When my first husband and I decided to end our marriage more than 30 years ago, we wanted to avoid ugly confrontations and create a solution that would give our young son a loving home with both of us sharing custody. For his sake we went to therapy to learn how to divorce well, consulted a mediator and eventually chose attorneys to wrap things up who would honor our desire for a respectful, harmonious process.
The judge who signed our divorce papers was so impressed by this cooperative effort that he told me he fervently wished more divorcing couples were like us. Little did he (or we) know that by 1990, Minneapolis attorney Stu Webb would suggest a process that has become an even wiser and more collaborative way of dissolving a marriage.
Getting Gangbangers to ‘Yes’
In the United States, divorce currently terminates one out of two first marriages, two out of three second marriages and nearly three out of four third marriages. At any given time, there's a good chance at least one couple among your clients is contemplating or already moving toward divorce. That often leads to a financial disadvantage or even disaster for one or both parties, undoing your good work for the couple.
Fortunately for many unhappy clients, a more harmonious option has become increasingly popular around the country. It's based on collaborative practice, a process that has been applied to settle grudges between street gangs, wrangling between businesses and even disputes between nations. Productive rather than destructive, it's also used to resolve probate matters, business matters, malpractice cases, employment issues and environmental matters, too.
As a means of reaching agreement between a divorcing couple, collaborative practice “provides you and your spouse or partner with the support and guidance of your own lawyers without going to court,” according to the International Academy of Collaborative Professionals (IACP). By allowing both spouses to draw on the expertise of financial, mental health and child specialists who work with them and their attorneys as a team, it serves as a non-adversarial mechanism for dealing with differences and disputes.
Maryland is ahead of most other states in having fostered collaborative practice for at least 10 years. Suzy Eckstein, a family law attorney in Maryland and Washington, D.C., and a practitioner of collaborative divorce since 2004, strongly believes that more financial advisors should be prepared to acquaint clients with this option. “Very often, a divorcing client comes to an advisor and asks for help and guidance around this overwhelming process,” she said. “It's really important that they have an understanding of and information about their choices in the divorce process. And [collaborative divorce] has the potential to create more durable agreements that serve everyone and avoid repeated litigation.”
The ‘Third Way’
Traditionally, there have been two ways for a divorcing couple to determine how custody of their children and ownership of their assets will be divided.
Mediation, the more direct route, consists of negotiations between the two parties with the help of a neutral mediator. Though relatively inexpensive, mediation has several weaknesses. One partner may be more emotional or less well-advised than the other, resulting in an unequal division of assets. There is no assurance that both parties will be completely open with each other. And sometimes “couples are so focused on simply getting the agreement done that they create a contract they don't feel content with as time goes on,” observed Lisa Herrick, Ph.D., a psychotherapist in Falls Church, Virginia, and Washington, D.C., who often works with families struggling through separation and divorce.
Many other divorces are settled the second way, through litigation. Instead of dealing directly with each other, the two parties engage through their respective attorneys. If the lawyers can't negotiate an agreement, the process moves to divorce court. Developments from then on may include escalating hostility, intimidating depositions, children frightened by having to make adult decisions, destructive custody evaluations, the threat of children testifying, repeated court filings, requests for modifications, appeals, key decisions made by judges who do not know the family and the depletion of investments and other assets.
In a collaborative divorce—the “third way” and potentially the fairest method of breaking up a marriage—the spouses sign a contract up front to resolve their disputes with “honesty, full disclosure, transparency and mutual respect,” Herrick explained. Their decision making is supported by a team that provides emotional coaching, unbiased financial advice and a dedicated voice for their children. The goal is to reach a signed settlement agreement acceptable to both parties that resolves all issues without litigation. Details of the negotiations, which typically continue for several weeks or months, are kept confidential.
The involvement of a mental health professional who serves as a divorce coach “helps to contain emotions during a very stressful time of life,” explained Sue Soler, a licensed clinical social worker who practices in Maryland and Washington, D.C. As a result, collaborative divorce can be uniquely effective in complex situations where both parties want to retain a good relationship with each other. One of Soler's cases involved a divorcing couple who had built a successful business with a great deal of growth potential. Both spouses felt a strong sense of ownership and enjoyed being part of the business. They were also able to see the value that each of them brought to the firm—one as the technical expert, the other as the marketing pro. Using the collaborative process, they were able to preserve their good relationship during and after divorce, enabling them to continue running the business together.
Cornerstones of the Process
Attorney Eckstein urged advisors to become familiar with the four cornerstones of collaborative divorce:
The couple and their team members agree in writing to do what makes sense for all parties involved, including children. (See sidebar, “The 13 Anchors of Collaborative Divorce”) Eckstein noted that this commitment is missing in other types of divorce processes.
Each partner is obligated to provide information that the other would need in order to make good decisions. In other processes, Eckstein pointed out, you may get this information if you ask the right questions. In collaborative divorce, spouses agree to provide it without being asked.
Everyone agrees that the goal of this process is to reach a settlement. Threats of “I’ll take you to court if you don't agree” are out of bounds.
If the issues can't be settled within the collaborative process, both parties may agree to litigate. However, none of the professionals who were on the advisory team can be involved if the case goes to court. This restriction keeps the partners’ attorneys and other team members focused on reaching agreement without resorting to litigation.
The Team Members
A full collaborative practice team consists of an attorney for each of the spouses, a “financial neutral,” a divorce coach and (when children are involved) a child specialist.
Attorneys educate the couple about the law and agree to work together outside of court.
A financial neutral, who must be a CFP or a CPA, provides financial settlement analysis to the couple and the team attorneys.
A divorce coach works with the couple to manage intense emotional issues, providing tools to help them communicate and resolve disputes respectfully. There may be a single neutral coach or a coach for each spouse.
A child specialist assesses the needs and interests of the child or children, giving them an opportunity to voice their concerns. He or she also supplies information to help the couple develop an effective co-parenting plan.
How It Works
While the process varies for each couple's specific needs, it typically begins with a meeting to sign a participation agreement that contains the four collaborative divorce cornerstones. The couple may be joined in signing this agreement by the whole team or just the attorneys. “After that, the financial piece and the parenting piece go on parallel tracks,” said Eckstein. Attorneys may be present at any or all client meetings, forsaking their usual adversarial roles in order to help craft a mutually agreeable settlement.
On the parenting side, the child specialist first meets with each parent separately to find out any concerns or questions they may have. “In this role I help people stay focused on their children's needs and interests,” explained social worker Soler, who has served as a child specialist in collaborative divorces. After meeting with the children to explore their experience of the divorce, the child specialist shares this information with the parents and coach(es), who use it to formulate a parenting plan.
Another of Soler's cases concerned a family with two children, one of whom had special needs. Initially, both parents wanted to stay in the home and resisted any other option. By talking with the divorce coaches, Soler learned that the mother was worried about being able to set up a home on her own and wanted to make sure the children would feel comfortable in both homes. Both parents were also worried about the special-needs child's ability to transition from one home to the other.
“Working in the collaborative process, the divorce coaches helped the parents develop a plan for a gradual transition to spending time at mom's home,” Soler said. “For example, the parents decided to go furniture shopping for her new home together. And to make the transition to two homes as successful as possible, the whole family went to the new home together the first time.” The parents’ ongoing collaboration allowed them to adjust the co-parenting schedule later on, based on how the children were doing.
In other cases, Soler has served as a divorce coach working with an individual client. “You are normally involved with that client from the beginning of the divorce process,” she said. “Your purpose is to help manage emotions related to financial decision making, as well as helping to create a child-focused parenting plan.”
Meanwhile, clients also move forward on the financial track by providing necessary information to the financial neutral. The clients, their attorneys and the financial neutral, sometimes assisted by the divorce coach(es), work together to develop a financial settlement agreement.
The Role of the Financial Neutral
Every case is different for a financial neutral, according to Debbie May, a principal at May & Barnhard PC, in Bethesda, Maryland. A CPA who also holds CFP and CDFA (Certified Divorce Financial Analyst) certifications, May has served as a financial neutral in more than a hundred collaborative divorce cases.
“We [financial neutrals] are responsible for gathering all the important financial information for full disclosure,” May explained. “We’re also responsible for making sure that clients and their attorneys understand this information.” This includes everything about which the clients will have to make decisions: assets, liabilities, income, taxes, budgets and so on.
“Thirdly, we’re responsible for summarizing and giving reports in a meaningful way,” she continued. “For example, a client may not understand how their retirement assets are divided, stock options, or tax issues on division. We do budgets, summaries of assets and liabilities, and cash flow analysis.” These reports are shared with the attorneys as well as the two spouses.
Since the goal of collaborative practice is for the clients to come up with their own agreement, the financial neutral doesn't make recommendations. However, May noted, “We give input as appropriate to help the couple make sound decisions.” (See sidebar, “Responsibilities of a Financial Neutral”)
Serving as a Financial Neutral
Most of the time financial neutrals are recommended or selected by attorneys, May said. A financial advisor must complete three days of collaborative divorce training and 30 hours of mediation training in order to qualify.
Once chosen as a financial neutral, an advisor must sign a contract agreeing not to pursue the client relationship when the collaborative process ends. Advisors who want to help their current clients without losing them often pursue collaborative training with no intention of becoming a financial neutral.
That hasn't been the case for May. “I love this work,” she said. “As a financial professional, you get to do what we do best: be creative, think outside of the box, be forward-thinking and help couples project into the future how their settlement is going to impact them. We get to come up with win-win settlements that are good for the whole family.”
The other upside of being a financial neutral, she said, is the fun of creative brainstorming with a whole team and seeing the case from the perspective of legal experts and others. In the process, mental health experts often help the other advisors learn to communicate better with clients.
Who's Right for Collaborative Divorce?
Although how a couple divorces is a personal choice, attorney Eckstein suggested that many spouses prefer collaborative divorce because it provides more support than either mediation or litigation. However, she acknowledged that some people don't need or want this higher level of support. “People who are on a level playing field can do well in mediation,” she pointed out. “And collaborative divorce isn't right for people who are in relationships where there's a coercive control dynamic—for example, a relationship where one person is intent on bullying or punishing the other.”
Cost is also a factor. While collaborative divorce usually costs more than mediation because of the need to hire a team of experts, it's “almost always less expensive than litigation,” Eckstein said. “How expensive it is depends on what the parties need to talk about and iron out, and how diligently they do their homework and participate in the process.”
In a 2011 white paper on collaborative divorce, therapist Herrick gave a rough range of costs for the various divorce models:
Mediation: $4,000 to $12,000
Collaborative: $12,000 to $90,000
Negotiated settlement (no trial): $40,000 to $120,000
Litigation and trial: $100,000 to $300,000 or more
In litigation, as financial planner May pointed out, “you have to hire two financial experts, and the attorneys are in an adversarial mode. There are a lot of formalities you can't bypass in a court process.” By contrast, she added, spouses in a collaborative divorce are “spending the dollars in a productive way rather than a destructive way.”
In Maryland, families of modest means have access to this more respectful process through the Collaborative Project of Maryland, a nonprofit organization funded by the state judiciary. An alternative to pro bono litigation services offered by legal professionals, the Collaborative Project (CollaborativeProjectMD.org) provides collaborative divorce services that are free or billed on a sliding scale for qualifying couples.
Two Steps Advisors Can Take
“I’m thrilled to be part of a process that always keeps the best interests of the family front and center,” May told us. “It's still a divorce and a dissolution of the marriage, but we’re able to help plan for a future for all the members of the family.”
Financial professionals who want to aid the process of collaborative divorce might consider taking these steps:
Strengthen your empathetic communication skills. In a six-hour training workshop last June, I helped divorce coaches, financial neutrals and other collaborative divorce professionals understand couples dynamics and practice stress management and empathetic communication skills. Using these techniques while volunteers role-played adversarial divorcing couples, participants learned how to help clients more deeply hear each others’ concerns, fears and feelings. Because negotiations can proceed more peacefully when practitioners are aware of their own beliefs and prejudices, I also educated participants about confronting money myths, anxieties and fears that might be limiting them.
As a financial advisor, you will deepen the bond with clients if you fine-tune your empathetic listening and feedback skills. At the same time, you may benefit from analyzing your own emotional charge in regard to money and lightening the load if necessary. Knowing that money is merely a tool to accomplish some of life's goals, you will be better able to educate and model “money harmony,” which I consider to be crucial in facilitating a plan your clients can trust.
Understand and educate clients about collaborative divorce. It's important to be knowledgeable about this option even if you never serve as a financial neutral. The better you understand collaborative divorce, the more helpful you can be to couples who are contemplating a breakup (especially if there are children involved).
A good place to start gathering information is the IACP, which has more than 5,000 members in 24 countries. To find local practice groups or collaborative-trained professionals, visit the IACP website, CollaborativePractice.com. Social worker Soler urges advisors or clients to contact “any of us … an attorney, a financial neutral or a mental health professional. Any of us are happy to help.”
An excellent resource in the Maryland/D.C. area is Collaborative Dispute Resolution Professionals (CDRP), a regional group of financial, legal, mental health and related professionals (e.g., coaches and parenting experts). Their website, CollabLawMaryland.org, includes a list of books about divorce for clients and their families, and educational brochures are available upon request.
When you are familiar with collaborative divorce, have a toolkit of materials at your disposal and know how to connect with trained professionals, you will be able to save clients emotional distress, time and money by avoiding an acrimonious and adversarial court-mandated ordeal. Your help in minimizing emotional turmoil at a time when stress levels are running dangerously high will be a gift—one that clients may reciprocate with lifelong gratitude and loyalty.
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