How is financial disclosure provided in mediation?
There is often some concern or confusion regarding financial disclosure in mediation. Do people have to provide it and if so, how?
The principle in family mediation is very clear, it is the same as if you were asking a lawyer for advice about what a fair settlement might look like. Full financial disclosure is required before discussions about how the financial issues can be resolved can begin.
There is a very detailed disclosure form that needs to be completed to provide all the necessary information, with supporting documents. This disclosure includes valuations of all properties, all other capital assets, investments, liabilities, business/trust interests, income, outgoings and pensions. Until all this information has been provided it is not possible for the parties to come to an informed decision about fair financial options and solutions. The forms are exchanged and then we see if there are any questions about the information provided. If certain values aren't agreed or additional information is needed we discuss and agree how to deal with that in the mediation meetings.
Once all the information has been provided it will be set out in a schedule of assets spreadsheet to make it easier for everyone to look at. It is also important to create this document so that if you want to speak with a lawyer about the terms of any agreement it is also easy for them to see what there is and what it is worth so that they can advise you. Some couples put together their own financial schedule of assets with supporting information without using the set form and we can use that in mediation if the couple agree it is a full pack of everything they own.
The financial disclosure that is exchanged and collated as part of the mediation process is what we call “open”. This means that unlike the content of discussions about an agreement that take place in mediation meetings, which are “without prejudice” (so can’t be referred to in any later court proceedings), the financial information can be used by lawyers and produced to the court because it is factual information. This means that if an agreement is reached in mediation the lawyers can use the information to complete a form that a Judge has to see before any final order is approved by the court to make it legally binding. If an agreement isn't reached then the lawyers can use the financial disclosure pack prepared in mediation so that they don't have to go through collating it all over again which will save people incurring unnecessary legal fees.
Providing full financial disclosure is an essential element of the mediation process where there are disputes about financial issues. Without it, people don’t know what there is or what it is worth so they can’t make informed decisions about what a fair agreement might look like. Also, if an agreement is reached, any financial consent order (the document needed to enable the agreement to become legally binding), must be submitted to the court with an additional document called a statement of information form. This form must set out what everything is worth and what both people earn, together with some extra information and if anything is missed off it may mean that a legal agreement could be overturned later one. The disclosure gathered during the mediation process is used to complete this court form which is another reason why it is important that everyone discloses everything and why we, as mediators, have to ensure that the couple we are working with don't have any outstanding concerns about the disclosure before we work on what a fair agreement about dividing the assets will look like.
If you have any queries, please do hesitate to contact us.