Even though a mediator should never provide legal counsel to either party, a good divorce mediator will often need to provide their clients with basic legal information or specific legal rules that are undisputedly applicable to a particular marital asset. Sometimes when my clients have a proposal for dividing a particular asset in their marital estate, they will quickly abandon their original proposal when they become informed of what I refer to as the “vanilla version” of the law. The parties may discover that one or both will want to resolve the disposition of the asset differently once they become informed of the applicable legal rules.
For example, a couple comes to mediation and informs their mediator that they have agreed that each spouse will keep his or her own retirement assets earned during the marriage, and they have negotiated this agreement with the belief that that retirement assets earned during the marriage are the separate property of the spouse who earned them. If their mediator informs them of the basic legal rule that retirement assets earned during the marriage are community property, subject to the same rules governing the division of other community assets, the Husband and Wife may quickly realize for the first time that their proposed division is inconsistent with the laws governing their retirement assets. If the value of Wife’s retirement assets greatly exceeds the value of her Husband’s retirement assets, Wife may become upset with the mediator for providing this legal information because now Husband is no longer interested in making the same proposal for division of retirement assets that he was willing to make before he was informed of the basic legal rule that retirement assets earned during the marriage are community property. Despite the fact the legal information favors one party over the other, this information must be made available to the parties if they are going to be sufficiently informed to negotiate and agree on the division of the retirement assets earned during the marriage. If the couple proceeds with the proposed marital property division without being apprised of the law regarding retirement assets, and later the party who suffers the loss of his or her interest in the retirement assets learns of the inequitable division they may not be happy with their settlement terms.
The parties can always proceed with their original agreement once they know the legal rules, but it is important that they be informed of the rights that they may be giving up before they proceed with the unequal division of their community retirement assets.
Not all legal information is neutral and whenever the mediator recognizes that there are specific facts and circumstances that need to be considered in addition to the basic legal rules, then the mediator will need to refrain from providing additional legal information which may be construed as legal advice. The mediator should suggest that if the parties want to learn more about the application of the legal rule to their specific case, they should seek the advice of their consulting attorney or valuation expert. When there may be loans taken against 401k, when the retirement asset has been accumulated both before the marriage as well as after the marriage, or if there are unvalued traditional pensions of significant value, the “vanilla version” of the law is not always enough to provide a definitive legal rule or all the information that the parties need to make an informed decision. In addition to suggesting a consulting attorney, the mediator may also need to advise the parties of their option to obtain an actuarial valuation of a traditional pension, or to consider having a financial expert determine the separate property interest in the retirement asset before proceeding with the proposed settlement.
After learning about the characterization of retirement assets the parties are free to agree to a more equitable division and not proceed with their earlier proposal, or they may agree to continue as first proposed. What matters is not whether they apply the legal rule in their case, but that they are aware of the law and the value of the retirement assets before they make a final decision regarding this important part of their settlement.
The “vanilla version” of the law is also an effective settlement tool when the parties are particularly conflicted regarding any other asset, support issue, or any other disputed issue in their case. Unfortunately, sometimes when a mediator provides the “vanilla version” of the law, it is hard to maintain the mediator’s appearance of neutrality when the law happens to favor one party’s position over the other party’s position. There is a tendency by many mediators to be too conservative and cautious regarding the communication of legal information to their clients. They fear that they may be crossing the line between giving “legal advice” and providing their clients with permissible “legal information.” Despite this potential downside, legal information provided in mediation is an essential tool for mediators to provide their clients so that there will be integrity and transparency in the clients decision making. I will be presenting an SCMA Master Class that will delve deeper into using legal information as a settlement tool when I present “Legal Information vs. Legal Advice – Where do you Draw the Line?” on Wednesday, February 28th at Noon. Register for Master Class Webinar here. https://scmediation.org/events/EventDetails.aspx?id=1828966