There are several reasons why I chose to work in the field of mediation, rather than live my life fighting for clients in a litigation setting. I am sure I’ve written a blog about that, but if not, I will. However, this blog is not about why working as a mediator is better (in my humble opinion) but rather, it is about why we choose to offer flat fee packages to our clients, as opposed to working on a strictly hourly basis. Apart from the obvious hourly fees, there are usually other ‘hidden’ costs involved with divorce litigation vs. mediation.
Many mediators still bill as you would expect to be billed by an attorney (maybe it is because many mediators still work as an attorney as well as work as a mediator – we do not). We decided very early on to put together various flat fee packages to allow our clients transparency into how much they could expect to pay and what they are paying for. We also include the average time required for communication (emails & phone calls) necessary to get through the entire process, within the flat fee. Our hourly billing will never kick in unless the time allotted under the flat fee is exceeded. And, we help direct clients to utilize the proper fee based on our knowledge of similar cases and the time it took for them to get through a case. Anytime additional fees will be incurred, our clients are notified ahead of time.
There are no hidden costs when mediating with San Diego Family Mediation Center – but when litigating, that is a whole different story.
Hidden Costs: Divorce Litigation vs. Mediation
Divorce litigation can involve several hidden costs that extend beyond the apparent financial expenses. Here’s a comprehensive overview of these costs:
Legal Fees:
One of the most obvious costs is the legal fees for hiring attorneys. These fees can quickly escalate, especially in contested divorces where issues like child custody, property division, and alimony are at stake.
An attorney bills for time in 6-minute increments. What that means is that if the attorney must spend 3 minutes on your case, you will be billed for 6 minutes. If he or she spends 8 minutes on your case, you will be billed for 12 minutes. If you are working with an attorney who bills $500 per hour, 6 minutes is $50.00, 12 minutes is $100.00. While an individual is going through a very difficult emotional time in their lives, they are spending $100 every time they speak with their attorney for 12 minutes or less. You can see how quickly that can add up. This is why it is imperative that clients try to keep the emotional topics for their therapists and keep conversations with the attorneys brief.
Expert Witnesses & Consultants:
In some cases, you may need to hire expert witnesses or consultants such as child custody evaluators, financial analysts, or psychologists, which can add significantly to the cost. Each one of these experts charge a steep hourly wage and when they are required to show up in court to testify, that rate increases.
It is understandable that certain cases may have no choice but to utilize such experts, but most of the cases that use them, do not need them. What they need is to sit down and talk to one another, face to face, with a third party to help facilitate the conversation to ensure everyone is heard and the facts are understood. 9 out of 10 times, it is a misunderstanding that causes the conflict that leads to court.
Mediation & Arbitration Costs:
Even if you are litigating your case, there is a high likelihood you will end up going through mediation or arbitration at some point during your case.
Very rarely are cases decided in front of a judge, instead, there are usually many court hearings with a few issues decided by the Judge, while the majority of the time the court tries to push you into a settlement conference of some type (which is sometimes referred to as mediation – but it is not the same as private mediation that you start your case with from the beginning). So, even though you are not “mediating” per se, you’ll likely incur fees for these services.
Time Away from Work:
Attending court hearings, meetings with your attorney, and dealing with related matters often requires time off work, leading to lost income or depleted leave balances.
The court ONLY works during regular business hours and attorneys are not typically going to stay late to see you. Which leaves the middle of the day – when you should be at your own job. In addition to needing time away from work for meetings, litigation can become a full-time job in and of itself. There are so many documents that you are expected to gather (far more than in an amicable divorce mediation), as fear and mistrust can push people to request years of information to find “all the hidden money.”
The chaos of court and the pressure to settle from the other side can become overbearing and cause health related issues that also will demand you miss time from work. Ultimately, a divorce can cause significant issues with your employer (even if your employer is YOU), and so if there is any chance of you and your spouse remaining amicable, there is no harm in trying mediation first.
Impact on Credit Score:
Legal battles can strain your finances, potentially leading to missed bill payments or high credit card balances, negatively impacting your credit score.
Some individuals may have liquid cash to throw at their attorneys, but often accounts are frozen so that neither party drains them – making it nearly impossible to access your cash. So, on the card it goes. And with large monthly invoices to cover the litigation costs, it doesn’t become long until the balances are astronomical.
Emotional & Mental Health Costs:
The stress and emotional turmoil of a contentious divorce can have significant mental health impacts, potentially requiring therapy or counseling. We have had the unfortunate experience of having a client kill himself over the stress of going through a divorce. Mediation hadn’t even begun, but he was terrified.
Effect on Children:
If children are involved, the conflict and tension can affect their well-being, necessitating additional support or counseling for them – not to mention the non-financial effects that can follow them forever into every relationship they have.
In mediation, our main goal is to insulate the children from the process. When permitted, we actively work with the parents to ensure the children are stable and supported throughout the process. If the preference is for us to be less engaged directly with the children, we will do all we can with the parents to help them understand how their actions impact their children. I have listened to a woman who litigated her divorce say, “my attorney never asked me once how my children are doing. How they are handling the divorce.”
You will hear us ask you on several occasions how your children are handling the divorce. Whether the parenting schedule we put together is working. Whether there is any sign that they could benefit from seeing a therapist. Your children remain at the forefront of the mediation process.
Long-Term Financial Impact:
The division of assets, potential alimony, and child support payments can have long-term financial implications for both parties. It is vital that you understand them all. We help you to do so in a low stress, no pressure environment.
Often, in litigation, you are pressured to decide NOW, in the moment, outside the courtroom doors, when realistically, you have no idea what the long-term impact will be by saying yes or no. We strongly believe our clients should have time to sit with their potential agreements before we make them final.
Agreements can often come at the end of a long day and a long mediation session, and you are tired and hungry. Maybe the agreements made will be fine. But we want you to sleep on it, read through it a few more times, and then tell us you are ready to move forward. There is no reason to feel pressure to decide in haste.
Loss of Shared Benefits:
Benefits like shared health insurance, tax advantages, and shared investments are often overlooked but can have a substantial financial impact post-divorce.
Working with a mediator, especially one who is also trained as a CDFA® (Certified Divorce Financial Analyst®) as all of the mediators at WCFMC are, allows you to take comfort knowing the complicated financial issues are understood and that if something seems “off”, we will ensure the issue is discussed and if necessary, that you are referred to a financial professional to review the agreement.
Rebuilding Costs:
Post-divorce, individuals may face costs associated with moving, purchasing new furniture, or other expenses related to starting over. These costs are often overlooked.
One of the benefits of sitting down together, and in a relaxed environment is that we do talk about these seemingly meaningless items that can turn out to be pretty large amounts when added up. I can’t think of a single case in which we did not discuss and agree on how to handle the value of the items left with one spouse or the other, or the costs of moving into a new place. Each couple deals with these issues differently, but they are always topics discussed.
Opportunity Costs:
The time and energy spent on litigation can distract from personal and professional growth opportunities. Great careers can be derailed, business can fail, it is difficult to be successful in your business (or anywhere else) when your foundation is crumbling underneath you.
Understanding these hidden costs of divorce litigation, vs. mediation, can help individuals make more informed decisions when navigating the complexities of divorce and deciding on the best path forward.
by: Jennifer Segura, J.D., CDFA®
