Joint Retainers – Part 2: Turning a ‘No’ into a ‘Yes’

by FDRIO Board Member and Certified Business Valuator Matthew Krofchick

This is a continuation of the discussion we started in a previous article about using joint retainers for family law cases. In that article, I introduced the concept of a joint retainer and discussed some of its benefits and shortcomings. In this installment I’d like to discuss what we need to do to get family law professionals to adopt joint retainers as their new norm.

When confronted with any  change we have a tendency to stick with what we know and have relied on in the past and joint retainers are no exception. Many family law practitioners have spent their careers litigating family law matters instead of looking into other alternative dispute resolution (“ADR”) techniques. In fact I recently spoke with a seasoned family lawyer who told me they were afraid of losing the tactical advantage of hiring their own CBV if they started entering into joint retainers.

So as we contemplate the shift to ADR we need to look at the entire process including the use of other professionals. In Collaborative Practice this is call the, ‘interdisciplinary model’ and it can produce fantastic results for clients.

So, the first step in turning a No into a Yes is to identify the key points of contention that either side (separating party/family law client/lawyer) may have with using a joint retainer. I will discuss the top reasons below and how to address each of them;

• I have never had any involvement with the business and I don’t trust my spouse to provide the CBV all the information.

This actually turns out to be an excellent reason to use a joint retainer. If there’s a fear that in the normal course of litigation disclosure will not be provided without a significant investment of time, energy, and cost then using a joint retainer allows full access to information provided by both sides.Although the thinking is counterintuitive, since the clients have a sense of ownership over the matter they tend to be more forthcoming in providing information as opposed to it being sought through a motion and a joint retainer this expedites the process.

2) My spouse does not believe a business valuation is needed. They say they know the value of their business or my spouse thinks the business is worth a fraction of what I think it’s worth.

It is essential to explain the importance of having an impartial expert opine on the value and the benefits it may have. Specifically, that as a neutral party the expert is there to provide an unbiased opinion so the value they provide is not in favour of either spouse. Secondly, a brief education on how business are valued provides the client with an understanding of why the value that they “know” it is worth is unlikely to be the same as what a CBV will come up with.

Lastly, it is just as important to explain to both spouses that without going through this exercise how does one really know the value of their business? I tend to use the example of a business with a fair market value of $100,000 where one spouse believes it’s worth $150,000 and the others spouse believes it’s worth $50,000. Clearly, both spouses cannot be right and if they are wrong (depending on the circumstances of the case) it will cost them $50,000 on the net family property statement. So the question is are they $50,000 sure they are making the right decision?

3) We can’t agree on anything. How are we going to decide on a CBV?

The lawyers of each party should recommend a CBV and provide them each with the same information about the case. Each CBV should be allowed to have questions answered and quote on the assignment. Both lawyers may want to speak to the valuators to assess their understanding of the case and see if it is a fit for their clients. Ultimately and with consent from their clients, the lawyers will select the valuator.

4) Who pays?

I actually touched on this point in my previous article but it’s certainly worth repeating. Who ends up paying what will change depending on the particular circumstances of the case. Any allocation of costs is possible from a 50-50 split to one side assuming all the costs, but how the costs of any specific matter end up being divided will depend on the product of each spouse’s ability to pay and their desire for the disclosure and confidence in the process that a valuation provides.

5) The spouses aren’t speaking to each other and can’t even be in the same room.

One of the advantages of a joint retainer is that it doesn’t require spouses to be in the same room or even on the same email chain. Flexibility is key to addressing the specific needs of the clients. Figuring out their relationship dynamic and accommodating it is key to allowing them to benefit from a joint retainer without putting them in a position that adds more tension to their separation proceedings.

From a valuator’s perspective a joint retainer may mean more time spent managing the client relationship but it also provides the CBV with the tools to potentially access more information than they could have had they only been retained by one party, and benefits both spouses usually by way of lower fees, less fighting, and a quicker turnaround time.

In the next and final part of this series I’ll discuss how a joint retainer can reduce conflict in matrimonial disputes where the parties disagree on basic fact scenarios.