Business Valuation and Appraisal

Introduction

The destructive effect of divorce litigation, especially on children, is widely recognized. The blame for this situation, however, too often falls on the attorneys.  In fact, the problem with litigated divorce typically lies not with the lawyers, but with a legal system that can turn adversaries into enemies and parties with common interests into winners and losers.  Fortunately, there is now a process that can provide all appropriate legal safeguards, while minimizing the risk of permanent damage to family relationships.  This process is called Collaborative Practice.

Collaborative Practice places primary decision-making power in the hands of the divorcing couple.  It is distinguished from litigation in three important ways.

1. The couple pledges in writing not to go to court.  Should either party renege on this commitment, all professionals must withdraw.  Neither Collaborative attorney may represent his or her client in any subsequent litigation proceeding.  Other professionals are likewise precluded from appearing on behalf of, or providing services to, either party.

2. The couple pledges in writing to provide honest and full disclosure of all relevant information, both financial and non-financial, whether requested or not.

3. The couple, not a judge, makes all decisions, and these joint decisions are based on their individual and shared priorities.

Because a Collaborative divorce settlement is a legal agreement, counsel will still advise the client on all matters of law, such as custody, support and property division. 

Process Models 

There are two principal forms of Collaborative Practice in divorce – the Referral Model and the Team (Interdisciplinary) Model.  The Referral Model is managed primarily by respective counsel, and includes only such other professionals as are retained by the parties on an ad hoc basis.  

The Team Model

In the Team Model, in addition to the attorneys, at least three other professionals are part of the process from, or very soon after, the beginning – a Divorce Coach (a mental health professional) for husband and one for wife, and a neutral Financial Specialist.  All five professionals are trained in the Collaborative Practice Team Model.

Coaches

The two coaches have four broad areas of responsibility:

1. Assist their clients to prepare emotionally for each step in the process, and help them to approach these milestones with more confidence and openness and less anxiety;

2. Facilitate effective communication between the spouses;

3. Keep all members of the team informed about factual and/or emotional issues that could impact the process;

4. Assist the parties to make constructive decisions about their child(ren), build the co-parenting plan, and develop a communication and decision-making structure for effective ongoing co-parenting.

Financial Specialist

The Financial Specialist is a neutral, hired jointly by the couple, who is primarily charged with bringing reality to financial forecasts and the financial/life decisions that flow from them.  Typical areas of discussion include:  

1. Cash flow and budgeting

2. Debt management

3. Risk management

4. Investments

5. Taxes

6. Retirement Planning

7. College Funding

8. Estate Planning

 

It is important to note that the financial professional will seldom provide advice related to outcomes, but will instead gather data and present options to the clients based on facts and sophisticated analysis.  Long-term projections of financial options will often highlight the weaknesses and pitfalls of one course of action or another that might otherwise seem quite attractive.  This reality check on the wish list will often spell the difference between adversarial “positional” bargaining and collaborative “interest-based” negotiation for critical decisions, such as whether to keep or sell the family residence.

Steven D. Popell is a Business Valuation Specialist practicing throughout the Bay Area. He pioneered neutral business valuation in divorce in the early ‘80s, and has published extensively on this and related topics in Family Law News, The Collaborative Review and Community Property Journal.  He is the senior partner in the business valuation firm of Popell & Forney.

Nancy Ligon De Ita is a family attorney practicing litigation, mediation and collaborative law in San Mateo County.  She is the State Bar Family Law ADR Bay Area Chair, a Director of the San Mateo County Bar Assn., and a member of the San Mateo Superior Court ADR Oversight Committee.

This article was published in The Docket, the official publication of the San Mateo County Bar Association.