The best way to negotiate a prenuptial agreement or cohabitation agreement

From time to time, I have clients who are about to get married and contact me in order to negotiate a prenuptial agreement for them. I also have had clients who are about to live together or are already living together and would like a cohabitation agreement in place. Having negotiated many of these agreements over the years, I wanted to comment on the best way, in my opinion, to negotiate an agreement. I will refer to these agreements as "prenuptial agreements" below, but please understand that I am also referring to cohabitation agreements.

Just so we are clear -- a prenuptial agreement is an agreement that two parties sign before they get married regarding issues such as property division or support, in case they separate in the future. In order for a prenuptial agreement to be valid and enforceable, both parties need to get independent legal advice from their own lawyers. Many clients are surprised that they need two lawyers in order to enter into a binding prenuptial agreement. In fact, because each party's interests are adverse in law, when it comes to negotiating an agreement, lawyers are necessary in order to ensure that each party knows how the agreement will affect their legal rights in case they separate.

The traditional way of negotiating a prenuptial agreement is for each client to retain a lawyer and for the lawyers to negotiate on behalf of the clients. The hope is that the lawyers are going to speak nicely to each other about something that is unpleasant -- what each party will get in case they separate in the future -- and come up with the terms of the prenuptial agreement. The last thing the lawyers want to do is to create a ridge between two people who are very much in love and want to get married -- but it does happen! Part of the problem is "broken telephone" when speaking through lawyers. Another part of the problem is the divide that is created between the couple because they are not being encouraged to talk to each other about the legal issues, and only to their lawyers.

I have found the most successful way to help clients to negotiate a prenuptial agreement is to encourage them to do the negotiating in the same room with a mediator. The couple will meet with the mediator and discuss the reasons why they want a prenuptial agreement, the couple will be encouraged to talk to each other about the issues, the mediator will provide general legal information about family law, and hopefully, the mediator will end up drafting a comprehensive prenuptial agreement. The parties to the agreement will still need to get independent legal advice from their own lawyers, but most of the work will have been done by the clients and mediator alone before the lawyers are involved. This is also a process that is less expensive than having lawyers involved right from the beginning because the parties are only paying for one professional (the mediator) to work with them, instead of the two lawyers. Most importantly, it's a friendlier, more personable process.

Collaborative family lawyers must meet the same standard of practice as family law litigators

I felt it was important to comment on the recent decision of Webb v. Birkett, [2011] A.J. No. 54.

In this decision by the Alberta Court of Appeal, the court ruled that collaborative family law practitioners must meet the same standard of care as family law litigators. Have a look at the article by Cristin Schmitz in Lawyers Weekly here: http://www.lawyersweekly-digital.com/lawyersweekly/3038?pg=14#pg14
You can also read the full decision here: http://www.canlii.org/en/ab/abca/doc/2011/2011abca13/2011abca13.html

This was a case where a client sued her collaborative family lawyer for failing to provide her with proper and complete legal advice during the collaborative family law process which the client and her ex-husband were participating in. In particular, when the client instructed the lawyer that she wanted to waive receiving financial disclosure from her ex-husband regarding the value of his dry cleaning company, her lawyer did not explain the risks and losses attendant upon her waiving receipt of full information from the other side. Accordingly, the client later claimed that she made an uninformed decision regarding some of her rights when she entered into a binding separation agreement with her ex-husband.

The court ruled that the lawyer had indeed fallen below the standard of care owed to her client. The lawyer should have tried to obtain all relevant disclosure from the other side and provided a "legal model" analysis of the client's entitlements by law (in property division, spousal support and/or child support). Where a client insists that he/she does not want to obtain full disclosure from the other side and feels satisfied with "not knowing" certain information, a lawyer needs to tell the client that they cannot give proper legal advice based on the lack of information and to also advise the client that they may be accepting less or paying more in a settlement than what would be required by law. It is preferable that the lawyer communicate this in writing to the client.

I must say that this decision, albeit necessary, is nothing "earth shattering" to me or my fellow collaborative family law practitioners. We are fully aware that our primary role is to protect our clients the same way that a traditional family lawyer (ie. litigator) must. We must keep abreast of the changing law and we need to advise our clients about how the law affects them. People, including the lawyer who was sued, may have the misperception that in a collaborative family law process, the lawyers do not need to "cross their t's and dot their i's" in the process simply because the clients who have entered into the agreement seem happy with the deal they are reaching. The only difference between a settlement reached through collaborative family law process versus traditional negotiation or litigation is the tone of the process itself -- the collaborative process is premised on the parties and lawyers working collaboratively, whereas the traditional negotiation/litigation process is not. However, both processes require that clients receive thorough and well reasoned legal advice before they enter into binding agreements. The standards of that legal advice are definitely no different between the processes. (In fact, many of today's collaborative practitioners were once traditional family lawyers practicing in the court system.)

Steine v. Steine stands for "incomplete agreements"

A recent decision, Steine v. Steine, decided by Superior Court Justice Gregory Mulligan, stresses some of the pitfalls of "settling a case on the courtroom steps". In this particular case, the litigants and their lawyers attended a case conference (a meeting with a judge before a formal court appearance) to discuss the merits of their respective positions. The lawyers and clients negotiated for 6.5 hours and managed to settle all issues in the case. Minutes were drafted up but because a photocopier was not available in the courthouse at that time, one lawyer promised to provide a copy of the minutes to the other lawyer. Unfortunately, this never happened and slowly, the deal reached began to unravel. One of the problems in this case was that the lawyers had not fully teased out all of the specific terms of the negotiation when the minutes were drafted -- probably because it was late in the day and everyone had been negotiating for 6.5 hours. As a result, when it came time to formalize these minutes at a later date, the lawyers could not agree on some very specific terms (that they thought had already been agreed to).

The reason I highlight this case is because it is very typical in court cases for the parties to settle their case on the courtroom steps. However, these agreements are often rushed through, not comprehensive, and not forward thinking. The parties don't have an opportunity to "try on a pair of shoes and walk around in them". They need to make a final decision immediately. And, then, they are sometimes not happy with the results because they didn't think through all of the repercussions. So...I must stress that this is a peril of seeking resolution through the court system.

Read the Law Times article here: http://www.lawtimesnews.com/201010047654/Commentary/Family-Law-Steine-case-shows-pitfalls-of-incomplete-agreements

Ontario Chief Justice Warren Winkler proposes compulsory mediation before court

A few weeks ago, Justice Winkler, in his speech at the Opening of the Courts here in Toronto proposed that mediation should be compulsory before couples can gain access to the court system. Although I think that there are some difficulties with making mediation compulsory in all court cases, I do believe that this is a step in the right direction.

And, quite recently, a collaborative team of individuals from the Ontario Bar Association, the ADR Institute and the Ontario Association for Family Mediation have made recommendations to Attorney General Chris Bentley urging for measures to be taken to make court the alternative, not the default point. The Law Times writes, "The authors want the province to train specialized case assessment co-ordinators to steer as many families as possible away from the courts and thereby leave judges free to deal with the most difficult matters. In those instances where litigation is the only option, they want greater judicial continuity, with specialized family court judges seeing each case through the system from start to finish."

So, definitely, we are seeing a continuing shift to alternative dispute resolution in this province. In speaking with some of my family litigation colleagues, I get the sense of how disheartened they are with the current system.

See the article from the Law Times here: http://www.lawtimesnews.com/201010047657/Headline-News/Make-court-the-alternative-report-urges

Helpful video by the Ontario Collaborative Law Federation

If you are interested in resolving your separation issues through Collaborative Practice, have a look at this very well done video by the Ontario Collaborative Law Federation. The video gives you a taste of what a collaborative case would look like: http://www.oclf.ca/OCLF-CPVideoPublicFast.htm

Metro Morning Interview regarding Collaborative Practice

Hi folks. Check out an interview by Matt Golloway of the CBC with Judith Huddart (an esteemed colleague and fellow collaborative family lawyer) and Cyd Barley (a client who had a positive experience using collaborative practice in resolving her separation issues with her husband.): http://www.cbc.ca/metromorning/2010/09/collaborative-practice.html

Separating/Divorce Legal Information Sessions

I am pleased to announce that I will be offering "Separating/Divorce Legal Information Sessions" at my office. The purpose of these sessions is to provide people with general legal information about separation/divorce. The format is question and answer. (You ask the question, and I provide the answer.) For more information, please link here: http://www.meetup.com/The-separation-divorce-legal-information-group/.

Alternatively, you can get more information about these sessions by calling my office at (416) 913-1994.