Tag Archive: settlement

1. Bringing on the Collaborative during a Litigious Divorce!

   March 5, 2012 3:22 pm Leave a Comment

   By Kathryn Jankowski

   Some judges ask collaboratively trained professionals to attempt to bring the ‘essence’ of the collaborative divorce to their litigious divorce clients in an effort to solve differences in a more peaceful manner and keep divorce proceedings out of court. One might think that these very same judges are attempting to put themselves out of business, however, there are enough divorce cases to keep them busy. A sad and sobering thought!

   It was because of the judges ‘call to action’ that prompted me to have a collaborative slant on a discussion I recently had with a client who was going through the worst of a high conflict, litigious case. Sometimes divorcees can get caught up in fighting for things that maybe they shouldn’t. Let’s look at this example, below.

   Husband, let’s call him Joe, will do anything to upset wife, let’s call her Jane. Joe knows Jane so well (they were married, right?) that he knows exactly what triggers her and he uses it. Jane has a pension plan from her place of employment and Joe has a right to be a joint beneficiary of that pension until he signs off on his interest in it. He is dangling this over Jane’s head in his effort to constantly thwart her in every effort to move forward.

   In my conversation with Jane I asked her why the value of that pension was so important to her. She told me that she wanted to help support her children if anything were to happen to her (she has two children, eight and ten). As her pension is a defined contribution pension she is very concerned that if something happened to her that her children would have those funds to help meet their needs, especially since they are still dependent. It seemed to me that Joe was using his spousal rights to the pension to empower himself in the divorce proceedings. By neither agreeing to sign the right to give up his interest or to negotiate a separation agreement Joe has Jane right where he wants her. (I won’t get into the fact that Joe does have a valid interest in the pension asset which needs to be negotiated.)

   Stepping back from the situation I reminded Jane that if her children did become the beneficiaries of her pension then the assets will become deregistered, at death, and included as income in her final tax return. Depending on what else was going on in the form of income, in that year, her asset will be diminished by her marginal tax rate. So then, if her pension was worth $100,000 her income would be $100,000 in her final tax filing (along with any additional taxable income). The kids would get the $100,000 and Jane’s estate (the residue that is also left to the kids) would pay the tax. So, in essence, the kids would be left with $56,590 (again, simple math and not taking anything else into consideration and using the highest marginal tax rate in Ontario). I asked Jane if she could afford to purchase a life insurance policy for $57,000, with her kids as beneficiaries so that if something did happen to her that she would protect the value of her pension to help meet the needs of her children? I also asked Jane if she was insurable. The insurance proceeds are non-taxable (as they were purchased with after-tax cash). I mean, if it was truly her goal to ensure her kids were OK this solution seemed like a win-win. Regardless of the asset in question, I suggested Jane do some number crunching to calculate the needs of her children going forward, if she wasn’t around, rather than just assuming the pension amount would suffice. Guardians would have to be paid and then, of course, there is the post-secondary education needs to consider as well. By purchasing an insurance policy she is taking away the empowerment of a high conflict ex-spouse. It no longer mattered what Joe did or didn’t do with regard to the pension issue. Jane’s concerns were addressed by another means and Joe no longer had pension power!

   She loved the idea.

   Sometimes it helps to not get hung up on particulars of each asset but rather what that asset truly means to you. In a litigious setting the power struggle seemed to be more of the issue than the value of the pension. Taking a collaborative approach and seeing another potential solution allowed Jane to move on with less resentment and still have her needs fulfilled. Hopefully, this post will reach someone who is contemplating divorce to consider the collaborative approach rather than getting hung up on the throngs of battle in a litigious setting by realizing needs can be met and voices can be heard in a less harmful manner.

   Kathryn Jankowski, B.A., CFP, FDS, FCSI
   Vice President, Financial Divorce Specialist
   T.E. Wealth
   kjankowski@tewealth.com
   416-640-8591

2. Lessons for Collaborative Clients and Practitioners

   February 15, 2012 9:55 am Leave a Comment

   
   by Diane Daly
   In many years of collaborative practice, I’ve had only one really, over the top, bad experience with another collaborative lawyer. A lot of files have been challenging for sure, but only this one stands out as absolutely over the top bad. And the first thing you think as a person who has separated is, “why is she telling me this bad news story?” “Why would I want to consider Collaborative Practice as a means of negotiating a settlement with my spouse?” Because the story illustrates two points:

   First, it was one bad file in about nine years of Collaborative Practice – that’s pretty good, especially when you consider the number of bad files family law lawyers have in litigation – I can’t begin to count them in 22 years of practice, there are so many!

   Second, it illustrates the importance of choosing your collaborative practitioners wisely.

   Here is the “Reader’s Digest” version of my story. I and another “collaborative” lawyer (I’ll call her Jane) set up and attended two or three four-way meetings with our respective clients. We exchanged most financial disclosure and were just getting down to the details of settlement, when Jane tells me (at a Christmas party, no less) that her client has asked mine to meet at Jane’s office and sign a draft separation agreement that Jane had prepared, outside of the collaborative process, based on her client’s instructions.

   The agreement was a horrible deal for my client, who was being pressured by spouse and children, also outside of the collaborative process. I pointed this out to Jane who knew the situation. Well trained collaborative practitioners understand that people don’t always behave well. It’s human nature. People are being asked to put their best foot forward at one of the most difficult and stressful times in their lives. It’s just not realistic to expect perfect behaviour all the time. As collaborative practitioners, we have to deal with that in a non-judgmental way, within the process, and still advocate on our client’s behalf. By virtue of the Participation Agreement that clients sign, and collaborative practitioners confirm, we are bound to withdraw from the process if a client’s behaviour lacks honesty and integrity. In this situation, I pointed out to Jane how inappropriate this was from a collaborative process perspective, not to mention the fact that it was a serious breach of professional conduct to have a vulnerable person sign an agreement at her office, without the benefit of independent legal advice. Well, it happened anyway. I found out that my client had gone to the other lawyer’s office and signed the separation agreement. I called Jane to tell her what I thought of the tactic and her response was that her client wanted her to do it, so she had to.

   It was a terrible outcome – not only because it was so unfair to my client, but more importantly, because my client wasn’t happy with the result. It was just a case of not being able to deal with the stress, and being bombarded with pressure, outside of the collaborative process.

   Jane’s behaviour in that process was inexcusable. But the really good news is that Jane is truly the exception. The vast majority of lawyers, mental health professionals and financial professionals who practice using the collaborative model have a genuine desire to assist their clients in a dignified, respectful, non-adversarial way, and with the very utmost of integrity. Our credo is “Resolving Disputes Respectfully” and we live by that.

   The anecdote begs the question, “how do I choose a collaborative practitioner, be it a lawyer, mental health professional or financial professional?” So here are a few pointers:

   1. Ask about their training. Most Collaborative Practice groups require their members to have a minimum of five days of basic training. But ongoing, continuing education is absolutely critical.

   2. Ask how long they’ve been practicing collaboratively? How many collaborative files have they done in that period? If they’re just starting out, they may only have their basic training and done only a couple of files. And that’s okay. Everyone has to start somewhere and the beauty of the collaborative model is that dedicated collaborative practitioners exchange information. We meet to talk about our cases (on a no name’s basis, of course). We mentor each other. We do not take advantage of the other client’s or lawyer’s mistakes. We strive for agreements that emphasize a “win-win” approach. If your collaborative practitioner has been around for five years and never taken anything but the basic training, and has had only two collaborative files, you might want to have a frank discussion with them regarding their commitment to the process.

   3. Ask whether your practitioner is a member of a local collaborative practice group. Do they attend group meetings? Do they attend any of the collaborative conferences? Do they demonstrate commitment to the process by working to develop and improve the process in their community and with other collaborative professionals?

   4. If it’s a collaborative lawyer you’re looking for, ask them how much litigation they do? Many collaborative lawyers do some litigation, of course, but if most of their files are in court, you should at least discuss with them why and get some feel for their commitment to the collaborative process.

   5. Most importantly, trust your instincts. Whether it’s a collaborative practitioner or a litigator, you need someone who is on the same page philosophically as you are. Your collaborative practitioners are part of your team, and you need to be comfortable dealing with them.

   Diane F. Daly
   Collaborative Lawyer, Mediator & Arbitrator