There’s an article this week at “Walletpop” (an AOL news website) entitled: Getting Divorced or Separated? 7 Financial Mistakes Not to Make. Mistake #1 as presented is: “Thinking that a mediator will protect your financial interests”. The article suggests that during divorce mediation, some participants assume mistakenly that the mediator will always look out for their best financial interests.
The article also states (quoted from a CPA interviewed for the story) “The primary goal of the mediator is to get a settlement”.
Taken together, these statements imply that a mediator’s goal is to succeed in reaching a settlement at any cost, regardless of the best interests or one or either of the parties, and specifically their financial interests. This is what I want to talk about today.
Taking the second item first, the global practice of mediation these days follows certain well-established tenets. One of these tenets is NOT that the mediator MUST reach a settlement, or as I prefer to call it, an agreement. In fact, the mediator knows that the outcome of any mediation is either that an agreement will be reached, or that an agreement will not be reached, the latter because of an impasse, or because one of the sides or the mediator terminates the mediation for any reason, or for some other reason.
In practice, it’s become apparent that for many disputed issues, a mediated agreement works better than any of the options. Mediators also know this, and they encourage the parties to seek solutions. But not at any cost. For any mediator to push for an agreement simply for its own sake and at the expense of one of the party’s interests is wrong, unethical, and not how a competent mediator would work.
Turning to the issue of finances, it’s another tenet of mediation that a mediator cannot and should not offer any form of professional advice to the parties, including legal, financial, or psychotherapeutic. Parties should always seek their own independent advice in these areas, so that they know what their negotiating parameters are within the mediation. The mediator cannot and should not be expected to be able to quantify such issues.
To put it in mediation “jargon”, the mediator is there to help each party see how a mediated solution would compare to the alternative of not reaching agreement. Such alternative is known as the BATNA, or “Best Alternative to a Negotiated Agreement”. However, the specifics details of the BATNA, especially quantification of dollar amounts and likelihood of success in litigation, are something that the mediator can not know. This is information that the party needs to have obtained from their legal or financial professional, to bring to the mediation as information supplied. The mediator can then work with the parties to help them craft an agreement based on actual information.
As a footnote, knowing that a client is headed to mediation, a good attorney will prepare his client appropriately, making sure the client is fully armed with all such information and ready for a cooperative negotiation. The attorney knows that mediation may have a prompt and surprisingly palatable result if the client is fully prepared for the process.