Step 3 - How to negotiate a divorce financial settlement
Depending on the circumstances, negotiating the financial settlement can range from being straightforward, to being protracted and bitterly contested. The aim of the negotiation is to arrive at a proposed settlement that both parties agree to, and that a court views as being fair. It is unfortunately quite common for the process to be challenging because the emotions and stress of the divorce make it difficult for the divorcing couple to be objective about the finances. There are several different approaches to negotiation which are discussed below. In general, effective negotiation can only really begin once each side has provided the other with full financial disclosure.
There are various negotiation methods that you can use:
Direct (informal) negotiation between the divorcing couple
Where the split is amicable, the couple can sometimes manage to agree an outline financial settlement between themselves. This is in general a very good thing as it is the least costly, quickest and most friendly way to reach agreement. One word of caution is that if you take this approach it may still be worth running the agreement past a solicitor to check that the deal is not manifestly unfair to you. Also, even though the agreement is reached informally, it is still very important to have the agreement drawn up as a formal legal document (a Consent Order) and ratified by the court. This is to protect both of your from claims against you by the other party at a later date.
Solicitors Exchanging Out of Court Offer letters
A more formal and traditional method of negotiation is where both parties hire a solicitor. Once you have done financial disclosure then each solicitor will advise their clients on what a fair settlement would be. Typically one party will take the initiative and instruct their solicitor to write an offer letter to the other side. The other party and their solicitor will consider the offer and typically reply with either an acceptance or a counter offer. Further offers and counter offers may follow. If good progress is made then an agreement may be reached and one of the solicitors can begin the process of drafting a legal agreement called a Consent Order. If no progress is made and the two parties remain miles apart then one side may decide to break the deadlock by suggesting mediation or by applying to court for a financial settlement.
Professional mediators provide a service whereby they facilitate a series of discussions between the parties in dispute, with the aim of reaching an agreement. Mediation can be used for child contact disputes as well as financial disputes. The mediation process provides a formal framework which encourages a level headed discussion which might not be possible directly between the parties. Specialist Family Law mediators have training or past experience in family law, and so are able to guide the discussion to keep it focussed on the relevant issues and avoid discussion on irrelevant topics. For example in general the conduct of either party (adultery, drinking, unreasonable behaviour) is not relevant to the financial settlement, and so the mediator will try to prevent the conversation returning to these topics.
In response to growing public concern over the costs of divorce, Collaborative Law has emerged in recent years as a new option for reaching an agreement. This relies on both parties using a solicitor who agrees to use a collaborative approach, and specifically agrees to reach a deal view negotiation rather than through court action. The basic approach is that once full disclosure has been done, each party comes to the table with an opening position (based on the advice of their solicitor). The outstanding issues/gap between the two parties is identifed, and then a series of face to face meetings are held at which the parties discuss the issues/gaps and make compromises until agreement is reached. The approach is less confrontational than the adversarial court route and promises (but doesnt guarantee) to be less expensive.
When negotiations fail:
Going To Court - The adversarial process
The traditional adversarial process involves each party fighting for the best financial outcome via solicitors/barristers and the courts. One party, typically the weaker financial party, applies for a Financial Settlement through the courts and the court drives a timetable for obligatory financial disclosure and then a series of court hearings at which the parties present their case to a judge. This process typically culminates at a Financial Dispute Resolution hearing at which a judge, after hearing the case and evidence presented by each side, offers a view on what the court feels would be a fair settlement. The majority of cases that go to the FDR are settled on the day of the FDR or shortly after.
In the small minority of cases no agreement can be reached and so the case moves on to a Final Hearing at which the court will hear evidence before imposing a settlement via a court order.