Can Mediation and Collaborative Law Work for High-net-worth Divorces in Florida?

Date Posted: June 19, 2022 12:01 pm

Can Mediation and Collaborative Law Work for High-net-worth Divorces in Florida?

What is a High-net-worth Divorce?

A high-net-worth divorces are considered complex for many reasons. In practice, the most common factor leading to a complex divorce is the high net value of the marital estate. Other reasons contribute to the complexity of the divorce procedure, such as child custody issues and alimony. But the central aspect of high-net-worth divorces is a valuable family estate.

Divorces that fall into the high-net-worth category involve multi-million dollar property and debts, including shareholder accounts, real estate, retirement accounts, professional practice, trusts, businesses, etc. What complicates things further are prenuptial and post-nuptial agreements that govern marital property division and other related issues. Also, many affluent couples have family businesses, property overseas, and offshore accounts.

There is a misconception that litigation is best suited for handling highly complicated financial matters. Many people see the financial discovery procedure as the most appropriate way of disentangling the financial knot of high net worth divorces.

In most cases, mediation and Collaborative Divorce prove to be more effective than litigation in resolving divorce disputes in general. Can these alternative dispute resolution methods work for high net worth divorces, as well?

Let us look at the typical financial-related aspects of high net worth divorce and see whether mediation and Collaborative Law are better processes for handling them.

Disclosing Financial Information

One of the central features of litigation is the financial discovery tools that require the exchange of financial information between divorcing spouses. In litigation, the spouses must exchange Mandatory Disclosure, revealing minimal information about their assets and liabilities. That gives each side information about the general financial status of their spouse. The spouses sign the disclosure forms under oath, contributing to the truthfulness and authenticity of the information disclosed.

In addition to Mandatory Disclosure, attorneys utilize other methods of getting financial information, such as Requests for Production and Interrogatories (asking questions and asking for documents). Attorneys also use depositions and subpoenas to get the information they want, often at great expense. Formal litigation rules include sanctions for those who fail to comply with the subpoena or ignore interrogations. Failure to disclose documents and attempts to force the other side to produce documents cause litigation expenses to be very high.

Dealing With Financial Imbalance

Another inherent characteristic of high-net-worth divorces is a financial imbalance between spouses. There are many examples of one spouse being more knowledgeable than the other regarding earning power and financial knowledge. In such cases, the lower-income spouse not possessing sophisticated financial skills can end up with an unfair outcome in litigation. The party that earns more can easily win simply by hiring better attorneys and financial experts.

How Can Alternative Methods Help?

Mediation and Collaborative Law are much more suitable processes for handling contested divorce issues.

But knowing the challenges and setbacks of litigation (as well as its advantages), are these alternative tools appropriate for treating financial disclosures and imbalance?

Mediation is an out-of-court process of negotiating the divorce dispute with the help of a neutral person. The spouses discuss the disputed high net worth divorce issues in an open setting negotiating offers and counteroffers until they eventually settle.

Collaborative Law is a team approach. . Each spouse has their own attorney representing them and working together with the other person’s attorney, help the couple to reach a mutually beneficial settlement. The central aspect of a Collaborative Divorce process is a functional and cooperative relationship between the spouses and their attorneys.

But how do these methods deal with the disclosure of financial information? Can they be as effective as litigation in persuading the spouses to reveal relevant information and present supporting documents?

As a voluntary process, mediation has no way of coercing the parties to comply with a summons or present relevant financial information. But what may appear as a weakness at first is the true strength of mediation. The mediator encourages the spouses to cooperate by creating a peaceful and friendly atmosphere. The free flow of information is essential for a successful mediation process. Aware that they control the outcome and that no state-appointed judge is imposing the decision, the parties will more likely disclose all relevant financial information. Therefore, the voluntariness of mediation proves to be more effective in dealing with property issues than rigid litigation rules.

Likewise, an experienced mediator will address and overcome financial or other imbalances between the parties. The ultimate goal of mediation is to bring reconciliation and a mutually beneficial settlement. It is impossible to achieve that goal in an atmosphere of inequality.

In Collaborative Law, the spouses sign an agreement that obliges them to conduct themselves in good faith with the goal of reaching a solution. Spouses must invest the necessary effort in working towards a mutually beneficial settlement. Their attorneys cannot represent them in litigation if those efforts fail to achieve the purpose of resolving the dispute.

Similar to mediation, the mechanisms of the Collaborative Law process enable the same level of engagement in overcoming the challenges of high net worth divorce. Again, the key is voluntariness. Clients choose the Collaborative Divorce process because they want to stay out of court and make their own decisions. Collaborative attorneys work together by encouraging their clients to cooperate, revealing all relevant financial details, and enabling the free flow of information. Ultimately, such openness benefits the parties because that is the only way of reaching a mutually beneficial result. Even when there are issues of trust, the Collaborative team works with the couple to address these issues directly, improving communication between the two spouses.

As explained above, the Mediation and Collaborative Law processes do not involve formal mechanisms such as subpoenas, interrogatories, and statements. Instead of relying on sanctions and punishment, mediation and Collaborative Divorce achieve the same effect by promoting voluntary participation and the free exchange of information. Additionally, there is privacy inherent in these out-of-court processes. Information is not filed with the court, for all to see. This aspect is often very appealing for a high-net-worth couples who value their privacy. For that reason, these processes are more effective than litigation in resolving high net worth divorce disputes.

Get in Touch With Us

As an experienced Collaborative family lawyer and Supreme Court of Florida certified family law mediator, Carolann Mazza can help you deal with the most contested issues of a high net worth divorce.

Call us today to schedule your appointment.