To Mediate Or Not To Mediate, That Is The Question, Or Is It?

April 27, 2014

Understanding the importance of alternative methods of resolution when a couple is faced with the imminent possibility of a divorce, is an indispensable aspect of the family law practice. The depth of knowledge concerning alternative methods of resolution, manifested in different forms seen in Alternative Dispute Resolution (A.D.R), should be in par with the current financial, emotional, and pragmatic consequences faced by all parties involved. Although every situation is different and reasonable minds may differ, it is in my opinion, important for an attorney to be able to represent, but also resolve highly emotionally charged situations without the presentation of further adversarial complications. Divorce can be financially and emotionally taxing to everyone involved, and approaching it with an understanding of all the potential consequences or ramifications, whether it be financially or emotionally rooted, helps clients make better informed decisions. One such aspect is the presentation of ADR, by way of Mediation.

Mediation is a process in which the parties in dispute use a neutral person to help them agree on all, many, some, or in some instances, NONE of the contested matters. The mediator has no power to decide the outcome, and any participant may terminate the process upon their own compunction. Arbitration is another form, although not discussed in detail here, it differs with Mediation, as it has binding authority. In 1998, effective February 2, 1999, the Supreme Judicial Court (SJC) adopted Rules 1 through 7 and Rule 9 of the Uniform Rules on Dispute Resolution (Supreme Judicial Court Rule 1:18) which create a system for the use of court-connected dispute resolution option in Massachusetts, and in 2005, the SJC adopted Rule 8, defining qualification standards for neutrals.

Many considerations must me made and given when determining whether, at least in reference to this discussion, the possibility of Mediation is a viable one. As a practitioner one must consider many factors: can the couple talk and listen to one another?; is there a balance of power between the parties?; what about the ability for full financial disclosure?; valuation of assets- if financially driven: which are assets are part of the negotiation, and how are they to be valuated, and more importantly, by whom?; are the parties ready, willing and able to make decisions, and execute upon such decisions?; are the parties going to find the third party to be neutral?- what if one party feels the absence of such neutrality?; what about understanding the financial and tax ramifications? These are just a few of the issues and considerations presented.

As there are potential advantages to Mediation, there are also potential disadvantages, as is the case in every decision that we as individuals make in our every day lives. The predicate for this discussion is not to opine favor for, or against Mediation, but presenting the existence of other possibilities in resolving a situation. Knowledge is power, and being cognizant of opportunities is just as important as having the substantive knowledge in them. An educated consumer is one who makes the better decisions. Same goes for practitioners. Being able to recognize, identify and present to clients more than one solution to a given situation, makes for a better attorney, and client.

Possible advantages could be based on examining the situation from a cost-base analysis: Can the parties save money? If there is a viable opportunity to Mediate, can the parties save money by avoiding litigation in Family Court? Looking at the voluntary nature of such proceedings could be viewed as another possible advantage.

An area that frequently presents contested issues when looking at financial determinations is the valuation of a business. Is the Mediator able to make a determination when presented with the true value of an existing business? As there are many approaches to the valuation of a business, such as the Asset Approach (asset’s value is indicated by the cost of reproducing or preplacing it, less an allowance for physical deterioration or obsolesce), the Market Approach (value can be estimated from analyzing recent sales of comparable assets), or the Income Approach (estimating the future ownership benefits and discount those benefits to present the value using rates suitable for the risks associated with realizing those benefits), there could be a disagreement as to which method is the proper one, and to the qualifications of the person that made the valuation.

There is no clear answer, and as practitioners we know that our default preliminary response to a question requiring further inquiry is “it depends”. Keeping an open mind and knowing what your potential options are, are important traits to posses as individuals and as practitioners of law. Always seek the advice of a knowledgeable attorney when and if complicated questions or issues arise.