Sunday, September 28, 2008

Why Professional Athletes Have Prenuptial Agreements

After a brief flurry of news reports about the impending break-up of superstar baseball player Alex Rodriguez's marriage, a few recent stories came out announcing that an agreement had been reached and that there would be no further information released. It turned out to be a relatively quiet divorce for several important reasons.

  • First, there had been a prenuptial agreement completed about a month before the wedding. That agreement apparently settled many or most of the issues. It helped avoid a lot of litigation and undoubtedly saved a great deal of attorneys' fees for both sides. While prenuptial agreements may seem very expensive when they are negotiated and drawn up, they usually turn out to be a great investment because they minimize the costs of a divorce or they might even help preserve a marriage (when divorce options are limited). Prenuptial agreements may seem "unromantic", and they are, but for a second or third marriage, the odds of going through a divorce are going to be a little higher. Besides, doing a prenuptial agreement does provide more disclosure between the bride and groom than occurs in many relationships, and they force the parties to think more about the future, good or bad.

  • Second, there was not a lot of negotiating happening in the press. In celebrity divorces, there's often a lot of damage done because of what gets published, televised or discussed. Either the parties recognized that they both had something to lose by going public or the prenuptial agreement may have included penalties or incentives for privacy.

  • Third, the parties obviously had attorneys who recognized that hanging out the couple's dirty laundry would end up soiling both of them. They were able to protect the interests of both parties by working quickly and quietly. Sometimes less is more, and that was the case here. Both parties end up losing when they start slinging mud. Professional athletes need to keep a good image for marketing purposes. Unfavorable press can result in loss of endorsements and lost opportunities for outside projects and income.

Professional athletes, whether they play in the NBA, WNBA, NFL, NHL or MLB, would all be well advised to seek a prenuptial agreement if they are getting married. It can save them a lot of money later on and make their lives more peaceful and productive. A prenuptial agreement will probably save substantial attorney fees in case of divorce and will limit the financial exposure in that situation. It can also help the athlete and the spouse address and decide financial issues for the future.

Why use Collaborative Law? Basically, preparing a good prenuptial agreement requires long-range planning by the athlete and his/her spouse, with a financial advisor as well as an attorney. Instead of just living for today, professional athletes should take the time to look to the future and preparing a prenup is a great way to get started. The best practice is for each side to have their own attorney. That helps balance the power in the relationship and makes sure that both sides are heard and understood. Collaborative Law is a very effective way to negotiate a prenuptial agreement. There is disclosure, representation of both parties and other professionals can be used as needed. No agreement is established unless both parties voluntarily agree to it.

One final point: Don't wait until the last minute! A complex agreement takes time to prepare. You want it done right and you want both parties to be comfortable with it. To create a custom agreement, information must be gathered and analyzed, a plan must be put together and an agreement must be negotiated. If it's not done right, you are just wasting money because a court can find it to be invalid. It takes time to get all the work done. In addition, waiting until the last minute will only multiply the stress related to getting married, probably resulting in two very unhappy people. Start early.

Thanks to the My Family Law Celebrity Divorce Blog for their post on this case.

Thursday, September 25, 2008

Is Collaborative Law Cheaper than Litigation?

Answer: Sometimes, but it's really hard to directly compare the two systems.

Collaborative Law involves having a series of relatively brief meetings to work through to settlement in an organized and efficient manner. Including the preparation and debriefing times for each meeting, my experience is that there is often a three-hour block of time expended for each meeting. That can add up to some significant time if there are many meetings. Of course, the contrast in litigation is that there would probably be a number of court appearances in a case with complex property to divide or with custody issues, so the actual time commitment may not be greater in Collaborative cases. There are some other factors to consider that would seem to indicate that Collaborative cases can save time when compared to litigation. Consider these.

  • A Collaborative case normally (in Texas, at least) involves a single neutral financial professional (FP) and a neutral mental health professional (MHP). In litigation, the cost is usually doubled because each side hires their own expert. That sometimes results in hiring a third professional to break the tie if the original two experts don't agree on the issue. A single child specialist is often used in Collaborative cases, or the regular MHP may act as the child specialist. That compares with litigation where it is not unusual to have two or three experts on children's issues.

  • The parties ask for and produce only the necessary information in Collaborative cases instead of using standardized, boilerplate requests for voluminous information, much of which is never used. Collaborative Law saves trees, time and money by focusing only on the relevant issues for discovery, which is done informally. There's no playing games with objections and motions for sanctions. The appropriate information is produced and used.

  • The parties and attorneys don't waste a lot time arguing and posturing. Collaborative Law uses interest-based negotiating, instead of positional bargaining. We start off the process by establishing and clarifying the goals, needs and interests of each party. We creat solutions for achieving those goals rather than taking arbitrary positions and moving slowly to a compromise.

  • The parties don't file motions and set hearings with the court. That can be very time consuming and expensive for the parties. Obviously, not having court hearings means that the parties don't waste half a day waiting around the courthouse for each hearing.

  • The parties don't have to wait for distant court dates. The process moves along as fast as the parties both want and they can finish it when they are ready, rather than waiting for the court to have time for a hearing or trial.

  • Using the MHP results in more pleasant, efficient and effective work sessions. The meetings, although sometimes difficult and emotional, are improved by having the MHP work with the parties before, during and after the joint meetings. The MHP helps everyone operate at a higher, more adult level, and therefore they can get more done and the stress is greatly reduced for all. This is not to imply that the process is emotionally easy. Actually, it is often very difficult for both the parties and the attorneys, but the process can be effective because it utilizes the experts and trained attorneys who all work for the common goal of an agreement that benefits both parties.

  • Collaborative Law cases normally would not have depositions and there would be no depositions of the parties. That saves money and a great deal of stress that commonly occurs in contested litigation cases.

Although it is fair to say that a Collaborative case is probably cheaper than a litigated case, there really is no way to absolutely prove that because no two cases are alike. Nevertheless, the list above includes a number on money-saving innovations in Collaborative Law.

Thursday, September 18, 2008

Texas Collaborative Law Blog Honored

The Texas Collaborative Law Blog received an honor today when it was named the LexMonitor Blog of the Day. Here is a link to the notice. It is a very nice recognition that is greatly appreciated. LexMonitor is a highly respected daily review of legal blogs and journals. We appreciate their kind review.

Tuesday, September 16, 2008

5 Tips for Getting out of an Impasse

Sometimes, no matter how hard you try, it seems like you reach a dead end with your spouse on an issue in a Collaborative Law case. It happened while you were together, and it shouldn't be surprising that it still happens after you split up. You've thought about possible approaches and made plenty of suggestions, but no agreement seems forthcoming. While persistence can be a virtue in some situations, it can simply lead to frustration in others. If you keep trying the same tactics that haven't worked on the same issues, you probably aren't going to reach an agreement. What you need is a change. Here are five brief possibilities to help you get out of a negotiation rut and into an agreement.

1. Expand the pie. Review the situation and come up with some other possibilities. If you have gotten down to a choice between two options and neither party is willing to agree to the other side's choice, then back up and come up with some other choices. For example, if the decision is about who will take care of the children after school, and each parent wants a different grandparent to be in charge, maybe you should come up with other possible caregivers. If you rule out the current choices and look for others, you may come up with another satisfactory choice you had overlooked. Avoid assumptions about how the issues should be decided. Open up your imagination to look for other solutions. Get out of the rut.

2. Expand your point of view. Oftentimes, we focus so much on our own thoughts and ideas that we begin to have trouble understanding how anyone could possibly think another way on an issue. When that happens in negotiations, that narrowing of focus can lead to impasse. One solution is to listen to the other party and then reflect back to him or her what is being said. If you can just put into your own words what the other side is saying or asking for, it can increase your understanding of their position and may open up your thoughts to new possibilities. In some Collaborative joint meetings, it has been helpful to ask each party to state the other party's position on an issue and to explain why the party favors that position. It is also common, in preparation for Collabortive meetings or mediations or just plain negotiations at the courthouse, to have my client tell me what the other party would say about various issues. That helps me understand, but it also helps each client/party who works on that. Greater understanding of the issues and the other party can help lead to agreement.

3. Go back to your broad goals. It is very easy in negotiations to get drawn into discussions of small points. As you get into the smaller, lower-level goals, the options available are reduced and the potential for impasse increases. Sometimes you get off track and spend time on things that are irrelevant or just marginally useful. One way to get out of that trap is to stop the discussion and go back to your goals. For example, if you are stuck in a discussion about whether to take part of a retirement account or keep the house (and its equity), it can be helpful to review your major goals. If one of the goals was to maximize your retirement resources, then you probably need to take the retirement account. If a goal was to keep a stable home for the children, you might want to keep the house. If your goal was to obtain or have access to cash, and if you can realistically sell the house quickly, then you would probably want to get the house and sell it. Without constantly keeping the goals in mind, sometimes parties get into emotional arguments over assets because they "love" the house or because their hard work created the retirement account. The goals are more neutral and should always be the ideal in mind as the parties negotiate.

Another problem that frequently occurs is that you have gone from macro level goals to micro level goals. In other words, instead of trying to create ways to stay in daily contact with your child (macro goal), you get into an argument about whether your spouse must guarantee that s/he will be home at a certain hour (micro goal), rather than looking at it broadly and trying to find as many ways as possible to communicate with your child. Dealing with the issues at a broader level increases the number of opportunities to find solutions.

4. Get professional help. We usually work in the team model, using two attorneys, a neutral financial professional (FP) and a neutral mental health professional (MHP). We sometimes have a separate child specialist. The FP and MHP have been extremely helpful in cases where the parties get stuck. On financial issues, the financial professional can ask the right questions as well as suggest alternative solutions. The MHP can help the process generally by redirecting attention to constructive areas and also by maintaining a safe atmosphere for the parties to express themselves. Being perceived as neutrals gives the FP and MHP much more credibility and effectiveness than they would have if they were linked to just one party.

5. Start with areas of agreement. If you come to a standstill somewhere, you should consider switching topics and working on subjects where you expect to agree. Then you can build some momentum. For example, if you get stuck on how to divide up the bills, you might work on how to divide up the motor vehicles or clarify the holiday visitation schedule or clarify college plans for the kids. There are always some areas where the parties will easily agree, and even reaching easy agreements can result in good feelings and a willingness to cooperate. Of course, that doesn't mean that both sides will agree on everything once they start agreeing, but the momentum can be a helpful force for you.

Conclusiont: It's not unusual in a Collaborative Law case to get stuck more than once. Collaborative Law is not necessarily an easy process to work in, but the results are so much better than in litigation that it is worth the effort. When those times come and you start to realize that you are at an impasse point, try out one or more of the above techniques. They should be great tools to help you reach a successful conclusion for your clients.

Wednesday, September 10, 2008

Changing a Case to Collaborative after Filing

A common question people have about Collaborative Law is whether they can change a litigation case into a Collaborative case after it has been filed. The answer, thankfully, is Yes!

Some Collaborative attorneys will file a petition for divorce and either include a paragraph and information about Collaborative Law or provide, through separate documents, information to be served on the other party. The Collaborative Law information urges the other party to investigate and consider using Collaborative Law. If the other party hires a trained Collaborative Lawyer, any temporary hearing can be stopped and the case can be switched to Collaborative Law.

Other concerns come into play if there have been temporary hearings in the case. If there were actual "hearings", the parties' relationship could have become more damaged, which could make it more difficult to change processes. If the parties are fairly deep in the litigation process, it may be hard to recover a spirit of cooperation between them. Both parties and their attorneys need to candidly discuss their feelings and concerns before switching to Collaborative Law after doing a lot of things in a litigation model.

Unless the change in processes is done close to the outset, the parties and attorneys need to be very careful in deciding to make the change, but it is possible to do so.

Saturday, September 6, 2008

Do We Have to Sign a Participation Agreement?

Simple Answer: For the case to be considered a Collaborative Law case, a participation agreement must be signed by the parties and the attorneys.

What is it? The agreement sets out in very clear language how the process works, explains confidentiality, discusses the use of neutral experts and explains the requirement for the attorneys to withdraw in the event the process breaks down. The agreement also discusses the responsibility and commitment to open and honest cooperation between the parties, including the sharing of relevant information. Also included is an explanation of how, why and when the process could end. It is a comprehensive agreement which is intended to educate and reinforce, as well as commit the parties to the process.

Why must it be signed? It is required to be signed by the Texas statute that established Collaborative Law as part of our legal system. Part of the definition in the statute includes a requirement of having a signed written participation agreement.

What is the Rules of Conduct? Most Texas agreements also include the Rules of Conduct which operates like an injunction in a traditional litigated case. The Rules place restrictions and limitations on the parties to a case. The restrictions are intended to protect both parties and to avoid damage or loss to assets in the community estate. The Rules are usually imposed to maintain the status quo regarding the property and assets of the parties until an agreement is reached.

Monday, September 1, 2008

What if I Don't Want My Attorney to Withdraw?

Simple Answer: Unfortunately for you, and also fortunately for you, the attorney must withdraw in a Collaborative case if the process breaks down. That is one of the fundamental characteristics of the Collaborative process, according to the Texas Family Code. Without the requirement for the attorneys to withdraw, a case cannot be considered a Collaborative Law case.

Why must the attorneys withdraw? There is logic to back up the law on this issue. Forcing the attorneys to withdraw if the process breaks down means that the parties and attorneys will work their hardest to get the case settled. Obviously, the attorney loses a good client and the clients incur substantial duplicate attorneys' fees. With financial pressure on all parties to the process, there is good reason for them to try new alternatives and to be creative. If the attorneys did not need to withdraw, attorneys and parties would fall back into the old pattern common in litigated cases where one party (sometimes both) would reach a certain point and then boldly proclaim that if the other side didn't accept this one final offer, then they would all just go to court, which implicitly conveyed the threat of stress, additional cost and adverse rulings, among other things.

Don't worry. As good as your attorney may seem to you, please remember that there are plenty of good attorneys around and your present attorney can be replaced with another attorney. In fact, in most cases, your present Collaborative attorney can help you find another excellent attorney and then help transition the new attorney in. (I almost hate to disclose that all attorneys are replaceable, but it's true.) There is certainly an additional cost, but that's just part of the incentive for you.