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Last Updated: 7 October 2011
Tools from a Mediator’s tool-box;
Reflections on
Matrimonial Property Disputes
Professor John Wade
School of Law
Bond
University
Gold Coast, Queensland
Australia 4229
Abstract
This article comments upon eight practices used in matrimonial property mediations or negotiation conferences. These are:
(1) Requiring written ranges of outcomes to be specified before a meeting occurs;
(2) Systematically enlisting the aid of lawyers and valuers by a series of diagnostic questions;
(3) Distinguishing primary and secondary causes of conflict;
(4) The one day model of mediation meeting;
(5) Using a visual aid to identify the possible benefits of early or late settlements;
(6) Standardising issues on a whiteboard;
(7) The use of conditional linked bargaining;
(8) The common scenario of parties stonewalling at alternative ends of the range.
Tools from a Mediator’s
tool-box;
Reflections on Matrimonial Property
Disputes[∗]
by Professor John Wade
Director, Dispute Resolution Centre
School of Law
Bond University
Gold Coast, Queensland
Australia 4229
The writer has been involved in mediating many “matrimonial property” disputes on the east coast of Australia since 1987. This paper offers a reflection on a number of practices which have proved useful in some of these disputes. These comments do not present a magical “how-to-do-it” formula - but are presented in the tradition of mediators sharing ideas. Thereby each of us can pick and choose extra tools for our toolboxes. Most of these ideas can be (and have been) readily extended to conflicts outside the family. Few of these practices are original but rather underline what has come before.
The topics to be discussed are:
Preparation - “objective” ranges of outcomes
One fundamental role of a lawyer/mediator/negotiator is to move through processes and discussions away from the rhetoric of “fairness” and “unfairness” towards objective criteria[1]. Taped interviews have sometimes indicated how repetitive and cyclical are the discussions between family lawyers and their clients. The lawyer states “This is what is likely to happen”, to which the client responds, “Oh, that’s not fair”[2]. This can be referred to as the objective-subjective cyclical conversation, or the “yes but” – “oh but” cyclical conversation.
Mediators and negotiators can attempt to pre-empt this broken record by requiring that the agent or expert for each disputant defines objectively and in writing a range of possible outcomes in court. Writing is essential as:
(1) Clients tend to hear what advice they want to hear;
(2) Clients and agents often lie or exaggerate to the mediator as a form of positional bargaining;
(3) Writing focuses the expert’s mind and (s)he will be careful to give precise advice, particularly if the mediator has substantive expertise in the area of conflict.
A range of possible outcomes in court of both financial division and experts’ costs is also essential as:
(1) In Australia, it is arguably professional negligence to suggest that a single figure outcome is likely under s. 79 of the Family Law Act. The outcome of any matrimonial property case cannot be predicted within a band less than 15% of the asset pool. That is, it is professional negligence to advise “you will get 65% of the asset pool before a judge”. Instead, the advice could be “you will get between 60% and 75% of the asset pool on a bad and good day respectively”. “Your legal and accountancy costs will be between $13,000 and $18,000 on a good and bad day respectively”. Most experienced family lawyers advise on a band of good-day and bad-day outcomes separated by 15% or more.[3]
(2) A range of percentages begins to reduce expectations and create doubt for each of the negotiators weeks before they arrive at the negotiation table.
An example of a letter and annexures requiring this written range prior to mediation is attached to this paper and marked “A”.
There are, in the writer’s experience, a number of predictable hurdles to this essential objectification of negotiation criteria. These are:
(1) Some lawyers and valuers will feel that they will lose face if an absolute figure has to be revised as a range. They have commenced negotiations in a bullish positional fashion (known as “high-soft”) and are now suddenly being asked to shift to a range of possible outcomes.
(2) Some inexperienced lawyers are reluctant to express a range of outcomes as it is easy to claim high or offer low without any specialist insight. To gain specialist insight will involve transaction costs for the client. A specialist family lawyer will need to be consulted and paid for a detailed expert opinion on the range.
(3) With some marriage types, the “shadow of the law” is very mottled. That is, the case law on section 79 of the Family Law Act - an equitable property distribution regime - is particularly unpredictable for:
(a) short marriages (under say 3 years);
(b) marriages where the asset pool is under about $200,000[4]
(c) marriages where one partner is seriously disabled by alcoholism; ill health; nervous breakdown.
In these cases, case law precedents are either scarce or muddled. Accordingly, even the most experienced lawyer will provide a heavily qualified “objective” range, or will expand the range wisely to a 25% gap.
(4) With all marriage types, the provision of an accurate range of outcomes requires current expertise. This is because over the last five years, percentage outcomes in reported property disputes have been shifting gradually in favour of home maker/parents, usually women. This gradual increase in payments from accumulated marriage assets to women has taken place due to Australian studies on the effect of marriage breakdown or violence on women[5]; post divorce poverty[6]; judicial education[7] and case law[8].
All these developments require expertise to give the “correct” or “market” range of likely outcomes. Many clients and lawyers are naturally hesitant to spend precious money on buying news that they don’t want to hear anyway. Some males particularly prefer the out-of-date advice of a suburban lawyer rather than the more depressing news that the social contract for males has changed[9].
(5) Some lawyers, when defining the range of property outcomes, consciously or subconsciously shift the percentages in their client’s favour as an opening positional bargaining ploy. For example, “I think the range is 60% - 70% but will write a note for the purposes of mediation which states 55% - 65%.
In the writer’s experience, “mild” tactical range shift is common, but extremes are less common. Lawyers generally fear loss of face and credibility with the mediator and the other professionals if their advice blatantly fails to define risks. Moreover, a substantively expert mediator will often (in private) require the lawyer to justify his/her range advice on the basis of facts, evidence and case law.
What follows is one set of basic guidelines of current percentage ranges in property disputes under the Family Law Act for five marriage “types”.
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MARRIAGE TYPE
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RANGE OF OUTCOMES
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(1)
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CHILDLESS MARRIAGE; NOT “SHORT”; BOTH EMPLOYED
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50/50
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(2)
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CHILDREN WITH HOMEMAKER; ASSETS BETWEEN $100,000 - $300,000; PARTNER
EMPLOYED[10]
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65-90% TO HOMEMAKER + CHILD SUPPORT
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(3)
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CHILDREN WITH HOMEMAKER; ASSETS BETWEEN $300,000 -
$800,000[11]
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55-70% TO HOMEMAKER + CHILD SUPPORT
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(4)
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CHILDREN WITH HOMEMAKER; ASSETS BETWEEN $1 - $5 MILLION; PARTNER
EMPLOYED[12]
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50-60% TO HOMEMAKER + CHILD SUPPORT
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(5)
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LONG MARRIAGE WITH ASSETS OVER SAY $5 MILLION (CHILDREN
GROWN)[13]
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35-45% TO NON “ENTREPRENEUR” SPOUSE + CHILD SUPPORT
|
Preparation - Systematic Questions to Agents
One of the repetitive themes of conflict management is the potential conflict of interests between principals and agents[14]. For example, a family lawyer has an interest in having satisfied clients, having clients who do not denigrate their lawyer, telling the truth, being known as a trustworthy person, saving face if a mistake is made, being paid promptly, educating clients about reality, having an orderly work and recreational life, drafting tight and comprehensive settlements, leaving no stone unturned and being respected by “repeat players” such as judges, counsellors and legal colleagues. These interests of the lawyer-agent will often be in conflict with the perceived or actual interests of the client principal. For example, some clients have no interest in telling the truth, preserving the lawyer’s reputation, spending money on education or comprehensive settlements, paying bills or the lawyer’s peaceful home life.
Mediators can consciously or subconsciously inflame these principal-agent conflicts of interest. For example, a mediator can denigrate valuation or legal costs; or can ask a lawyer to rubber stamp a mediated agreement; or can fail to allow for the payment of legal fees; or can suggest that thorough asset investigation is costly and unnecessary; or can criticise legal advice as premature or outside the range[15] .
Alternatively, the mediator can attempt to enlist the insights and expertise of each lawyer from the very start of the process. Lawyers usually have profound insights into what are the causes of conflict, why cases have not settled, and what interventions might hasten the resolution of the dispute. What follows is an example of a questionnaire sent by the writer to some lawyers to give notice of the kinds of questions a mediator might ask over the telephone to the lawyer. Once a lawyer has become a repeat user of a mediation service, (s)he does not need this questionnaire as a prompt, but rather quickly offers analysis and suggestions to the mediator as part of the joint problem-solving team[16].
Some Questions
Which a Proposed
Mediator
May Ask a Professional
(These questions are also very helpful preparation in a lawyer-lawyer or party-party negotiation)
(a) Best alternative to a negotiated settlement (BATNA)?
(b) Worst alternative to a negotiated settlement (WATNA)?
(c) Probable alternative to a negotiated agreement (PATNA)?
(a) A range of possible outcomes in court from the worst to the best (worst first)?
(b) A range of possible professional out-of-pocket costs if the dispute “goes to court” from worst to best?
(c) A range of best to worst outcomes in relation to delay, publicity, lost opportunity costs, strained business relationships etc.?
Diagnosis - Primary and Secondary Conflict
The writer’s experience is that the vast majority of mediations and negotiations are “successful” (in the narrow sense that a long term settlement emerges) due to careful planning, diagnosis and interventions. Some are totally unsuccessful despite careful planning, diagnosis and interventions. And some mediations are successful due to total serendipity - negotiations progress in magical and unplanned ways.
Given the anecdotal success of “planned” mediations, it appears to this writer that much turns on the accuracy of initial diagnosis. This trite comment reflects more systematic propositions developed by researchers such as Janet Johnson[17].
Most family property conflicts have primary and secondary causes. The “primary” causes are to do with emotions. These can be analysed by various shifting theories on grief, power, family systems, autism, and enmeshed couples[18]. The secondary causes are more intellectual and cognitive - using Moore’s pizza, these may be data or structural causes of conflict[19]. For example, these secondary causes of conflict commonly include:
In the writer’s experience, an hypothesis on causes of conflict is essential for “planned” (as compared to serendipity) success. And the key hypothesis usually is about primary, not secondary, causes (though both types of cause will always be present). This is especially so because lawyers as gatekeepers only refer “difficult” cases to mediation. “Difficult” cases are those which do not settle after cognitive, rational, persistent, intellectual, educational persuasion about “commercial reality”[22] Mediators are left with difficult “emotional” cases.
A few anecdotal examples of successful hypotheses and interventions are given below together with an example of an unsuccessful hypothesis and intervention.
Dispute
|
Mediator Hypothesis
on a key “cause” of conflict |
Successful Intervention
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A
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W could not communicate with H as he was so charming and reasonable; H
reinforced her sense of failure as a person.
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W agreed to signal mediator whenever she was going to have a tantrum.
Mediator called breaks upon the signal being given and W vented
privately.
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B
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H could not make a decision. Whenever a settlement loomed, he would retreat
to isolation and write long letters re-analysing the marriage.
H did not want to
cut ties.
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Mediator insisted on H’s trusted accountant and not-so-trusted but
influential father being present. Both excelled at counseling
H on figures, and
that it was “time” to end it.
|
C
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W was overwhelmed by H’s slick talking and apparent mastery of
figures. She resented what H had done to her life and feared
trickery.
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Mediator insisted that W’s brother, an accountant, be present.
Brother and H negotiated well.
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D
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W resented professionals and their advice after years of perceived
“abuse” by professionals.
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Mediator kept quiet. W proposed settlement which was not based on legal
“rights”, but on what H could pay.
|
E
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W talked uncontrollably and set off a pattern of exasperation in H. She had
a storehouse of hurt.
|
Mediator asked W in private what to do about her overwhelming words. She
told him to tell her firmly to “keep quiet”.
After reality testing
her possible loss of face, mediator spoke firmly to her in joint sessions.
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F
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H swore, threatened walkouts, made abusive speeches about the past.
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Mediator asked W for her analysis. She advised - “meet before 8am;
and ignore his outbursts; he gets worse as the day progresses”.
It
worked!
|
G
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W was overconfident of her mathematical abilities. She desperately bent
additions to reach a result she wanted which would preserve
a fading
lifestyle.
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Mediator insisted on separate rooms with W’s new boyfriend (an
accountant) present. He persistently went through the cycle of
education.
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H
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W invented facts and law to support her financial claims; W was suspicious
of accountant H’s ability to manipulate figures.
|
Lawyers gave structured arguments on each issue. Mediator gave private
opinion “ruling” against each of W’s arguments;
mediator
encouraged W to bring her friendly accountant who kept her focused and
laughing.
|
I
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H and his father believed that caravan park business was
“theirs” and W just a paid-off employee; conflicting evidence
on
gifts or loans from father.
|
Lawyers gave structured arguments; mediator summarized these on whiteboard;
W in separate room away from “powerful” H
and father; handwritten
risk analysis for W to get her across last gap
|
J
|
W had unrealistic hopes of keeping “dream home”. W suspected
that real estate agent H had manipulated the value of his
business.
|
Mediator told W that house must be sold; Mediator did aggressive written
risk analysis with H about risks for him if the conflict
continued.
|
K
|
Chaotic facts on history of $ contribution to marital assets; both wanted
the dream family home in the country.
|
Mediator drew extensive chart on whiteboard and parties filled in differing
figures on $ contribution; mediator acted as auctioneer
and auctioned house to
highest bidder.
|
Dispute
|
Mediator Hypothesis
|
Unsuccessful Intervention
|
L
|
W relied (too) heavily on professional and angry father’s advice.
“My daughter has been tricked by H who is hiding assets
from her”.
Additionally, the parties’ lawyers were personally antagonistic to each
other; and the H talked in angry torrents.
|
Mediator asked W’s lawyer to draft 14 key written questions about
allegedly “missing” assets and trained H how to
answer these
questions politely. The antagonistic lawyers agreed to stay away. Result? A
total failure as:
1. The father wanted revenge; and
2. W was not paying her own legal fees; and
3. The W did not listen to the H’s newly found politeness.
(She subsequently went on to court and received two thirds less than the
H’s offer at the mediation!) Some conflicts need
umpires[23]
|
M
|
Hasty mediation – two wealthy clients engaging in preliminary
positional bargaining. Presence of two experienced lawyers would
hopefully bring
parties into “right” bargaining zone.
|
Wrong diagnosis and inadequate preparation. H was deeply hurt by his
W’s affair; H concocted wild figures as he went along (no
supporting
documents); H’s lawyer did not have skill or preparation to advise on good
day - bad day outcomes; H’s lawyer
also good friend of both parties.
|
N
|
W had wild expectations of retaining “dream” home; W’s
relatives were paying her legal costs; W’s lawyers
not strong enough to
tell her good day – bad day outcomes; W not in pain as living in
house.
|
Diagnoses correct! W jammed on her high expectations; and no motivational
pain.
|
O
|
Deep hurt as W had agreed to settlement and then reneged; H violent and
wealthy; H was a serial litigant; W has unrealistic hopes
of future blissful
life; lawyers dislike each other; positional range of offers: 5% - 40% to wife!
H still “in love”
with W.
|
Lawyers make presentations on likely “range” of good day
– bad day outcomes; W’s lawyers have no legal precedents
to support
“justice” claims; W’s lawyers believe own rhetoric; and unable
to convey realistic risk analysis to
W with high expectations and no
power.
|
These examples and many others have confirmed for the writer the importance (and perhaps luxury in times of recession justice) of developing a “humble hypothesis about the dispute” before any joint mediation session.
One day model of mediation meeting
One model of timing for a mediation meeting appears to have particular appeal to lawyers. This model was developed by a colleague from Brisbane, Phillip Theobald. Presumably, a number of mediators worldwide have developed a similar pattern.
This arrangement involves the following process:
(1) Discussion over the telephone between the mediator and each of the parties and each of the lawyers about concerns, documents, procedures, why the negotiations are jamming.
(2) By fax and post, the parties exchange summaries, asset charts, chronologies with copies to the mediator, and such other documents as each requests.
(3) Lawyers prepare “good day-bad day” ranges on outcomes and expert’s fees for each client and for the mediator and agree to be available on mobile phones for the whole day of the forthcoming mediation.
(4) When (2) and (3) are complete, the mediator meets separately with each party for one hour in the morning on a designated day usually in one of the lawyer’s boardrooms.
(5) 11.00am joint meeting begins; lawyers and supporters usually present.
(6) Both parties separately go to lunch at 1pm to consider offers made.
(7) At 2 pm the joint meeting begins again, usually with lawyers present.
(8) If lawyers have “exited”, though still accessible on mobile phones, they arrive back at about 4 pm to draw up the agreement. The mediator summarises the day’s proceedings in front of all parties; then the parties talk privately with their lawyers; then the parties go for a walk while the lawyers draft the detailed agreement. The parties return, read, amend, and sign the document. (This may not occur until after 8pm.)
The advantages of this model are obvious. It is ritualised and predictable; it minimises billable hours for lawyers; the intensity of negotiations is reduced by regular breaks; it reduces post-settlement recantation; it creates a final agreement by the end of the day; lawyers are in charge of drafting; lawyers are not left with suspicions of what “really happened” during the negotiations; clients have access to expert advice without necessarily having experts sitting in on all the negotiations; the mediator’s time and costs are clearly defined; disputants from distant parts of the country can travel, or the mobile mediator can travel, for a single day rendezvous.
The main disadvantages of this model (which can of course be adjusted) are:
(1) The disputants only meet the mediator face to face on one occasion - namely the day of the joint meeting. There are great advantages to early face-to-face meetings by each party with the mediator (eg. trust, familiarity, willingness to telephone, to express concerns, to relax, to feel safe to explore issues of powerlessness, fear or violence).
(2) Often at the morning meetings, one or both parties raise a completely new concern, document or demand. For example, a husband may suddenly produce a fresh valuation; or state that he has not seen the wife’s revised list of expenses. This conscious or subconscious tendency to “ambush” the other negotiator with new information then needs to be discussed and options considered. An adjournment of the afternoon joint meeting is a possibility, but often an inflammatory one.
This model is worth adding to the mediator’s repertoire for use on the “right” occasion.
“Settle now, or Settle later” - an ice breaking chart
Most of the different process models of mediation and negotiation have common core aims which include creating: a cautiously positive and hopeful environment; clarity (of goals, information, advantages and disadvantages of options); visual images and summaries; a place where people are listened to; and have a sense of personal control.[24] In an attempt to further these aims, the writer has sometimes used the following chart, written on a flip chart, at the beginning of the joint session before the parties give their statements. (On other occasions, it has been used in private sessions.)
Settle now, or Settle later?
Possible Benefits of Settling now?
W
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H
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The use of the chart is preceded by a mediator speech such as “I would like parties to go through an exercise; it has proved helpful in the past; the decision for you is whether you settle now or settle later; very few disputes (3-5% of court filings) actually get an umpire’s decision; you should relax because if you don’t settle today, you will settle in a year’s time at the door of the court; you both need to identify clearly whether there are any benefits to settling sooner rather than later” etc. The mediator then stands and works down the list explaining each item and obtaining a response from each of the disputants. The response is then indicated by a large “Yes” or “No” on the flip chart, or by a ranking of importance by a number between 1 (not important) to 10 (very important). My experience, with one memorable exception, has been that this interchange creates a lot of “yeses” in the room, breaks the ice, and then hangs on the wall as a stark visual reminder of some of the agreed personal and financial risks of late settlement. Naturally, like most communication tools, such a procedure can be overused, or used in the “wrong” cases (as indicated by hypotheses developed during intake sessions). This kind of joint life-goal chart can be converted usefully to confidential individual life goal and risk charts.[25]
For example:
LIFE GOALS? THIS OFFER??
➢ To get on with life 5
➢ To open 5
➢ To invest money 5
➢ To stop paying lawyers 5
➢ To stay healthy 5
➢ To minimize contact with “x” 5
➢ To reduce stress on colleagues 5
➢ To take a holiday 5
➢ To focus on my work 5
➢ To avoid becoming bitter 5
➢ To regain “control” of my life 5
➢ To settle “in the range” 5
➢ To reduce risks of paybacks 5
➢ To receive [$540,000] 5
➢ Other?? 5
Ask the client to work down the list and tick (or check) the boxes if a life goal is achieved by the current offer. Other boxes are marked with a question mark. Standardly, the client decides that more than 90% of his/her life goals are contained in the current offer! This is a visual surprise.[26]
Standardising issues on the whiteboard
Conflict in particular areas such as family property or over children tends to raise repetitive questions. The writer’s experience is that family property disputes raise only seven questions, and children’s disputes only fourteen questions. “Framing” or drafting the right question tends to provide half the answer. Many mediators avoid this difficult drafting task. However, in a model of joint problem solving which emphasizes the transition of needs and concerns into question (“issues”), it becomes relatively easy to convert an array of concerns into the seven or fourteen visible questions. The seven property questions are:
1. Is the list of assets complete? How can each person be satisfied that the list of assets is substantially complete?
2. What is the range of values of each asset?
4. Which assets should fall on each side of the ledger?
5. With what timing should assets be divided?
6. Is the list of debts complete and who should pay each debt?
7. Should any periodic payments be made? If so, over what period?
The transition of each disputant’s statement into reframed concerns and then into questions on the whiteboard becomes predictable. For example:
|
Disputant Statement
|
Reframed as a Concern
|
Questions on Whiteboard
|
1.
|
“I don’t think he’s telling me everything about his
assets”
|
So you’re concerned that all the assets may not have been
disclosed?
|
Is the list of assets complete?
|
2.
|
“She has the valuer in her pocket - that value is quite
unrealistic”
|
So you don’t think that the valuation by Wendy’s valuer is
either independent or in the ball park?
|
What is an appropriate range of values for each asset?
|
3.
|
“I only want what is fair”
|
The word “fair” has many meanings. One common need is to
receive a share of the assets which is in the range of what a
judge would
do.
|
What is the appropriate range of percentages in this type of
marriage?
|
4.
|
“I want the grandperson clock - I inherited that from my mother. He
can’t have it”
|
So you would prefer to have that special clock on your side of the
ledger.
|
What assets should fall on each side of the ledger?
|
5.
|
“She thinks I’m made of money. There’s no way I can
suddenly raise that kind of lump sum. The business would collapse”
|
You’re concerned about the timing of any payouts and the negative
effect that a single lump sum might have on the business?
|
On what timing should transfer and payments be made?
|
6.
|
“I’m not going to pay those debts! I don’t know what she
spent the money on – and I’ve got liabilities
of my own”
|
So you need to identify what debts each of you owe and who should be
responsible for the payment of each?
|
Is the list of debts complete and accurate? Who should pay each debt?
|
7.
|
“He should be paying me maintenance - and he’s not paying
enough child support. I’m going to have a really difficult
time.
He’s quite irresponsible.”
|
So you would like to discuss what periodic payments should be made for you
and the children and for how long they should be made.
|
What, if any, periodic payments should be made? In the short term? In the
long term?
|
Basically, every worry, grievance or argument about family property or family maintenance can eventually be “objectified” into one of these seven problem solving questions. The fourteen “standard” children’s questions are:
Time:
Money:
Children’s Lifestyle:
Communication Channels:
8. How should
children communicate with the absent parent?
9. How should a parent
communicate with the absent children?
The advantages of knowing the routine problem-solving questions are that every chaotic conversation can be given a structure; disputants can feel “normal” when their complex interactions is described and visualised as normal; and the mediator can avoid writing inflammatory words on a board. One disadvantage is that the mediator may cease listening and the disputants may feel trivialised if their lives are packaged and summarised too quickly.
Conditional Linked Bargaining
One of the fundamental principles behind interest based bargaining is to attempt to increase the number of issues for discussion. Colloquially, this is known as “expanding the pie” or “increasing the chips on the table”. Once there are more issues for discussion, the obvious possibility arises for tradeoffs. In the writer’s experience, many lawyers use a style of negotiation which seeks to “get rid of some easy issues” by pushing for quick agreements and just leaving the sticking points on the table. This is sometimes a very effective style of bringing the negotiations to a quick crisis point on the last issue. However, another style of bargaining is often appropriate in family property disputes - this is sometimes known as “conditional linked bargaining”. This style seeks to avoid quick unconditional agreements - rather it emphasises that the quick agreements are conditional upon the other issues in the list being decided “satisfactorily” or “appropriately”. There is no agreement, until there is total agreement. Thereby both parties are more willing to discuss “what if” possibilities, as they know that they can withdraw any offers without loss of face if subsequent parts of the deal are unsatisfactory.
As mentioned previously, here are the standard seven visualised issues which end up on the whiteboard in many family property disputes.
These seven issues can be dealt with one at a time, and progressively “linked” by “what if” hypothetical scenarios constructed by the mediator. The key words in these linkages are “what if”, “assuming that”, “appropriate” and “reasonable”.[27]
For example:
Mediator: “Looking at the first issue on the board, I would like each of you to comment on whether the list of assets is complete”.
Jane: “Well it looks okay except that I’m sure Bob owns some more shares in a mining company in Western Australia”.
Bob: “I sold those two years ago”.
Mediator: “Bob, Jane is obviously concerned about these shares. Could you please elaborate etc... (discussion)
Mediator: “Jane, you may still have some suspicion that there are more assets than listed. You and your lawyer have to make a strategic choice about how much more time and money to spend going behind the documentation given to you by Bob.....
What if you received an appropriate share of the property in the list - would you be prepared to treat the list as complete?”
Jane: “I’m not happy about it, but my lawyer said I don’t have much choice. As long as I receive a fair percentage.”
Mediator: “Well, assuming for the moment that the list of assets is complete, let’s move on to the second issue on the board - valuations. You have agreed to the valuation figures for eleven items (tick those). For three other assets your lawyers have set out different valuations. Let’s start with the house – Bob, can you suggest why these two expert values are so far apart?” (Discussion)
Mediator: “The experts are $300,000 apart on those three items. Let’s leave issue two for a moment. We will have to come back to it of course. I’m going to ask you each now to consider issue 3 - percentages.
Jane, what if appropriate valuation figures were reached, what is the range of percentages from best to worst to which you might be entitled according to your legal advisers (spread by at least 10%)”.
Jane: “50%-60% in my favour”.
Mediator “Bob?”
Bob: “50%-60% in my favour”.
Mediator: “So the legal advisers predict a range between 40%-60% with an overlap at 50%?” (diagram on board).
Jane & Bob: “Yes”.
Mediator: “Bob, what if the division decided upon was 50/50 and satisfactory results are achieved on the other issues on the board - where would you prefer the valuations to fall?”
Bob: “On my expert’s figures, $400,000 for the house; and $800,000 for the business”.
Mediator: “Jane, what if you received 50/50 split, and appropriate results to the other issues, would you be prepared to accept valuation figures closer to Bob’s experts than your experts?”
Jane: “I might. It depends what happens on the timing and debt questions”.
Mediator: “Precisely. We are attempting to gradually link all seven issues but only on the clear understanding that each figure is completely conditional on satisfactory answers to all seven issues”.
Mediator: “Jane, what if the assets listed are divided 50/50 on figures close to Bob’s valuations, what assets would you like to see on your side of the ledger? - that is, included in your 50%?”
Jane: “Oh, nothing in particular my car, my apartment and the grandfather clock”.
Bob: “Not the grandfather clock! You know how special that is to me”.
Mediator: “Bob, could you tell me more about this clock etc”.
The mediator continues to move slowly through all the issues on the board
using these same hypothetical linking methods.
“What if appropriate
movement occurred on percentages, what would you prefer in relation to issue
5?” or
“Let’s leave the grandfather clock for the moment
(we will come back to it). What if satisfactory arrangements were made
about the
clock, what would you prefer in relation to issue 6?”
Then:
Stonewalling at one End of the Range
One of the classic roles of a mediator is to encourage disputants to move from extreme positional claims (“I want $200,000” - “my offer is $5,000”) to interest based bargaining (“expand the pie”) and/or to offers based upon some objective criteria. The latter strategy leads some mediators to insist on each lawyer setting out in writing before the mediation, the range of outcomes in court from “good” to “bad”; and the range of expert’s fees from “good” to “bad”[28]. These short “advices” are readily given by lawyers experienced in mediation; mediator brinkmanship may be necessary with less experienced lawyers - “The mediation cannot start unless both clients have these advices in their hands and show them to the mediator”; “I want to avoid clients making surprising statements about ‘what my lawyer promised me’.”
Such objective ranges of outcomes are possible in many conflicts including personal injury, defamation, matrimonial property, breach of contract, insurance and employee dismissal cases. However, one common pattern of negotiation is for the “stronger” party for example, an insurance company - to make a stonewall offer at the bottom of the range and refuse to budge. In many cases, it appears that the weaker or less experienced negotiator will begrudgingly accept the “low” offer. Some mediators systematically pressure or nag at the stronger party in the hope that (s)he will rise above the very bottom of the range.
Inexperienced negotiators are often angry and disappointed with this predictable pattern of negotiations. “I thought mediation was about fairness; this is just blackmail, take it or leave it”. Certain insurance companies are known for this predictable style of stonewalling at the bottom of the range in personal injuries conflicts. The writer sees this style of negotiation particularly by males in family property disputes. For example, the range is defined as 60% - 70% in favour of the home making/custodial female (for assets under $500,000); or 60% - 70% in favour of an entrepreneurial male (for assets over $5 million). The male offers 60% or 30% respectively and refuses to budge. Usually the female eventually accepts a figure close to the initial “low” offer.
This pattern of negotiation is often seen as unfair or exploitative by commentators. They refer to the female as the weaker party with the ubiquitous “inequality of bargaining power”. Predictably, it is the writer’s observation that the dynamics are often far more complex than these simple labels may suggest. No doubt, women may “cave in” because they are exhausted, inexperienced at negotiation games, unable to pay lawyers to continue the games, or do not have the money to tilt an “information imbalance” (eg. about valuation of businesses[29]). By way of contrast, their salary-earning spouse is able to pay lawyers and continue living a reasonable lifestyle. Research is needed on the range of motives for settlements at “low”, “mid” or “high” range figures. However, in matrimonial property disputes, women sometimes take the low-range figure because:
(1) 65% of marriage separations appear to be initiated by women in Australia[30]. Consequently more women have progressed further down the grieving track than their husbands[31]. The male may have another two years on the emotional roller coaster before he is willing to accept the loss. Accordingly more women want to “get on with their lives” at earlier stages than their husbands. They are willing to pay a financial premium of 5% - 10% to free up capital immediately and “move on”.
(2) Arguably, women are often, by nature or nurture, more “relationship oriented” than males. That is, they place a higher value on preserving relationships within a family than upon winning a competition[32]. Paying 5%-10% of an asset pool in an attempt to preserve family goodwill may of course either be interpreted as being a doormat, or as profound long-term wisdom.
(3) Women (or personal injuries’ plaintiffs) who take the low range figure may do so with profound insight into the financial and lifestyle benefits of less money now being more value than mid range money later. For example, 60% now is often far better than 65% later as:
60% can be invested immediately; fewer days are lost from employment while preparing for litigation; disputes with an asset pool of less than $300,000 will eat up 10% of the pool in litigation costs. That is, 60% now is the same as 65% later at the door of the court.
The writer sometimes uses a flip chart at the beginning of a family property
mediation, as an icebreaker, but also as a educative
tool to try to
clarify each person’s respective lifestyle and financial
priorities[33]. Some
people will readily surrender 5% of assets for strongly held lifestyle values;
others (allegedly) place $100 far more highly
on their priorities than years of
pain for themselves and those around them.
It is essential, in the
writer’s opinion, that a mediator clarify the choices and risks
which the allegedly weaker party faces when a stonewall low-range offer is made
to him/her and then give space and time
for each party to consider those choices
and risks. Of course, the best alternative is for the mediator to telephone or
interview
both parties before the joint session and warn them of routine
negotiation patterns with statements such as, “It is normal
for one party
to offer at the top of the range, and for the other to offer at the bottom of
the range. How will you feel if and when this normal pattern
emerges?”
The disputants’ choices at a minimum include:
(1) indicating the intention to make, or actually making, a mid-range counter offer with legal costs consequences attached[34] and requesting a break for the offeree to consider this offer;
(2) leaving the mediation (not a “walk-out”) after consulting the mediator and after making a speech about willingness to settle somewhere within the range, not at one end of it;
(3) reverting to negotiation about short term issues (debts, electricity, rates, banking, holidays etc);
(4) weighing up lifestyle priorities in contrast to the possibility of gaining another 5% of the assets, and deciding to accept the “low-range” offer on the table.
These four choices can be expanded into a list of 16 ways of crossing the last gap thereby indicating to both parties that there are many face-saving methods of addressing the stonewall tactic.[35]
Of course, these negotiation strategies and methods are far from infallible.
Conclusion
This paper has set out a number of potential tools for the mediator’s tool-box. As reflective practitioners the writer believes that it is a matter of both responsibility and curiosity for mediators to reflect upon their experiences, systematise and share these[36]. Thereby the different cultures of conflict managers can be constantly enriched, and we may learn to tolerate the necessary ambiguities in problem solving techniques and theories.
Appendix “A”
To:
Lawyer 1
Lawyer 2
Dear Sir or Madam:
Re: Bloggs mediation
I now enclose a copy of documents relating to a possible mediation. These include a mediation contract, costs information, request for chronology and concerns. Would you please request each of your clients to compile and sign these documents and return them by mail to me. It may take them each some time to write the chronology of the relationship.
Could you please ensure that each of your clients have in writing from you:
Document (a) - the tables of assets and valuations - is not confidential. Documents (b) and (c) are for confidential discussion with me - though many clients immediately or eventually decide to share these documents.
If possible, a copy of documents (a) should be sent to me and documents (b) and (c) should be given to your clients within say the next two weeks. The mediation cannot proceed without this information.
Please advise me of your client’s telephone numbers. They should also feel free to telephone me at (07) 5521 2223. I will return calls in the evening if convenient.
Please send me copies of any documents which you think will help me to
understand the background and issues.
To Summarise:
Feel free to
telephone to clarify this process or to discuss any concerns.
Yours
sincerely,
Mediator
P.S. Please confirm by email that each of you are holding $1500 on account for mediation expenses.
INFORMATION FOR LEGAL PRACTITIONERS AND
ACCOUNTANTS ABOUT
MEDIATION
1.
|
5
|
Phone the mediator and encourage the client to telephone the mediator at
any time to ask questions or express concerns.
|
2.
|
5
|
Explain what is a common mediation procedure in order to reduce client
anxiety (see attached information sheet).
|
3.
|
5
|
Show your client a video of a mediation.
|
4.
|
5
|
Be very careful to use neutral language in any correspondence leading up to
the mediation.
|
5.
|
5
|
Do help your client write out confidentially;
(a) a list of goals and concerns; (b) which goals or concerns are priorities. |
6.
|
5
|
Do not encourage your client to fix rigidly upon a single result. There are
always ranges, alternatives and a variety of packaged
options.
|
7.
|
5
|
Do not tell your client to “go along and see what happens”; or
“go along and say little/nothing”.
|
8.
|
5
|
Set out in writing for your client what in your current opinion:
(b) is the range of
possible legal costs from best to worst in a litigated result.
The client and the mediator MUST have this document in their hands at the mediation and be able to discuss these ranges confidentially with the mediator, or if (s)he chooses, openly. (Clients often have misconceptions about 8(a) and 8(b). |
9.
|
5
|
You have a far more thorough understanding of the historical facts of your
client and the communication dynamics than the mediator
will ever have. The
mediator is likely to ask you some of the following questions over the
telephone. Please volunteer your insights
which invariably help to save time and
money.
|
10.
|
5
|
In property disputes, a standard neutral summary of:
|
ASSETS
|
WIFE’S VALUE
|
HUSBAND’S VALUE
|
||
1.
|
|
|
||
2.
|
|
|
||
3.
|
|
|
||
DEBTS
|
|
|
||
1.
|
|
|
||
2.
|
|
|
||
3.
|
|
|
||
|
|
is always very helpful to minimize data chaos.
|
||
11.
|
5
|
Mediation is a client’s negotiation. Lawyers will be seated
“strategically” at the joint sessions. The mediator
will consult
with you beforehand concerning when and how you think lawyers should contribute.
The mediator values your suggestions
on how to organize or change meeting
procedures.
|
||
12.
|
5
|
Fees. As mediation expenses are usually shared equally, collect a cheque
from the client for one half of the estimated expenses before
the first joint
session.
|
AN EXAMPLE OF A COMMON MEDIATION PROCESS
1. Disputants return to lawyers with signed “without prejudice”
heads of agreements in handwriting
OR |
2. Lawyers draft final contract of settlement immediately at the joint
session.
(MOST COMMON OUTCOME) OR |
3. Mediator immediately drafts a single confidential report sent to both
parties describing unresolved issues, and possible alternatives
for the
future.
|
Mediator telephones to check with disputants and lawyers concerning any
stumbling blocks to converting a “without prejudice”
agreement into
refined and final consent orders or contract.
|
[∗] This paper
is adapted from J.H. Wade, “Tools for a Mediator’s Toolbox:
Reflections on Matrimonial Property Disputes”
(1996) 7 Aust J of Family
Law 68.
[1]
Fisher & Ury, Getting to Yes (London: Business Books,
1991)
[2] See A.
Sarat & W. Felstiner, “Law and Strategy in the Divorce Lawyer’s
Office” (1986) 20 Law & Society Review
93
[3] J.H. Wade,
“Arbitral Decision-Making in Family Property Disputes – Lotteries,
Crystal Balls and Wild Guesses” (2003)
17 Aust J of Family Law
224.
[4] Sophy
Bordow & Margaret Harrison, “Outcomes of Matrimonial Property
Litigation: An Analysis of Family Court Cases”
(1994) Aust J of Family
Law 264 (In 1990 of the 349 judgments of the Family Court of Australia in
property cases, an amazing 53.1% involved disputes where assets
were valued at
below $200,000. A further 29.8% involved disputes where assets were valued
between $201,000 and $500,000. The commercial
madness of litigation in low value
asset cases requires further
research).
[5]
Australian Law Reform Commission, Equality Before the Law: Justice for Women
Report No 69, 1994; N. Seddon, Domestic Violence in Australia The Legal
Response 2nd ed, (Sydney: Federation,
1993)
[6] P. McDonald
(ed) Settling Up: Property and Income Distribution on Divorce in
Australia (Melbourne: Prentice-Hall, 1986); K. Funder, M. Harrison & R.
Weston, Settling Down: Pathways of Parents after Divorce (Melbourne:
AIFS, 1993).
[7] In
the 1990’s, all the judges of the Family Court of Australia have attended
numerous workshops on “gender” issues,
led particularly by
Professors Kathleen Mahoney and David Cruickshank from
Canada.
[8]
Ferraro and Ferraro [1992] FamCA 64; (1993) FLC 92-335 (37% of $12 million asset pool to
wife); Clauson and Clauson [1995] FamCA 10; (1995) FLC 92-595 50% of $1.5 million assets
to wife; husband had $700,000 pre-marriage assets and $800,000 from his
entrepreneurial activities; Marsh and Marsh [1993] FamCA 57; (1994) FLC 92-443 (punitive
and exemplary damages against husband for assault upon his
wife).
[9]
“Life” expectations of males have been steadily changed in Australia
by compulsory superannuation, increased mid-life
redundancies, the Child
Support (Assessment) Act 1989 (Cth); requirements of lifelong reskilling and
education; assertive females; Anti Discrimination legislation; expectations of
domestic
skills and sensitivity; loss of community etc.
[25] For example
charts for risk analysis for clients, see J.H. Wade, “Systematic Risk
Analysis for Negotiators and Litigators:
But You Never Told Me It Would Be Like
This” (2001) 13 Bond Law Review
462.
[26]
Ibid at
481-484.
[27] See
the amazing reference to these words in William Shakespeare, As You Like
It (1623) Act V, Scene IV, “Your If is the only peacemaker; much
virtue in
If”.
[28]
Supra discussion at pp 1-2 of this
paper.
[29] See
McDonald, Settling Up supra note 6 at p 211 (wives often felt
disadvantaged in the calculation of the value of
businesses).
[30]
P. Jordan, The Effects of Marital Separation on Men (Brisbane: Family
Court of Australia,
1985)
[31] E.
Kubler-Ross, On Death and Dying (New York: Macmillan, 1969); D. Vaughan,
Uncoupling (London: Methuen, 1987); C. Ahrons, The Good Divorce
(Great Britain: Bloomsbury,
1994).
[32] See
Kressel supra note 17; also H. Astor & C. Chinkin, Dispute
Resolution in Australia (Sydney: Butterworths, 2002) pp
128-133.
[33] See
“Settle Now, Settle Later” chart supra in text at note
24.
[34] Family
Law Act 1975 (Cth) s 117C (one party can make an open offer which if not
accepted within the specified reasonable time limit, may lead to a costs order
against
the person who failed to accept such a reasonable
offer).
[35] See J.
Wade “The Last Gap in Negotiations - Why is it Important? How can it be
crossed?” (1995) 6 Aust DRJ
93.
[36]D.A.
Kolb, Learning by Discovery (New Jersey: Practice-Hall, 1984); C.
Menkel-Meadow, “Lawyer Negotiations: Theories and Realities - What We
Learn From Mediation”
(1993) 56 Modern L Rev 361.
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