Video Transcript: Transcript of the Roundtable on High Asset Divorce
I’m Dan Couvrette, the publisher of Divorce Magazine and Family Lawyer Magazine and, I want to thank you for watching or listening to today’s video roundtable and podcast. I’m confident that the information that will be shared by my guests will be of tremendous value to you, particularly if you’re going through a divorce that is a high asset divorce case because these lawyers have dealt with many cases of that nature. I also want to mention that each state treats divorce differently. Depending on the state that you’re in, the information provided may not be appropriate for your state if we get into the nitty-gritty. You need to talk with a lawyer from your state and we’ve got lawyers from three different states here, but if you’re not in one of those states, you need to talk with a lawyer from your state to get information specific to you.
Today’s roundtable is intended to give you insights into an overview of the subject of high assets. With that in mind, all the attorneys that I’ve invited to participate in today’s roundtable are very, very experienced and accomplished. All are highly rated by their peers and their clients, and they all have been and continue to be involved with their state bar associations, local bar associations, some with the national bar associations, and some with international family law associations. These are the cream of the crop folks. These are the top lawyers in their field, and I have known all these people for several years in my role as the publisher of Family Lawyer Magazine, Divorce Magazine. I’ve been at this for 25 years. I can say that these are top-top professionals and you’d certainly be wise to reach out to them if you happen to be in Indiana in Harrisburg or Long Beach.
Let me introduce my three guests Maria Cognetti is in Harrisburg, Pennsylvania as I mentioned. A family lawyer who offers clients the benefits of her decades of experience, tenacity, thorough preparation, let me underline thorough preparation and passion for justice in all family law matters. To learn more about Maria and her firm you can go to cognettilaw.com. John Gilligan is in Long Beach, California, and John says there is no family law case he hasn’t handled in some fashion over his 41 years of experience in 7,500 plus family law cases. To learn more about John and his firm, please visit gftlawyers.com. Lastly, Nissa Ricafort is in Indianapolis, Indiana and she provides compassionate and efficient counsel to help her clients make important decisions as they go through their divorce that will benefit her clients and their families. To learn more about Nissa and her firm please go to bkrfamilylaw.com.
Thank you all very much for joining me today. I look forward to hearing your insights into how you help people going through a divorce who have lots of assets and lots at stake. John, let’s start with you and talk about what is your approach when dealing with higher net worth divorcing clients?
John Gilligan: My approach first of all, when we’re dealing with a high net worth divorce, you’re typically dealing with someone who has substantial assets, specifically businesses and the first thing that I want to do is get a hold of their tax returns. I want to get a hold of their personal, their corporate, their partnership, their K-1s, their 1099s, all of the specific information concerning the income that they derive from those businesses. Usually, we have two types of spouses that come into my office. One is the spouse that runs everything, typically the man, but not always and the other spouse typically is at home taking care of things at home and possibly raising kids. We call that spouse the out spouse.
Many times, when the out spouse comes in, and I say that I want those tax returns they say, my husband would never give me those tax returns. The first thing I say is this is a community property state, and you typically file jointly on your tax returns. Even with corporate tax returns, you have an interest in those businesses that those tax returns represent, therefore you walk into the accountant’s office and say, I am a client of yours and I demand all copies of all tax returns for all entities that have been generated. The accountant has a fiduciary obligation to provide those tax returns to you. That’s the first thing that I want to see because I want to develop an overall strategy of how we’re going to attack this case and I get most of my information from those tax returns. That’s the first thing that I do.
Maria, do you have anything to add to that?
Maria Cognetti: Actually, I would just mirror something that John talked about when you’ve got John. I think you’ve called it the out spouse. We would call it the dependent spouse and frequently they come in as John said, and they’ve asked for those tax returns that John wants them to get, and the accountant has said no to them. I want to reiterate to those folks to go back to the accountant who’s filed your joint return for you and explain to them if they think you’re too stupid that they have an absolute obligation to give you that information.
Nissa Ricafort: I would just echo what both Maria and John said. It’s amazing how once someone retains an attorney and that attorney reaches out to the accountant how then quickly all of a sudden, the tune changes and you’re able to hopefully informally get those documents without having to serve formal discovery. But I agree with John. It’s about trying to gather as much information as quickly as possible regarding the finances so you can start working with your client to come up with an overall strategy.
Nissa, what other professionals do you bring in to work with on a case when there are high assets involved?
Nissa Ricafort: John’s already mentioned one of them Dan and that’s the accountant. You want to start with the accountant. Usually, it’s a business, knows the businesses inside and out. You want to establish a relationship with that accountant. A lot of times, you’re going to talk with your client to find out if your client has been working with any kind of a financial planner, someone who’s been maybe managing their portfolio, their investment advisor, their or investment strategists, whatever you want to call that person. But we want to reach out to that person to help us identify goals in the divorce. What are the assets we’d like to keep? What are the most tax-favorable assets? Which assets may be carrying loss carried forward, those types of? A lot of times when you’re dealing with a couple and they’ve been using the same financial strategist, you might need to start looking at whether or not you need to get a new person involved that can work just primarily with your client.
A lot of times, as John mentioned, we have businesses. We need to start thinking about, are we going to need to retain a business valuator to help us put a value on these businesses? That leads to the question of, are we going to each have our dueling experts, or are we going to agree on a joint business evaluator? There are pros and cons to both of those approaches. Obviously how much money do you want to spend? Do you want to use an expert? What happens if you don’t like what that expert has to say? But those are probably the three primary individuals that we would start with.
Maria, is there anybody else you would bring into the case?
Maria Cognetti: I take a little bit of a different approach when you talk about a team because I look at it from my end. I have both an internal team and an external team. My internal team is made up of, believe it or not, my secretary, my paralegal, and myself. My secretary because we all know that when you’re dealing with a high-end client, they need a little extra hand-holding. They need to know that they’re special, and your secretary has to be able to deal with that personality. My paralegal. I’m blessed because my paralegal has been with me for 30 years and she is probably brighter than most lawyers I know. I let the client know that she will be working with them on a lot of things. Sometimes they’re very happy to hear that because her rate is lower than mine, but they need to know about her to have faith in her and know that when they have to deal with her it’s okay then I’m the rest of the internal team.
But then I’ve got, as Nissa was saying, my external team, which is a little different. Basically, I start with a business evaluator because that’s probably going to be generally speaking one of the top assets and our business valuators will not only do the business valuation but also do the disposable income analysis if that’s what we need to be done. That would relate to the alimony issue and also, it’s one of our facts in the divorce. Then I like to line up several real estate appraisers, both residential and commercial, depending on what the case involves. Finally, something that a lot of people don’t think about, and I find more and more in a high-end case is the personal property appraiser.
In the average case, we have a personal property appraiser, they go into the house, and they value the stuff. In a high-end case, you need personal property appraisers who are used to dealing with the collections, the artwork, the special things, the antique cars. Oftentimes you’ve got to reach out to some of the national associations to find the expert that you want. But back to Nissa’s point about the CPA. I was glad you went there Nissa because it’s important and John mentioned it earlier. It’s important to have that CPA ready to go for your client, because if you have the dependent spouse, you know that the accountant that’s been working with these people, who was friends with both of them, perhaps now sees the forest for the trees. He wants to end up with the money-earning spouse so he’s not going to cooperate at all. One of the first things you want to do, if you have a dependent spouse, is to line her up with an accountant of her own that you can then deal with.
John, is that the strategy that you would take as well? Would you get an accountant involved with the out spouse or dependent spouse, and is there any other support that you would bring in? Do you bring in a mental health professional or anyone else that could be involved?
John Gilligan: Yes. I agree with what Nissa and Maria said. It is important to get the forensic accountant hired first because even though we’re in the Los Angeles area with millions of people, there are very few forensic accountants that are worthwhile and reputable in our area. I could probably count them on the fingers of both hands, and I want to make sure that I have secured the best one for my client before the other spouse has had an opportunity to secure that same forensic accountant. I want to get them on board right away and once that forensic accountant is on board, then yes, I may bring in a corporate attorney if I’m dealing with a publicly-traded corporation with many shareholders. I may bring in a corporate attorney. I may bring in a tax attorney because there are specific tax consequences to transferring assets and dividing and dissipating shares of stock, things of that nature. Yes, if there’s children involved and the parties are having difficulties in formulating a parenting plan, I’ll bring in a mental health professional to deal with the family, to try to get the parenting plan established so I don’t have to take that matter to court because nobody likes to try child custody cases.
What I’m hearing from all of you is that there’s an imbalance in knowledge. It could be about finances, could be about the business, could even be about raising children, you’re going to bring in top-notch professionals to help even out that imbalance. Is that basically what I’m getting? Maria, do you want to comment on that?
Maria Cognetti: I think we’re all on the same page even though we come from vastly different areas.
Is it important to have an overall strategy when you are dealing with a high net worth divorce case, more so than when you’re dividing just a house and a pension? Do you have to have more of a strategy when you go at it, Maria?
Maria Cognetti: The two types of cases are different animals. One of the first things that I like to do with high-end clients is lay everything out for them. I like to lay out what I see as being the external team that we’re going to need to bring into the case and also to make sure they understand how much that might cost them. This is especially so when you’ve got the dependent spouse or the out spouse. You need to confirm that that client who hasn’t been involved in the businesses may not be as knowledgeable in some of this stuff. You need to confirm that they’re on board with your approach, that they can buy into your approach, and that they can afford your approach.
How many times have we all had clients who ask if it’s necessary to have to hire that person or that expert? I know what my business is worth, can’t we do it that way? To me, I think that I work with a strategy that I’m comfortable with once I’ve assessed the case, and it’s the strategy that I know works for me. I need to make sure that my client buys into that strategy.
John, when you’re thinking about strategy, is that finding out what the priorities for the client are? Is that your strategy? Working on what is most important for them, John? How do you go about it?
John Gilligan: I try to have a strategy in place that the client consents to before they leave the office in my initial meeting. I know that there are things I have to do to find out more information, especially if the out spouse is the one that’s in my office on her first appointment. I’m saying “her”, but it could be “him” depending on who runs things. I want an outlined strategy that the client agrees with before they leave the office. That entails both an in-house strategy as Maria was saying where they have met my paralegals, they have met my staff. They feel comfortable with the staff and then the specific professionals that I’m about to retain to make sure that the status quo is maintained. The thing that you don’t want to happen is funny business going on right at about separation, where you see assets being transferred offshore or strange accounts. You want to make sure that that business is operating as it was before their separation because many times unfortunately the spouse that’s in control of the business is going to do some divorce planning to try to minimize the exposure that that person has to pay the ex-spouse. You want to make sure that that doesn’t happen.
Maria, can you give some examples of how experience matters when it comes to a high asset divorce case?
Maria Cognetti: I think this question ties in an awful lot with everything we’ve just been discussing. Your experience comes into play first in recognizing the high-end case. You need to recognize it to know how to plan it and how to deal with it. Then your experience assists you in recognizing what that case requires. Again, we’ve all talked about which experts to hire, how to handle the client. If you don’t do high-end cases all the time, I think it’s very hard then when one comes your way to know what you’re doing. Next is having the experience to pick the right people for your external team. I think we probably, I will guess we would probably all agree that not all experts are good for all kinds of cases. I like to have a few business valuators that I work with:
a) Because sometimes the one you like working with has already been hired by the other side, but
b) Because some business valuators are better at this type of business versus this type of business.
The same is true for basically all of your categories of experts. You need to use your experience to know which of your experts in each category that you want for that case. But then there’s a whole second area of sorts where I think your expertise matters and to me, that’s in the courtroom. Now, that may be because I like being in a courtroom, and shockingly, I was very quiet growing up. But I think that when you’re in a courtroom, oftentimes a judge right or wrong will judge your case and your client by you, by your demeanor, by your professionalism, your skills, your preparedness.
I know Dan commented at the beginning about how I tend to prepare a lot. I prepare excessively. Unfortunately, that means that in fairness to my client, I usually write off some of my time because I’m just crazy about being prepared for anything that comes up. I think that that comes off in the trial or the pretrial stage when the court can see that you know what you’re doing and what you’re dealing with, and it gives you instant credibility as far as the facts of your case are concerned. That last reason is why I like to make sure that I represent clients who I can do with all my heart and all my fervor, all everything. The last thing that I think your experience helps you with is to know when to not take a case.
Maria, as usual, was very thorough. Is there anything you can add to that, John?
John Gilligan: Yes, Maria was very thorough, and I echo those strategies completely. It’s very important to get the expert that you want on your case. You want to contact them immediately as soon as the client leaves the office. But another important thing is that because of the experience that I have in handling these types of cases, nobody in LA knows this. Usually, the inexperienced lawyers don’t know this, but we have a procedure where we can run into court on an ex parte basis which means on an immediate basis and have a court declare a particular high-end case as a complex case. When it is declared a complex case, the court knows it’s a complex case and initiates immediate orders to prevent any funny business from happening.
For example, the court will order immediate accountings being rendered to the non-operating spouse to make sure that the business is flowing as it was before the divorce. Also, that spouse will know exactly what the income is, what the expenses are and be able to see some expenses that may be unusual. For example, the operating spouse may be taking substantial vacations with their new girlfriend, things of that nature that they’re trying to run right off on the business and things like that show up as red herrings in these monthly accountings that the operating spouse is required to render under this code section which declares the case a complex case. That’s one of the tools that we use because I’ve handled many of these to make sure that the status quo is maintained. That’s very important to make sure that there’s no funny business going on.
Nissa, do you have anything to add?
Nissa Ricafort: Yeah, Dan, I just wanted to echo a little bit what Maria said. I think the things that you gain by having experience in these cases is that you can recognize and identify what you don’t know. We all like to think that we can walk into a courtroom, and we’ve done these cases and we can be prepared, but I think experience helps us understand that we need to rely on these experts. We need them to help educate us, and we need them to be able to give us the lingo for lack of a better word that we need. As Maria said, when we walk in that courtroom, we need to have instant credibility. I’m just like Maria, I prepare, prepare, prepare because I know that walking in that courtroom, I’m telling a story and to be able to tell my client’s story effectively, I need to be able to speak the lingo. I need to understand it and most importantly, I need the judge to understand it. From my perspective, that’s where experience comes in.
We’ve talked about business owners in a few different ways here. Are there any particular issues Nissa that a business owner needs to address when starting his or her divorce?
Nissa Ricafort: We talked about a lot of them, Dan, but one that hasn’t come up yet is that confidentiality issue. For most of the business owners that I work with, one of their biggest concerns is they do not want their financial information to be disseminated in any way to any third parties or spouse’s friends or the people at the country club or the likes. One of the things we do at the very beginning of the case is to hammer out some type of confidentiality and protective order that allows us to take all of this information we’ve been discussing all of this very sensitive financial information. Sometimes you’re talking about trade secrets, those types of things, and make sure that it’s protected, and that’s going to require all of your experts to sign affidavits that they’re not going to disseminate that information or share it in any way. Our clients have worked hard. You get their businesses to a successful place, and we don’t want to do anything in this divorce that is going to negatively impact the reputation of that business. Nobody wants it on the front page of the local paper that this business owner is going through a divorce. I would say taking some steps to protect confidentiality is one of the first things that we need to do and make sure that all of our experts are on the same page.
John, anything you want to add to that?
John Gilligan: Yes, confidentiality is very important in this process, and getting that confidentiality agreement signed by all the parties in your case, including the expert is extremely important. I would echo what Nissa just said but also if the husband or wife or other spouse is a minority shareholder in a corporation or a minority partner, you may need to join the partnership or the other partners or shareholders in your case so that the court has jurisdiction over them to make sure that they produce documents and comply with the restraining orders imposed upon the court if your case is declared a complex case. It is not good for your case if your spouse is a 40% owner of a partnership but the 60% partner is doing whatever he wants with the partnership.
John Gilligan: We make sure that the court has jurisdiction over that 60% partner to bring him into the case to make sure that the court has enforceability to make sure the status quo is maintained throughout the dependency of the divorce.
Maria, anything you want to add to that?
Maria Cognetti: I would support what they’ve both said about the confidentiality agreement. That’s probably the key thing as soon as you get any request for information, but I would also add one small piece of advice. When you’ve got a business where even though let’s say again, the dependent spouse has no interest in the business but has been running in and out of the office for years befriending the staff, looking at whatever he or she wanted to look at. You want to tell your client to set their staff down and explain to them in a very polite way so that you don’t involve them in the war, but how they need to deal with their spouse when the spouse starts making requests for information.
John, what happens in a case, in a business where they’re both working in the business, but they can no longer work together?
John Gilligan: Usually when people get divorced their marriage is terminated and their business interests together are terminated. Typically we need to have a situation where one will buy out the other or the business will be sold, and the proceeds will be divided depending upon what their interest in the business is. I have very rarely seen in my 41 years a divorce being finalized and the partners that have just divorced continue to operate the business amicably. That typically doesn’t happen. Now, another situation that sometimes arises is that your business is so successful, especially if it’s a publicly-traded business. I handled the divorce of a primary shareholder of a publicly-traded corporation, and they simply did not have the financial wherewithal to buy out the other spouse, therefore this spouse had to stay on as a shareholder.
But the spouse that was staying on wanted to make sure that her shareholder rights were not being diminished or dissipated. We had to work in a situation where that spouse, even though she never operated the business, had no idea how the business was even run. We made sure that she remained a board member so that she attended all of the board meetings and she attended all the shareholder meetings and she had regular accountings being given to her to make sure that everything was maintained and that her interest was adequately protected.
Maria, anything you can add?
Maria Cognetti: I would say in my 45 years of doing this that probably a very small handful of times I’ve had clients come in want the client that I was representing saying, yeah, we’ve decided we want to run the business together and good or bad or right or wrong I have done my best to talk them out of that. They’re sitting here now and maybe it’s a semi-amicable high-end divorce and they’re getting along, but I try to ask: “what are you going to do if he has a girlfriend, or when he remarries? Do you want to be walking into the office at the same time and try and talk them out of that?” That’s just a disaster waiting to happen. The courts don’t like it. If it has to go through our court system, the court will do their best to convince them that the business should either be sold or given to one or the other in exchange for a conveyance of other property. But it’s just a bad idea.
It sounds like another case where experience can provide good advice to your clients. Nissa, anything you want to add?
Nissa Ricafort: The only thing I would say Dan is I think that when you have two people who are closely working in the business while a divorce is pending it can be very helpful, I think, to try to make sure that everybody’s on the same page about how those roles are going to continue and what business operations are going to look like as the divorce progresses. Sometimes you’re going to have a spouse that says, I just can’t do this. I cannot be in the same room with this person anymore. I can’t do this every day. If that’s the situation then we need to come up with a plan on who’s going to take over those responsibilities or what’s going to happen. I think it’s about identifying what needs to happen and outlying a strategy of how to get there and making sure that everybody’s on the same page.
I’m going to shift gears a little bit here, Maria, and ask you a question pre-divorce and that would be about prenups. I guess postnups would be after the marriage of course. But what are the keys to creating a great prenup, Maria?
Maria Cognetti: Dan knows, and John and Nissa may not know this, but prenup is my middle name. I like doing them. I enjoy doing them and in preparing for this, I was trying to decide why do I like them so much? I think it’s because, over the 45 years that I’ve done this work, I’ve seen many bad prenups that were done by estate attorneys and corporate attorneys. They would use a prenup they got out of a form book, and I feel the need to right the wrong and get it right from the start. When I’m doing a prenup, I have five different areas or five things in mind. The first of which is when’s the wedding. If that’s not the first question that your office asks when the prenup client comes in it should be.
It may be a great multi-million dollar case, but the wedding is in a week. I’d probably take a pass because even if you think you can get it done, that’s not going to be a good situation. Take a look at the timing and make sure that the timing works for us. For the person who wants a prenup, get to the attorney as soon as it’s even a thought in your head. The second thing I want to do with a prenup client is to find out whether the other side knows if they’ve shared this desire to have a prenup with their fiancé. If they haven’t, then I try and tell that client, please go and talk to your fiancé because frankly speaking, you could spend a lot of time and money on me and then you take a draft home and the person looks at you and says, over my dead body, the wedding is off. You’ve wasted a lot of time plus, I think it helps them, the person who wants the prenup to look more legit if they make it an open discussion.
Once I’ve done that and I’m sure that everybody knows what’s going on, then I want to ferret out the client’s goals. Unlike a postnuptial agreement where everybody’s got somebody who’s been divorced, they know what’s happening. They know what the possibilities are. Many times, a prenup client will come in and they don’t know what a prenup can accomplish. They think they do but sometimes they don’t even know that prenups work in both divorces and death situations. Then even if they know that they don’t know the wide array of things that it can do for them.
What I try to do at that point is to lay out for them generally in that first or second meeting an array of possible provisions for them to consider. Okay, you guys have a house together. What do you want to do when one of you dies? What do you want to do when you separate? What if you have children by then? What if one of you has been sick? Do you want it based on fault? Which I always try to talk somebody out of, but you want to just give them the idea so that they can come back and say, okay, here’s where I want to be. What I’m looking for is that sense of what I call the severity. What are they looking for? Do they want to give the other spouse nothing or do they want to be reasonable? Being at least a little reasonable generally works better but only once you know that and they know their options can you start to craft it.
Then my last pointer would be that some clients will come in and they’ll say, yeah, just draft this. In Pennsylvania, there’s no requirement to be fair at all, which is interesting, but you just have to have had full disclosure. That’s what I emphasize when I’m putting a prenup together.
Nissa, do you have anything you can add? Because I know you do prenups as well.
Nissa Ricafort: In looking at prenups I agree with Maria. Anytime I see a prenup or someone comes in and it’s three pages long and there’s no disclosure or anything like that I immediately want to say to them you have to do this the right way if you want the prenup to do the job for which the prenup is designed. I always try to look at whether we have complete disclosure of all assets and debts? Do we have clear, concise definitions of property, and do we have counsel on the other side? I think that at least in Indiana having a lawyer on the other side that the other person has reviewed the draft with, they’ve had the opportunity to ask questions. It just goes a long way in being able to get that court to say from day one that this is an enforceable prenuptial agreement.
John, anything you want to add.
John Gilligan: Yeah, a couple of things. In California, if there isn’t full disclosure, the prenup is not valid. That’s the most important thing that both parties have fully disclosed all of their assets and debts and that those assets and debts are attached to the agreement. Like in Pennsylvania, the agreement does not have to be fair. However, it’s a lot more helpful if it is, or at least has some semblance of fairness because we have a Supreme court case here. The Barry Bonds case where Barry Bonds, who used to play baseball with the Giants was married to his Swedish model who didn’t speak English very well. He was on his way to Vegas to get married and he stopped off and he said, oh, by the way, I’m going to stop off at my lawyer’s office so you can sign a prenup.
That went to the California Supreme Court, and it was thrown out because she didn’t have any representation. It was done right before the wedding. She had little experience in speaking English and it was unfair. She got nothing, he got everything and there was a waiver of spousal support. I want to make sure that there’s an attorney on both sides so that it has some semblance of fairness even though it doesn’t have to be exactly 50-50 and I want to make sure that there’s full disclosure on both sides. Prenups are favored by our Courts of Appeal. If you do them right, they’re upheld.
We’re going to end this conversation with what people normally think of, I believe when they think of a high-net-worth case and that is that people are going to battle it out in court. John, what’s your experience? Do people battle it out in court? I’m of course going to allow Maria and Nissa to comment on this as well. What’s your experience and what’s your approach to how to handle these cases?
John Gilligan: I try my hardest to get my clients to not battle this out in a public courtroom. We can hire a judge who’s retired to hear this case and have it private. You can go through collaboration to try to settle the case or mediation. You don’t want to do mediation because that’s typically not going to work in a highly complex divorce case. But you want to stay out of the public courtroom and the best example of that is if anybody remembers the McCourt case, the guy who owned the Dodgers. Neither of them stipulated to a private judge to hear their case. They were in a public courtroom with hundreds of reporters in their courtroom every single day and everything, all of their dirty laundry concerning the family came out daily and it was headlines in the LA Times.
We learned about Jamie McCourt’s affair with her bodyguard. We learned about Mr. McCourt’s affairs and the questionable business transactions that he had with the Dodgers. It was something that definitely should not have been handled publicly in a public courtroom. Some states maintain privacy and secrecy in family law courts. California’s not one of those states. We have a fully open courtroom. Anybody can walk in and watch whatever is going on in that courtroom. You do not want to have your complex case heard publicly in a public courtroom in California.
Nissa, do you have anything to add to that?
Nissa Ricafort: I just would echo the same thoughts. Here in Indiana, we also have open courts so you’re not going to get any level of privacy. Your dirty laundry will be aired for all to hear. We do not have private judges in Indiana. What I find to be one of the most effective mechanisms for finalizing these types of cases is mediation. A lot of times we will do mediation with some of our experts also participating in the mediation to be helpful that day. I find that these clients are very sophisticated and that they understand the negatives of, as I said, airing dirty laundry in a court. My experience is that more often than not we will resolve this outside of court. It might take a while because it’s complex, but we want to make sure that we get all of the details correct so we can set these people up for success going forward.
That’s an example of how different states operate differently, and you look for solutions that work in your state. Maria, what about in Pennsylvania? How would you describe what goes on with your cases?
Maria Cognetti: Dan, I would mirror a lot of what John said about staying out of court. There’s an additional reason that you want to stay out of court at least here and right now. It doesn’t have a lot to do with COVID but just generally the way the court system runs and the fact that family law cases are not a high priority. But when you throw yourself into the court system, you’re looking at massive delays. I will agree with John that mediation in a lot of these cases is just not going to work. There’s often way too high of a conflict level for that to work. Arbitration is a good idea. I’m in the central part of Pennsylvania. We have a lot of arbitration in the west and the east, not a lot here, but we do have an interesting court system that effectively helps keep you out of court.
It’s a three-part system where the attorneys go to the first meeting and lay out their case for the judge or in many cases, it’s called a divorce master. We now don’t even get judges in a lot of our cases. The divorce master or the judge helps you steer the case. Then the second step is what’s called a settlement conference and you have to have an in-between. They set all the deadlines for discovery. You have to have your case prepared and you have to have been talking, which replaces a lot of the mediation type theory.
They try not to hear the settlement offers, but just to ask you if there’s an impediment to the settlement. What do you need to know? What do you need to do? And then the step is trial. But I will tell you that I would say that probably 90 plus percent of the cases that get into our three-part system are settled well before trial. But at least that keeps the case moving and keeps control over the clients. The master or the court keeps control over discovery so nobody can mess around with that and it’s a good system. We don’t have private judges which I learned about at a conference I did with someone from California. I don’t see us ever having that. I think that what we have right now works as long as you’re trying to make it work. You go to these meetings; you want to settle the case which is what we should all want to do as much as I like courtrooms. But you want to settle the case and you convince the client, they need to keep control over the outcome. The minute you go to that last step, and you go to trial, like in any area of family law, you’ve lost control of the outcome. Settlements are always good. I think we’re all on the same page where that’s concerned.