The Evolving Role of the Divorce Financial Analyst in Collaborative Divorce

The situation should be different in the collaborative law setting. Collaborative lawyers work in a client-centered, interest-based settlement model in which financial information is defined from the start as a shared resource and a basic tool for developing mutually advantageous settlement scenarios. In fact, failure to disclose all relevant financial information violates fundamental good-faith undertakings set forth in the written collaborative participation agreement. Nonetheless, it is not uncommon for beginning collaborative lawyers to embrace interdisciplinary teamwork with mental health colleagues on the professional team more enthusiastically than they welcome the divorce financial analyst. Understanding why this is so begins with acknowledging that it takes time for collaborative lawyers to switch gears. In intermediate collaborative practice training sessions, divorce lawyers who have handled only a handful of collaborative cases often protest that gathering and analyzing financial evidence is a central part of how they do their job. Why, they ask, should their clients pay some other professional to do it?

The answer lies in the significant differences between how information is prepared and used when legal rights and entitlements are the sole focus and winning big is the goal, as compared with how information can be prepared and used when client-centered interest-based negotiations are the agreed method and settlement entirely outside the court system is the sole objective. Old habits based on maintaining tight control over disclosure of financial data so that it can be manipulated for maximum strategic advantage die hard. I have found, based on nearly 15 years of experience as a collaborative divorce trainer, that it takes as many as 25 or more successful cases before a lawyer masters the skills and techniques that reflect real competency in collaborative law, and substantially more than that before most lawyers leave entirely behind them the residual habits and attitudes of the adversarial advocate, replacing them with those of a client-centered conflict resolution professional.

The Divorce Financial Analyst's Job

Over time, lawyers working in communities where trained professionals are available for interdisciplinary collaborative divorce teams generally do come to appreciate the enhanced quality of financial services that an experienced divorce financial analyst can provide. Indeed, when the collaborative divorce financial analyst becomes the organizing source for information on the collaborative divorce team, the early availability to both parties and their lawyers of reliable, comprehensive financial information vetted by an expert neutral source has transformative potential, both to facilitate smoother sailing in the negotiation process and to support generation of far more comprehensive and sophisticated options for settlements. Working from carefully developed income, expenses, asset, and debt schedules that both spouses understand and accept as valid and complete, the professional team can help couples consider long-term financial consequences to both parties resulting from any set of assumptions about asset and debt division or amount and duration of alimony.

With this kind of rich and nuanced information, it becomes apparent to both parties whether a proposed solution is or is not financially viable. It becomes obvious when a settlement option will cause substantial inequity or even hardship to a party. It no longer is necessary for a dependent spouse's lawyer to argue with his client about the financial wisdom of remaining in a family residence that is unaffordable, because the spreadsheets and graphs about cash flow and net worth speak for themselves. Because the good-faith commitments that couples make when entering the collaborative process include a willingness to consider all reasonable goals of either party regardless of whether they could be achieved in court, this kind of accurate information about financial consequences of settlement options can become a catalyst for creative problem solving and even generosity. In short, when the divorce financial analyst is part of the collaborative team, financial information functions as a shared dynamic tool, not a unilateral weapon.

Because of this potentially powerful support for collaborative conflict resolution, it is not unusual in communities where integrated team collaborative divorce practice is well established for the divorce financial analyst's participation on the professional team from the beginning of the case to form part of the protocols by which collaborative divorce lawyers and their professional colleagues do their work. (This is so in the San Francisco Bay area, San Diego, Los Angeles, the Hudson Valley, Atlanta, Vancouver, Minneapolis, and many other mature collaborative practice communities in the U.S. and Canada.)

The Importance of Communications and Teamwork

Collaborative lawyers and divorce financial analysts, working together on a collaborative team, can perform their respective tasks at a high professional standard only if they share a congruent understanding of the job description and ethical boundaries within which the divorce financial analyst will work. These understandings are developed and refined in the local collaborative practice group, and in many instances are incorporated into the practice group's protocols. Those protocols evolve as collaborative lawyers do more case work with the divorce financial analyst and learn from experience how to coordinate their professional efforts more effectively. As they begin each new collaborative case together, collaborative lawyers and neutral divorce financial analysts learn the importance of taking time to clarify beforehand what tasks the financial analyst will (and will not) perform, and in what sequence. They should also clearly define how they will communicate with one another, what form the work product will take, and where the boundaries lie between the lawyer's job description and the divorce financial analyst's job description. These understandings can vary considerably from one case to another, depending on the clients' needs and the collaborative lawyers' preferences.

At one end of the spectrum, the collaborative lawyers may simply ask the neutral divorce financial analyst to gather the usual financial disclosure documents required in divorce practice, to organize them, and perhaps to prepare basic spreadsheets summarizing what they reveal. However, experienced collaborative lawyers generally ask divorce financial analysts to do far more than that. In Northern California, where I practice, it is now customary in a collaborative setting for the neutral financial consultant to:

• Confer initially with both attorneys about scope of engagement, special needs and challenges of clients, timing issues, format and venue for presenting financial information;
• Meet with the divorcing parties jointly and separately to understand how money and records have been managed and to explain forms that will be used for gathering documentation of income, expenses, assets, debts;
• Confer with both collaborative lawyers about financial and disclosure concerns that emerge during meetings with clients;
• Alert lawyers to missing documents and information and possible bad faith disclosures;
• Help clients prepare and/or review budgets, as directed by lawyers;
• Educate financially na've parties about basic money management;
• Confer with family and/or business accountants to gather tax returns and business records (it is not customary for the collaborative divorce financial analyst to undertake tracing or business valuation while at the same time functioning as the collaborative neutral on the case. Most collaborative lawyers prefer joint retention of a different neutral forensic accountant to perform those tasks so that the uniquely client-focused role of the collaborative financial neutral is not compromised by rendering expert opinions on issues that often carry emotional charge);
• Prepare preliminary asset/debt spreadsheets, cash flow summaries and estimates along with indexed supporting documentation, in binders or on CD-Rom;
• Attend “five-way” collaborative meetings to walk parties and their lawyers through an overview of family finances;
• Update documentation and schedules periodically throughout negotiations and before completion of settlement agreements;
• Prepare long-term financial projections of cash flow and net worth for various settlement scenarios as directed by lawyers;
• Attend settlement meetings as requested to provide “real time” calculations of child and spousal support (alimony), taxes, and financial consequences of settlement scenarios under consideration;
• Meet individually with one or both clients as directed by lawyers when specific financial issues or concerns will benefit from individualized attention;
• Prepare exhibits for inclusion in settlement agreements; and
• Assist with collaborative modification of support agreements post-judgment.

Pauline H. Tesler is a family law specialist certified by the State Bar of California Board of Legal Specialization, and a fellow of the American Academy of Matrimonial Lawyers. She co-founded the International Academy of Collaborative Professionals and served as its first president. In addition to training and speaking on the subject, Ms. Tesler has written extensively on collaborative law and interdisciplinary team collaborative divorce.

During the early 1980s, divorce lawyers began experimenting with the use of financial planners as consultants and trial experts to enhance spousal support advocacy on behalf of the dependent spouse. Although some immediately recognized both the value of that resource in counseling fearful clients and the power of such expert testimony in persuading judges to make higher support awards, the idea did not catch on widely. For many years it remained a power tool used by a select few. Persuading family law specialists that some other professional might do a better job than they of marshalling financial evidence on the client's behalf has remained a hard sell in some quarters ' even in the realm of collaborative divorce practice, where interdisciplinary professional teams are becoming the norm.

Breaking Down Resistance

It's not difficult to imagine why skillful lawyers might resist accepting the divorce financial analyst (also referred to as a divorce financial planner) as a valuable resource. Divorce lawyers practicing in an adversarial mode are masters at controlling the flow of information about financial resources ' how much will be disclosed, when, how, and to whom. Information is a major strategic weapon in the battle, and good trial lawyers keep firm control over its deployment (within the limits of applicable law, of course).

The situation should be different in the collaborative law setting. Collaborative lawyers work in a client-centered, interest-based settlement model in which financial information is defined from the start as a shared resource and a basic tool for developing mutually advantageous settlement scenarios. In fact, failure to disclose all relevant financial information violates fundamental good-faith undertakings set forth in the written collaborative participation agreement. Nonetheless, it is not uncommon for beginning collaborative lawyers to embrace interdisciplinary teamwork with mental health colleagues on the professional team more enthusiastically than they welcome the divorce financial analyst. Understanding why this is so begins with acknowledging that it takes time for collaborative lawyers to switch gears. In intermediate collaborative practice training sessions, divorce lawyers who have handled only a handful of collaborative cases often protest that gathering and analyzing financial evidence is a central part of how they do their job. Why, they ask, should their clients pay some other professional to do it?

The answer lies in the significant differences between how information is prepared and used when legal rights and entitlements are the sole focus and winning big is the goal, as compared with how information can be prepared and used when client-centered interest-based negotiations are the agreed method and settlement entirely outside the court system is the sole objective. Old habits based on maintaining tight control over disclosure of financial data so that it can be manipulated for maximum strategic advantage die hard. I have found, based on nearly 15 years of experience as a collaborative divorce trainer, that it takes as many as 25 or more successful cases before a lawyer masters the skills and techniques that reflect real competency in collaborative law, and substantially more than that before most lawyers leave entirely behind them the residual habits and attitudes of the adversarial advocate, replacing them with those of a client-centered conflict resolution professional.

The Divorce Financial Analyst's Job

Over time, lawyers working in communities where trained professionals are available for interdisciplinary collaborative divorce teams generally do come to appreciate the enhanced quality of financial services that an experienced divorce financial analyst can provide. Indeed, when the collaborative divorce financial analyst becomes the organizing source for information on the collaborative divorce team, the early availability to both parties and their lawyers of reliable, comprehensive financial information vetted by an expert neutral source has transformative potential, both to facilitate smoother sailing in the negotiation process and to support generation of far more comprehensive and sophisticated options for settlements. Working from carefully developed income, expenses, asset, and debt schedules that both spouses understand and accept as valid and complete, the professional team can help couples consider long-term financial consequences to both parties resulting from any set of assumptions about asset and debt division or amount and duration of alimony.

With this kind of rich and nuanced information, it becomes apparent to both parties whether a proposed solution is or is not financially viable. It becomes obvious when a settlement option will cause substantial inequity or even hardship to a party. It no longer is necessary for a dependent spouse's lawyer to argue with his client about the financial wisdom of remaining in a family residence that is unaffordable, because the spreadsheets and graphs about cash flow and net worth speak for themselves. Because the good-faith commitments that couples make when entering the collaborative process include a willingness to consider all reasonable goals of either party regardless of whether they could be achieved in court, this kind of accurate information about financial consequences of settlement options can become a catalyst for creative problem solving and even generosity. In short, when the divorce financial analyst is part of the collaborative team, financial information functions as a shared dynamic tool, not a unilateral weapon.

Because of this potentially powerful support for collaborative conflict resolution, it is not unusual in communities where integrated team collaborative divorce practice is well established for the divorce financial analyst's participation on the professional team from the beginning of the case to form part of the protocols by which collaborative divorce lawyers and their professional colleagues do their work. (This is so in the San Francisco Bay area, San Diego, Los Angeles, the Hudson Valley, Atlanta, Vancouver, Minneapolis, and many other mature collaborative practice communities in the U.S. and Canada.)

The Importance of Communications and Teamwork

Collaborative lawyers and divorce financial analysts, working together on a collaborative team, can perform their respective tasks at a high professional standard only if they share a congruent understanding of the job description and ethical boundaries within which the divorce financial analyst will work. These understandings are developed and refined in the local collaborative practice group, and in many instances are incorporated into the practice group's protocols. Those protocols evolve as collaborative lawyers do more case work with the divorce financial analyst and learn from experience how to coordinate their professional efforts more effectively. As they begin each new collaborative case together, collaborative lawyers and neutral divorce financial analysts learn the importance of taking time to clarify beforehand what tasks the financial analyst will (and will not) perform, and in what sequence. They should also clearly define how they will communicate with one another, what form the work product will take, and where the boundaries lie between the lawyer's job description and the divorce financial analyst's job description. These understandings can vary considerably from one case to another, depending on the clients' needs and the collaborative lawyers' preferences.

At one end of the spectrum, the collaborative lawyers may simply ask the neutral divorce financial analyst to gather the usual financial disclosure documents required in divorce practice, to organize them, and perhaps to prepare basic spreadsheets summarizing what they reveal. However, experienced collaborative lawyers generally ask divorce financial analysts to do far more than that. In Northern California, where I practice, it is now customary in a collaborative setting for the neutral financial consultant to:

• Confer initially with both attorneys about scope of engagement, special needs and challenges of clients, timing issues, format and venue for presenting financial information;
• Meet with the divorcing parties jointly and separately to understand how money and records have been managed and to explain forms that will be used for gathering documentation of income, expenses, assets, debts;
• Confer with both collaborative lawyers about financial and disclosure concerns that emerge during meetings with clients;
• Alert lawyers to missing documents and information and possible bad faith disclosures;
• Help clients prepare and/or review budgets, as directed by lawyers;
• Educate financially na've parties about basic money management;
• Confer with family and/or business accountants to gather tax returns and business records (it is not customary for the collaborative divorce financial analyst to undertake tracing or business valuation while at the same time functioning as the collaborative neutral on the case. Most collaborative lawyers prefer joint retention of a different neutral forensic accountant to perform those tasks so that the uniquely client-focused role of the collaborative financial neutral is not compromised by rendering expert opinions on issues that often carry emotional charge);
• Prepare preliminary asset/debt spreadsheets, cash flow summaries and estimates along with indexed supporting documentation, in binders or on CD-Rom;
• Attend “five-way” collaborative meetings to walk parties and their lawyers through an overview of family finances;
• Update documentation and schedules periodically throughout negotiations and before completion of settlement agreements;
• Prepare long-term financial projections of cash flow and net worth for various settlement scenarios as directed by lawyers;
• Attend settlement meetings as requested to provide “real time” calculations of child and spousal support (alimony), taxes, and financial consequences of settlement scenarios under consideration;
• Meet individually with one or both clients as directed by lawyers when specific financial issues or concerns will benefit from individualized attention;
• Prepare exhibits for inclusion in settlement agreements; and
• Assist with collaborative modification of support agreements post-judgment.

Pauline H. Tesler is a family law specialist certified by the State Bar of California Board of Legal Specialization, and a fellow of the American Academy of Matrimonial Lawyers. She co-founded the International Academy of Collaborative Professionals and served as its first president. In addition to training and speaking on the subject, Ms. Tesler has written extensively on collaborative law and interdisciplinary team collaborative divorce.