely rare that one party will then refuse to disclose a document during mediation without a very good reason that can then be discussed with both parties.

Before moving on, I know that the obvious second stage to this desire to deflect clients away from mediation is the assertion that one party could easily hide certain assets within the mediation process. However, with a bit of thought it is not too difficult to realise that this exact same thing can happen via lawyers and it is only when one party is able to establish some evidence of the existence of the missing documentation that a credible request can be made, either in person or via the courts, for documentation to be disclosed about these missing assets. Of course, there are ways to appoint forensic accountants and private investigators to look into these matter but quite frankly this is extremely rare and these methods should generally be the last resort after exhausting more cost-effective and direct methods including discussing the issue within the mediation process.

Ultimately, the aim is to enable the process to reach the stage where both parties, their solicitors, and the mediator are satisfied that full disclosure has taken place and from my experience this can be achieved in the vast majority of cases but there will of course be cases when this is not achieved and when the mediation will then need to be terminated or suspended in order to allow legal action to take place.

2. Mediation is not robust enough

As with most things in life, the mediation profession is made up of a wide selection of mediators with different backgrounds and different approaches to the mediation process. In fact, the same mediator may approach different cases in a variety of different ways, with the discussion about a child’s wellbeing at school clearly requiring a very different approach to a discussion relating to the disclosure and apportionment of complex financial assets. Provided that the mediator takes a robust approach to the disclosure process that focuses on ensuring that there is full financial disclosure, that both parties have been able seek legal and financial advice if appropriate and that both parties are then in a position to have informed discussions and make informed decisions about how to deal with the finances then I fail to see that there is anything relating to the mediation process that is inherently lacking in robustness.

There are plenty of stories out there about mediators who failed to even raise the issue of pension or who failed to consider whether there was a need to discuss ongoing maintenance between the parties but it would hardly be fair to judge the whole profession as a result of these stories and if the mediator is chosen carefully then there is no reason to believe that s/he will be anything but robust in their approach to financial issues.

3. Skills and experience

I would be the first to admit that, even though I have dealt with many high value cases, I am not a pensions expert, stockbroker or financial advisor. However, I like to feel that I know enough about finances to enable me to know when I am dealing with financial assets or instruments that are not only outside of my knowledge base but that are also outside of my remit to discuss in detail as a mediator. Indeed, it is often the case that I will come across complex investment vehicles that I do understand but, rather than risking straying into the realm of acting as a financial adviser to either party, I will suggest to both parties that they should seek financial (and/or legal) advice about these assets e.g. valuing a business, understanding pension benefits, how to deal with risk associated with stock options or calculating potential tax liabilities.

Quite frankly, unless a family lawyer happens to also be a qualified Independent Financial Advisor who is also allowed to enter the arena of providing financial advice then I fail to see how they would be able to take a different approach to these issues.

Conclusion

Essentially, the underlying point that I am trying to make is that there are mediators out that who are able to deal effectively with very complicated financial issues. These sorts of cases will almost inevitably have technical legal aspects about which both parties will benefit receiving independent legal advice, as well as financially complex issues about which both parties will benefit seeking independent financial advice, but the end process is the same – the parties will feedback their advice or provide the various reports and then discussions can take place about how they each want to deal with these issues with a view to allowing possible financial settlements to be discussed. It may even be appropriate to invite the lawyers and/or financial advisors to take part in some of the mediation sessions, not as an acceptance that the mediation process is not suitable, but in a recognition that it is only possible to enable the parties to make informed decisions when they have this level of support and as a way to short-cut a potentially lengthy and expensive series of communications between these various advisors.

So, I hope that the next time you are asked to consider whether mediation is suitable for higher value finance cases or the next time that you are advised that mediation would not be suitable that you take a look back at this post and at the very least pick up the phone and speak to a mediator with experience in these sorts of cases before deciding how to proceed.

Thank you for taking the time to read this post and I look forward to reading your comments.

Euan Davidson

Family mediator

Godalming Family Mediation