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Feb 07

The Value of Intangibles in Divorce Negotiation

Some of you are in the throes of nasty divorce or child custody litigation, and some of you are headed there.  Here’s something that may seem counterintuitive at first, but I’ll make sure and explain what I mean.  Here goes:

Sometimes it’s better to settle for less.  You may be thinking, wow, did a lawyer just say that?  Yes, you heard that right.  I don’t mean getting less value; I mean getting more value.  If you’re wondering how accepting less money or less support could possibly lead to your getting more value, read on.

Win-lose—the paradigm of our litigation system:

Attorneys have minds like steel traps.  If there’s a closely-held business we need a professional evaluator to apply the discounted cash flow method of evaluation, using the Gordon Growth Model.  Or if spousal support is an issue we need an in depth analysis of all 14 of the Family Code section 4320 factors.  Each lawyer argues and fights to push the needle in their direction on each individual issue, and such issues are resolved one-by-one in isolation.  On the spousal support question, we might spend half an hour on Husband’s income, half and hour on whether and how much income to impute to Wife, whether it’s legitimate to consider unearned stock options as income available for support, and on and on.  Here is a diagram of a typical result for such a negotiation:

Screenshot (3)

Here the lawyers have neatly divided an asset, such as a business, into equal 35 percent shares for each of the divorcing parties.  It’s certainly even, but the combined shares of Husband and Wife are 70 percent.  The red area is the attorney’s cut.

The win-win paradigm of mediation:

One way to make the pie bigger it to cut out the divorce attorney’s share by doing your own legal work—but this has a high degree of difficulty.  And, we can do better than that. The chart below illustrates how intangible values can actually make the pie bigger:

Screenshot (4)

An “intangible” is something that’s worth something to a divorcing spouse that can’t be directly measured by a professional evaluator or lawyer.  How much money would you pay to have a good relationship with your children?  If you have a complicated and nasty hearing coming up, how much would you pay to avoid it?  Here is a partial list of intangible values:

1.  Avoiding painful hearings and trials.

2.  Teaching respect and tolerance of others to your children by example.

3.  Teaching children to respect their mother or father.

4.  Having happy, well-adjusted children.

5.  Moving on with your post-divorce life.

6.  Having an asset that has sentimental value.

7.  Living in proximity for co-parenting.

8.  Being able to co-parent peacefully and civilly.

9.  Fairness and equity.

10. The dignity of being self-supporting in a career you’ve always wanted.

I’m not suggesting that you always put these intangible items on the table during negotiations.  But it helps to consider them when deciding how much to offer and when to settle.  And, it starts you thinking about solutions that benefit Husband, Wife, the children, and the extended family and friends.

Many people lose their sanity and happiness during painful and expensive divorce litigation.  But as the most wise person to ever live said, “What profiteth a man if he gain the whole world and lose his soul?”  Remember to…

Love your family,

Protect your finances, and

Reach for your future!

Thomas D. Ferreira, Esq.

Disclaimer: Thomas D. Ferreira is an attorney licensed only in the State of California. The information set forth in this blog or on our websites are not intended to create an attorney-client relationship, nor are they intended as legal advice on your specific matter. This information is not intended to apply to cases or jurisdictions outside the State of California, and those viewing this information outside of California, or having business before jurisdictions outside of California, should consult a local professional or lawyer. The information in this blog is not a substitute for the advice of competent counsel, and is not intended, nor should it be construed, as a guarantee, warranty or prediction regarding the results of your legal matter.

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