Tuesday, June 18, 2013

Dirty Tricks and Divorce Mediation

Prominent Michigan family law attorney Carole L. Chiamp, who is of counsel to our firm, is a family law court-approved mediator. She is among the first attorneys in Michigan to obtain this designation. She currently authors a monthly article in the Michigan Family Law Journal entitled "Mediation Matters." 

“Trickery and treachery are the practices of fools that have not the wits to be honest.”- Benjamin Franklin

Most clients who decide to enter into mediation do so in good faith with the intent to make full disclosures.  So what can you do when you believe mediation would be best but the other party decides they are not going to play by the rules and are instead going to engage in behavior not conducive to resolving disputes?  Recognizing a dirty trick will get you started.  For example:

Conflicting Out Top Divorce Attorneys

Spouses who know a divorce is coming make appointments with top divorce attorneys in the area with no intention of hiring those attorneys.  They tell the attorney just enough of their situation, and often pay for the attorney’s time to keep the attorney from representing their spouse.  They may spend a few thousand dollars but get what they want.  And yes this does happen in high asset divorces.  Only the attorneys can prevent this. Some attorneys may tell prospective clients to be careful before spilling their stories as the attorney does not intend to be unable to represent their spouse should the prospective client hire someone else.

Firing an Attorney Just Before Mediation

Some litigants who receive a good interim status quo order may rather prolong the matter to keep the present lifestyle.  Firing an attorney will often be grounds for an adjournment of mediation and trial or an extension of time for discovery.  Since withdrawal is allowed only by court order (MCR 2.117), most judges will limit the number of substitutions, especially close to a trial date.

Financial Dirty Tricks Before and During Mediation

1)    Liquidating Accounts

One of the most common ploys used to reduce the marital estate is to liquidate joint accounts and move the money to another account.  Wealthy people hide it in offshore accounts.  Others simply put it in a relative’s account. 

2)    Arranging for Mortgages Just Before Divorce

Spouses who know they will soon file for divorce induce their spouse to take out a new mortgage in order to “help the business” which may or may not be in trouble.  The divorce is then filed.  It is claimed that the money is in the business which is not worth much.

3)    Using a Power Imbalance to Manipulate the Settlement

Power imbalances occur when one spouse has a level of understanding that the other does not.  That can lead to an offer being made which, on its face, appears fair.  In reality it fails to account for something such as tax ramifications making the offer unfair to the person with little or no tax acumen.

4)    Using Credit Reports

Credit reports are good tools to be sure that any accounts recently opened by either spouse are readily available.  Many surprising auto loans and credit cards have been opened without the knowledge of the other spouse.  These loans and debts have to be investigated and included in the judgment.

5)    Hiring an Accountant

The accountant should have provided to him/her three years of joint tax returns with all of the schedules.  There are all kinds of things that can be in those returns.  Both spouses signed them and ignorance will not be excused if they are wrong.  If it is suspected that a party has not been entirely truthful on the returns, the possible negative ramifications should be an issue for the mediator.  The accountant can also help with the division of assets so that neither or both receive a tax advantage.

6)    No Mediation Summary

One side prepares a mediation summary while the other side does not.  This can be done for reasons other than incompetency of counsel.  Perhaps they see mediation as a discovery proceeding and are there to learn only what you know.  It may also happen that what they do bring is “recently discovered” – meaning unsubstantiated – debts, hoping to add them into the deliberations.  Too frequently, the financially weaker party forges ahead to a mediated resolution because an adjournment when you are paying your attorney and half of the mediator’s hourly rate is too much to bear.

7)    Budgets Can Show Hidden Assets

If Couple A shows $90,000 on their joint income tax but spends $150,000, there should be significant credit card balances.  If there is not, then there is another income stream.  Someone, perhaps an accountant, needs to look for it.  Even if it turns out to be from credit card debt, that too must be negotiated.

No one can ever know too much about their assets.  The more knowledge about the identification and valuation of assets, the better position both spouses will be in to obtain a fair division of those assets.

My Favorite “Dirty Trick”

This won’t get anyone in trouble and may actually help in the settlement of some issues.  This comes from Diana Mercer1, an attorney.  Here is what she told her friend, who was having trouble getting her husband to pay half of their child’s extra-curricular sports and book rentals.  Take a photo or two.  In fact, assemble a lot of photos of the child doing all of these extra-curricular activities.  Be sure to show the child engaging in all of the activities such as prom, sports, choir.  Include an art project.  In fact, maybe it should be a photo album.  Maybe, if the child cooks, you and he/she could make some cookies for dad.  Offer them to dad at mediation with no strings attached.  Copies of college brochures?  Or the child’s application to colleges?  Why not?  You get the drift...a quiet package.  Give one album to your attorney to show dad’s attorney.  Give the other to dad as a gift.  Then let dad say he doesn’t want to pay.  If so, the judge should be impressed with the evidence.  It will be difficult for the dad’s attorney to argue dad shouldn’t pay his fair share.  Mercer likes this approach because it’s dramatic, effective and a little evil without appearing so.

1.    Diana Mercer, Lawyer’s Favorite Dirty Trick, Huff Post Divorce, (October 22, 2012), http://www.huffingtonpost.com/dianamercer/divorce-lawyers-favorite-_b_1983175.html, accessed April 30, 2013

1 comment:

Earl Finnegan said...

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