Washington Uniform Collaborative Law Act

Last Friday marked a watershed moment for Washington alternative dispute resolution (ADR). On that day, the Uniform Collaborative Law Act (UCLA) was signed into law. By a stroke of the pen, Collaborative Law became a dispute resolution process that is sanctioned by Washington statute. The UCLA becomes effective on July 28 and will be part of Title 7, alongside mediation and arbitration.

Washington Governor Jay Inslee signs the Uniform Collaborative Law Act into law on May 3, 2013.

The UCLA promises to be a huge benefit for people seeking the benefit of Collaborative Law, currently mostly couples who are getting divorced. Among other things, the UCLA:

• Defines Collaborative Law as requiring a Participation Agreement, in which each party is represented by a lawyer who is hired exclusively to help parties reach agreement. Lawyers are disqualified from representing parties in any disputed matter. The statutory definition helps ensure that those who choose Collaborative Law will actually get the benefits of the process.
• Provides for testimonial privileges and confidentiality, to ensure that proceedings are properly protected.
• If a court proceeding has been filed, mandates a stay if a notice is provided to the court.
• Imposes various requirements on Collaborative Lawyers to ensure the appropriateness of the process for clients. 

Collaborative Law has been practiced in Washington the last decade, and has proved to be a highly effective process for parties who wish to resolve significant disputes without going to court. By eliminating the "tug of war" of court, everyone can devote 100% of their efforts working towards solutions. Although most lawyers who focus on Collaborative Law work in the arena of divorce, the UCLA applies to all civil disputes.

Equality in Divorce

As a divorce lawyer, I often see clients who believe that divorce means dividing everything "down the middle" (50-50). Or, splitting the community property down the middle. (Washington is a community property state, after all! Right?) They typically wonder what could possibly be more appropriate than being treated exactly equally?

Initially, I want to address two common misconceptions. First, contrary to popular belief, Washington divorce law does not require or even suggest splitting property down the middle. Second, Washington divorce law also does not restrict what can be divided in divorce to community property only. Washington divorce law says that all property must be addressed (including separate property) and that all property can be divided on divorce. Yes, in divorce separate property can be divided, and commonly is divided in Washington. And, property should be divided in a "just and equitable" manner considering all circumstances.

As a Collaborative Divorce lawyer and mediator, the standard used by in Washington State by the court for dividing property is useful because it can be applied in reaching agreements. All that matters in reaching an agreement is what is truly agreeable to everyone after considering what might impact the decision. Instead of asking a judge to use his or her discretion in determining what might be "just and equitable," in reaching an agreement in Collaborative Divorce or mediation, we can ask each party to independently apply that discretion for himself or herself based on his/her own considerations.
 
For some, dividing property and debt equally may in fact just fine. However, doing so typically assumes either that both spouses are equally situated and have equal opportunities in life, or that there should be some limit in terms of responsibilities for the other. The reality is that many spouses do not leave marriages the way they entered; both spouses make choices based on expectations of the future. Such choices might relate to matters such as careers, child rearing, lifestyle, and allocation of responsibilities during marriage. Those, and other considerations including cash flow and future expenses, might factor into deciding how best to divide property in divorce.

Ultimately, a divorce is different from other types of transactions. Unlike market-place transactions, the choices made during divorce have an impact on important future relationships and on others--with each other, with children, with in-laws, with mutual friends, with future partners. The decisions can even have an impact on one's own future emotional well-being. The more integrity that all can bring to the process, and the more carefully the decisions are thought out, the better all are likely to be.

The Collaborative Divorce process is particularly well-suited to helping work through matters with a high degree of integrity. For more information about Collaborative Divorce, see here: Collaborative Divorce Information

The Broken Language of Divorce

How does the language concerning divorce -- statements like an "intact marriage" or a "broken home" -- affect our thinking? Most writers or editors can discuss how a specific word or metaphor can bring a concept to life. In psychology, narrative theories posit that our perceived realities come from our own and cultural stories. Certainly the language describing married families as "normal" or "intact" and divorced families as "broken" creates only stereotypes -- it implies that marriage is good and divorce is bad, regardless of how both conclusions can fly in the face of reality. Vancouver psychologist Susan Gamache, PhD, in her recent article A New Metaphor for Separation, Divorce, and Remarriage in The World of Collaborative Practice, discusses the effects of the dysfunctional language used to describe divorce in our society and proposes a better alternative.

Certainly, a discussion about many shortcomings of our dominant narratives describing divorce, including its 1950s-era cultural biases and inaccuracies, is hardly new to the world of Collaborative Divorce. For example, as long as a decade ago, Pauline Tesler included these concepts in some of her talks, and described  their negative effects on our society. Where Gamache's article shines is in its crispness and approachability, particularly for those for whom these concepts might be new. With the precision of a laser scalpel, she quickly ablates the "metaphors" that describe divorce, noting the significant omissions and deviations in the dominant narrative from reality. She describes its shortcomings with a quick historical review of marriage and scientific studies.

After dispatching the dysfunctional dominant metaphors that describe divorce, Gamache proposes the "health and wellness metaphor," with which she intends to better describe the spectrum of realities of marriage and divorce relationships. If our language and stories shape our perceived reality, then we need a good substitute to replace our prior narrative to help change our thinking. Gamache's new metaphor for divorce wisely takes a positive step in that direction. Her article A New Metaphor for Separation, Divorce, and Remarriage is an important step towards forming a more complete story of divorce.

Negotiating from a "Position of Strength"

I recently consulted in a divorce negotiation. While professing to be seeking an agreement, the lawyer for the wife believed it important to negotiate "from a position of strength." To him, it appeared that meant two things:

1. Staking out a position at the outset where his client would certainly have received much more than she might have reasonably been able to expect were the matter to be decided in court; and
2. While making that his position, also making statements about the enormous cost of litigation.

In short, the wife's lawyer, while smiling and stating he was interested in reaching an agreement, was also threatening litigation as a negotiation tactic. In my experience, negotiating in this style is not uncommon for conventional lawyers, and I myself negotiated in that manner for years. It is a way of trying to coerce or manipulate the other party to agree to something that is otherwise disagreeable.

The problem of negotiating in this commonly-accepted manner arose immediately. Instead of having its desired effect, the husband and his lawyer both immediately became defensive. "That's outrageous!" was the immediate reaction. The wife's lawyer had placed into motion what Harvard professors William Ury and Roger Fisher describe as the "power paradox:" By using power to try to achieve a goal, you create resistance, making achieving that goal less likely. The reduced likelihood of achieving the goal is not because the goal was unreasonable, but because of the means used. And, that is one of the fallacies of the myth that one must negotiate "from a position of strength."

Negotiating that way also reduced the credibility of the wife and the wife's lawyer in the mind of the husband. This was because the husband reacted to the incongruity between the lawyer's statement that the wife desired to settle and the barely concealed threat of litigation. The threats were inconsistent with the stated desire of the wife, making the lawyer less trustworthy to the husband.

Another problem with negotiating that way is that the wife's lawyer made it difficult to retreat from that initial position without some collateral damage. In other words, because of the disappointment when the extreme offer was rejected, the wife came to feel resentful about any settlement that she did deem as advantageous to her as her lawyer's idealized initial position had been. After all, her lawyer had blessed it.

What the wife's lawyer did do correctly was to negotiate from a place of having knowledge. That lawyer understood the facts of the case thoroughly. For a successful negotiator, that type of preparation is very important. However, he then sabotaged his own ability to use that knowledge to his advantage by making threats and thereby cutting off the listening of the husband and the husband's attorney and setting into motion the "power paradox."

Negotiating in a divorce is difficult because divorce inherently raises fear and insecurity. To successfully and efficiently reach a good resolution generally means that all parties be engaged in a constructive problem-solving process. For that to occur, all parties need to feel sufficiently safe to be willing to participate. And, rather than defensively negotiating "from a position of strength," learning with an aim towards understanding is more likely to lead towards a good divorce settlement.

One of the reasons I like Collaborative Divorce is that its very structure that creates a disincentive to use the ineffectual and problematic method of negotiating from a position of strength.

Divorce Settlement or Resolution?

I sometimes talk about the difference between a divorce “settlement” and a divorce “resolution.” Over 95% of divorces probably end up in a settlement. Far fewer, however, end up with a resolution. As I think of it, a settlement addresses the narrow legally-defined issues for divorce and separation. However, a divorce resolution addresses the conflict as well as the legal issues.

Ask most family law attorneys about the difference, and odds are that they'll stare blankly. Pretty much all will be very familiar with clients who reached a settlement in their divorce. However, with a settlement, too often they return time and again for new post-divorce legal proceedings, such as issues relating to parenting (child custody and visitation), child support, spousal maintenance (alimony) or other family law matters.

Most divorce lawyers focus only on issues that are defined by divorce law, ignoring anything that cannot be addressed through the legal lens. The problem with that approach is that merely addressing legal issues often leaves the underlying conflict unresolved. And that unresolved conflict then festers. Yes, the legal issues in divorce are important; however, when conflicts are not resolved, they often create problems later. Addressing only the legal issues in divorce is therefore often an incomplete approach. You really don’t want an incomplete divorce.

When arriving at a divorce resolution, both the legal issues and the conflict are addressed as part of your divorce. Doing so creates a better divorce outcome, results in an outcome that has staying power, reduces any damage to important relationships, and reduces the likelihood of the need for divorce lawyer involvement in the future.

There is no doubt that a divorce settlement is an enormous improvement compared to not settling your divorce. Maybe a divorce settlement is all that can be achieved. However, resolution addresses the underlying conflicts. It means that the parties can leave the marriage with integrity and without added damage or ongoing conflict.

Not every divorcing spouse is interested in resolution, much preferring to holding onto their high emotions even though they cause nothing but pain. However, if you value the possibility of a resolution in your divorce, ask yourself two things:

1. Do the divorce lawyers and the other professionals working on your case have the awareness and skill set to increase the likelihood of reaching resolution in as part of your divorce?

2. Is the divorce process you have chosen well-suited to allow for resolution, and restructuring families and relationships without inherent collateral damage? My belief is that mediation and Collaborative Law are most suited for resolution, while conventional representation can normally only offer a settlement.

If a durable resolution in your divorce is consistent with your values, investigate the possibilities of a Collaborative Divorce or a divorce mediation with skilled divorce lawyers and other professionals who can support you with that option.

Financial Challenges in Divorce

Divorce is often accompanied by financial challenges, including that the same total of income must now support two households. Decisions and choices that you and your spouse make during the divorce process will make those challenges easier or more difficult. Here are three common decisions that can have profound impacts on future finances:

Planning for Financing for a New Residence.  If purchasing or refinancing a residence for either spouse might be part of your divorce, it may be wise to delay filing the divorce with the court until the financing is handled. Filing with the court will likely have the unintended consequence of making mortgage financing unavailable until a final agreement is reached. The better choice – reach agreements before filing with the court.

Using Court Procedures Will Increase Your Expense. Court procedures can add enormous expense to your divorce, even if your case does not go to trial. Old-school divorce lawyers will often advise their clients to file motions with the court or to conduce formal "discovery" (information exchange), both of which are expensive procedures. When necessary, these can be helpful. However, they are overused and very expensive. Worse, such court procedures are likely to create a dynamic that will make reaching a satisfactory agreement less likely, because they are designed to create (or set up creating) a winner and a loser. Instead, explore alternatives that are likely to create better results, such as divorce mediation and Collaborative Divorce. 

Get Good Legal Advice. Failing to get good financial and legal advice can be costly. Divorce has major financial, tax, and legal implications. Good advice will often more than pay for itself. Part of finding good advice means seeking advice from professionals whose financial motivation is consistent with your own interests. For example, it may be worth hiring a financial advisor only for divorce planning with no prospect of selling financial products. Yes, such financial advisors will charge a fee, but their focus will be solely on providing you good advice, not selling product. Similarly, if you wish to seek a settlement instead of a litigated outcome, consider hiring a lawyer who will not go to court and who specializes in divorce settlements. Hiring a lawyer who specializes in divorce, and is known to be competent, is important; divorce is a true specialty, and those who do not practice divorce law regularly are unlikely to have the knowledge base to provide the best advice. Consider hiring a lawyer who is also a Fellow of the American Academy of Matrimonial Lawyers -- Fellows are required to be recognized as experts in the field and pass tests to demonstrate their expertise. No other organization provides such an objective and stringent review of divorce lawyer skills.

Tax and Divorce

Yes, you really have to think about taxes as part of your divorce. There can be significant tax ramifications resulting from a divorce. Depending on your situation, some tax issues can be quite complicated. Therefore, good divorce planning includes good tax planning.

A divorce will affect your taxes in several respects, including your tax bill when you file, and payroll withholding and/or estimated taxes. Different tax tables apply to unmarried persons instead of married persons, selected based on their marital status on December 31. Additionally, persons with different incomes may end up in different tax brackets and differing income tax brackets can affect budgets and cash flow. Spousal maintenance (alimony) is usually (but not always) tax-deductible to the paying spouse and treated as income to the recipient, so long as certain rules are followed. If the rules are not followed as part of the divorce, there might be an unpleasant surprise and the tax-effect of the alimony as part of the divorce settlement may be different. However, child support and property division normally have no direct income tax effect.

An important consideration is that different types of property come with different tax considerations that may affect their economic value, and which may affect how you view your divorce settlement. For example, property with a low cost basis (purchase price plus allowed costs of improvements) will likely come with a future tax bill that will come due when the property is sold for a profit. Similarly, retirement plans, IRAs, and similar tax-deferred assets come with future tax obligations that may affect how you view them. Some types of property, such as various types of options, can have very complicated tax considerations following a divorce. Finally, head of household status and dependency exemptions may affect each spouse’s finances.

Many of the variables can be considered and addressed in your divorce, so that you and your spouse can take maximum benefit of what is allowed under the tax laws. Divorce tax planning can therefore be an extremely important part—though a sometimes overlooked—part of the divorce process.

A good divorce lawyer can advise you about many of the tax issues that pertain to divorce. Some tax issues are complicated and technical, however, and may require advice from a qualified tax specialist. The investment in good tax advice will usually more than pay for itself.