Is mediation a soft option for resolving the finances on divorce and separation?

Mediation is one of several non-court options for achieving an agreed financial settlement, following the end of a marriage or relationship. But how rigorous is mediation in ensuring that both parties have provided the necessary information for them to negotiate, with a full understanding of the assets, pensions, income and liabilities of the other? After all, how can you negotiate and make informed decisions about a fair financial settlement if you don’t understand exactly what there is to divide or what it’s worth? As a mediator, clients sometimes express a concern to me at the initial one to one meeting about whether their ex-partner’s presentation of their finances will be subject to sufficient scrutiny. Likewise, some people are keen to mediate as they think that they can get away with only a superficial account of their wealth. So, what are the mediator’s tools for dealing with this?

Both parties have a duty to give a full and frank disclosure in mediation, just as they are in the court process. They will be asked to complete the standard financial statement (called a Form E) which is used in the court system. The only difference is that those mediating will only be asked to complete the purely factual, monetary sections and not the more subjective parts of the form (such as suggested housing costs, proposed earning capacity, a history of respective contributions). These sections often cause unnecessary conflict and are better discussed in mediation, than written. Forms E provided in mediation must contain bank statements for all accounts for the past 12 months, evidence of investments, mortgages, income tax returns, evidence of salary, company accounts, pension values etc.

At the first mediation session, the mediator will go through both Forms E with the parties and together agree upon those gaps in the disclosure which need plugging. The mediator will draw up a list of the verifying information and documentation which it is agreed must be produced and agree a deadline with the parties, so that everyone is clear as to their obligations to provide outstanding information before the next session.

Sometimes the economically stronger party (usually the one with more knowledge of the finances) may successfully persuade the other (less assertive) partner, that key documentation is not, in fact, necessary at all (for example, management information about their company which is relevant to their income or a full set of bank statements going back 12 months). If the mediator is of the view that, despite this apparent acceptance, the information is still required to ensure any settlement being discussed is fair, he or she may insist on this.

Sometimes, one of the parties tries to replace Forms E entirely by presenting a beautifully prepared and detailed spreadsheet identifying all the assets, often colour coded, in an attempt to avoid providing a disclosure of necessary documentation altogether.  Whilst the motivation for this may be an understandable desire to shorten the mediation process and reduce the cost, sometimes the real objective is to avoid providing documentation which may tell a different story. The mediator should explain the requirement for a full, honest and verified financial disclosure which is central to the mediation and insist upon this being given.

Ultimately, if a Mediator is not satisfied that a full and frank disclosure has been provided, it is open to them to pull the plug on the mediation and bring it to an end, even if both parties wish to continue. It is a central and fundamental tenet of mediation that negotiations can only take place fairly if there is a sufficient level of understanding of the finances, which have been sufficiently verified by reliable documentation. This is a vital role for the mediator to play and ensures that mediation is not a soft option which allows unscrupulous parties to manipulate, hide or disguise their finances to the detriment of the other.

How can Ellis Jones help?

Deborah Leask is a partner at Ellis Jones, family lawyer and accredited mediator.

Should you need further information about mediation or any other family matters, please call our family team on 01202 636223 or email MatrimonialDept@ellisjones.co.uk  and we will be pleased to help with any query you may have.

If you are interested in learning more about mediation, please also see our recent article: Family Mediation Week 2024 – what is mediation?