"Whether in business, government, or the family, people reach most decisions through negotiation. Even when they go to court, they almost always negotiate a settlement before trial."

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Such an approach to the division of property forces the parties to be reasonable about the valuation of items, rather than trying to set an inflated price for an article and then giving it to the other party at that price! If the husband, for example, puts an inflated price of $1,000 on the butler's table, for example, he might just get it, because the wife then gets to choose who receives each item after the husband prices them. If he puts too low a price on it, of course, the wife would then likely choose it for herself.

This method, of course, usually ends up with an uneven division of property; someone almost always has more than the other party. But there's another way to handle the problem if the parties want to come out even, and it too combines creativity, objective standards that do not favor either side, and the self-interest of each party. In this case, the master list contains only the items of marital property -- without reference to price or who gets them. The list is then broken down by one of the parties into two "equal" columns, List A and List B, so that the other party can choose who gets which list. The lists must be "equal" in the sense that, if the party dividing them into lists creates one column that is significantly less valuable than the other, he is simply giving his partner an opportunity to choose the "more expensive" list! In this way, the self-interest of the parties is harnessed in a creative fashion and used to address one of divorce's thornier problems, the valuing and dividing of personal property.
M. Don't Negotiate Against Yourself!
Mr. Green is paying alimony to his wife and he has just uncovered some evidence which might point to her cohabitation, a defense that he might be able to use in terminating alimony. On the other hand, the proof is not clear-cut and he wants to reduce his alimony payments as much as possible without going to court. Your client, Mrs. Green, has told you of the evidence and is willing to discuss some reduction in payment. Your first offer to Mr. Green, however, to reduce alimony from $1000 per month to $750 is met with the response, "No -- that's not enough." What should you do?

Going back to your client and relaying this message, in the hopes of getting Mrs. Green to further reduce her demand for alimony, is called "negotiating against yourself." There has been no counter-offer by Mr. Green. Continued negotiations along these lines will only have Mrs. Green "sharpening the pencil" until there is nothing left to sharpen. Without a counter-offer by Mr. Green, you are only negotiating against yourself in the reduction of alimony. There is no reason Mr. Green should not continue to respond, "No -- that's not enough," each and every time you come back to discuss a further reduction of alimony payments.

A good negotiator will insist on a response from Mr. Green as to a new amount of alimony or other terms for a settlement. When met with the above response of Mr. Green, you should continue the discussion by asking, "What would you propose? What would you be willing to pay?" Obtaining some commitment by Mr. Green regarding what he would be willing to pay is essential to moving negotiations along and making progress. One-sided responses, on the other hand, are simply another way of forcing you to negotiate against yourself. Whenever you negotiate against yourself, you are bound to lose -- even if you win, you have lost.
N. Use of Precedent
Whenever possible, use precedent instead of power to negotiate. If you are trying to obtain a settlement, it makes little sense to threaten the other side with "We won't give in. We have all the money, and you’ll not see a dime of support from us until all the appeals are completed." Such tactics simply stiffen the other side's resistance.
Instead, use precedent to convince them. "We've done some research, and the Jones, Smith and Kelly cases in the Court of Appeals all agree with our position -- the custodial parent deserves more than half of the marital estate." Even if the cited cases really stand for the proposition that it is not an abuse of discretion for the trial court to give the custodial parent more than half of the marital property, the authority of similar cases and precedents may be helpful in suggesting a compromise.

Even precedents at the trial level are helpful. Suppose you are local counsel and you know that Judge Alice Smith usually decides on a 50-50 division of marital property. Faced with a settlement demand from the wife's attorney for a 58-42 split, you might reveal to the other side that -- in the last case you tried before her honor -- the judge had decided on an even division of marital property, in spite of the fact that the wife had a job earning 30% of what the husband earned, the wife was living in her mother's house and the husband had just received a substantial inheritance. Such factual precedents may be just what is needed to convince the other side -- based on objective data -- that an even division is acceptable.

O. Objective Standards and Creativity


"Look for mutual gains wherever possible, and... where your interests conflict, you should insist that the result be based on some fair standards independent of the will of the other side."
--Fisher and Ury, Getting to Yes (Boston: Houghton Mifflin Company 1981).

Objective criteria should be used in selecting and evaluating possible settlement options. Negotiations should not depend purely on the will of one party or the other. Make sure that, if the argument goes one way, it also goes the other. Consider what would happen if the tables were turned -- would the other side willingly accept the same set of facts that they're trying to sell you? If the Volvo is really worth $10,000 when the wife says that the husband can have it, is it also worth $10,000 "in the wife's column" for settlement purposes? Would she be willing to accept it at $10,000? If not, then "objective standards" are not really being used. "Buy cheap, sell dear" will not work in negotiations that are conducted in good faith.

Sometimes it's useful to be creative. Suppose Mrs. Smith needs at least $1,000 per month for support, and she has been getting this much each month without a written agreement since her separation from Mr. Smith. Once you've proven this, the next step might be for Mr. Smith's attorney to offer $1,000 per month in alimony. But that would involve, presumably, taxable alimony, which in turn would perhaps yield $750 per month to Mrs. Smith (in her tax bracket). So she counteroffers with "$1,000 per month nontaxable alimony." This is unacceptable to Mr. Smith since he wants the tax deduction for alimony and so he rejects it, since it won't benefit him in any way for the support he's supposed to pay (although it's actually what he's paying right now). How to resolve the impasse?

A creative solution involves using the tax impact of alimony to "gross up" the amount of support he should pay by the taxes that will be due on it. If he must, for example, pay $1,300 per month in taxable alimony in order for Mrs. Smith to receive a net after-tax income of $1,000, then try to sell Mr. Smith on the idea of paying the pre-tax equivalent of $1,000 in support, since it will allow him to deduct $1,300, not $1,000, from his income each month. This kind of solution stresses creativity as well as mutual gain. Both parties benefit when they "gang up on Uncle Sam" by taking a jointly beneficial stance regarding their support settlement.
Sometimes precedent and creativity can be at war with each other. Take the case of "the dad's dependency exemption." Dad wants the dependency exemption for his daughter and the child tax credit because of all the child support he's paying Mom and because he needs the exemption to shelter some of his income. When you start to negotiate, Mom's attorney points out that the child support guidelines contain an assumption that the custodial parent will have the dependency exemption. This is the use of precedent. How do you respond?
One way you could counter this use of precedent is by using creativity is to suggest that Dad should get the dependency exemption, but he can reimburse Mom each year for her loss of the exemption and the increased taxes she will have to pay due to this loss. By creatively introducing a new factor into the equation, you can show the parties how to team up against the IRS for their joint benefit. For examples of how to do this, see ATCH 3.
P. Unsolvable Problems

What about an issue which is in dispute and can't be resolved? What is the best negotiating strategy for the nut that's too hard to crack, such as the sale of the home, the division of a party's pension rights, or some other issue that has psychological importance that can't be measured in monetary (or other) terms? Some items are just "too hot to handle!" Some issues, such as joint custody for an otherwise uninvolved father (or mother) are emotional pressure-points for a client.



One alternative is to leave it open and do nothing in the settlement document. The parties may cool off and later be able to reach agreement. This can be done if the parties sign a partial settlement, "excepting out" the disputed term.
But is this a wise idea? Who really wins (or loses) in this version of a settlement? When this happens, one of the parties usually loses negotiating leverage if the other party really needs a signed agreement and only a partial settlement is signed. The party "under pressure" to obtain an agreement gets most of the needed agreement, and the one who doesn't really need the agreement has made a substantial concession (albeit without knowing that he or she has done so). Thus reaching an agreement -- without reaching the whole agreement -- may be a bad idea if it means taking the pressure off the other side.
Another way to handle the disputed item is to leave it out of the agreement and say nothing about it. What's wrong with this? The problem can be defined as:


  • "SILENCE IS GOLDEN"?? What has happened to the issue? It hasn't just gone away! Has it been reserved? Has it been waived? No one will know unless you tell them. Consider the need for an explicit reservation of the issue; don't just remain silent on it. Consider two examples of the results of the silent treatment:

U.S. v. Knisley, 817 F.Supp. 68 (S.D. Ohio 1993). This was a malpractice claim against the Army caused by the failure of a military lawyer to include division of the husband's military pension in a separation agreement. There was no disagreement as to its exclusion; the issue was whether the wife intended to waive division or whether the parties simply disagreed as to what should happen to it. The court ruled in favor of the husband since there was insufficient evidence in favor of the wife and the separation agreement was silent on the issue.

Hagler v. Hagler, 354 S.E.2d 228 (N.C. 1987). In this case the parties signed a separation agreement that did not mention the issue of equitable distribution of marital property. The separation agreement did, however, contain a clause that released any claims arising out of the marital relationship. When the wife raised the issue of equitable distribution in the divorce proceedings, the husband moved to dismiss. The court held that failure to hold open or reserve any issues of property division meant they were waived under the "general release" clause in the agreement.


  • OR... "SILENCE IS DANGEROUS"? The lesson here is to include any exceptions or reservations that you want to make when dividing marital property (or any other aspect of a domestic settlement). Don't rely on silence. Even though your client (or your conscience) may caution you to "leave it out -- why cause problems?," the better course is to state explicitly what issues have been resolved and which have been reserved. Don’t leave the conference table with a silent misunderstanding between you and your opponent. You will only be doing your opponent and your client a disservice. A good negotiator is an ethical negotiator, one who does not use silence to lead the other side into believing there’s an agreement where none exists. You may, at worst, not reach an agreement because you've raised an issue that your client believes should've been kept quiet ("let sleeping dogs lie"), but you will at least have a decent change of dodging a complaint to the state bar or a malpractice suit as a result of remaining silent.


III. CONCLUSION

These are specific examples of areas in which negotiations can make the difference for domestic clients. Also shown are some of the fundamental precepts of good negotiations in domestic cases. Negotiating skills are essential for any advocate, whether in family law or some other field. Learning these principles and applying them in practice is the key to being a good domestic negotiator.

ATCH 1-- CLIENT'S CASE OUTLINE
CONFIDENTIAL INFORMATION -- DO NOT RELEASE
Sullivan & Tanner, P.A.

5511 Capital Center Drive #320, Raleigh, NC 27608



919-832-8507 November 9, 2016
DEBRA L. WALLACE CASE Outline ---- OPPOSING ATTY= JAKE BROWN, 555-1234


  1. FACTS

    1. Married 2/1/2002; separation 3/4/2013

    2. MINOR CHILD: ANN LEIGH WALLACE – born 4/5/3006




  1. CLIENT ACTIVITY LOG [INTERVIEWS, PHONE CALLS, CORRESPONDENCE]

    1. 9-15-2013: INITIAL OFC VISIT WITH CL

      1. ADVISED ABT TRO, PRELIM INJ [ ORDER ONLY VALID FOR 1 YR] AS TO WASTE, CONVERSION OF PROPERTY

      2. ADV. ABT PROPERTY SETTLEMENT-- NEEDS TO BE NOTARIZED OR ENTERED IN OPEN CT; NEITHER OF THESE DONE




    1. 9-25-13: CALLED PF'S ATTY, JAKE BROWN-- OKAY TO DROP CONTEMPT CHARGE AND ENTER VOL. RESTR. ORDER. DROPOFF AND PICKUP AT MCDONALD'S, SPRING FOREST ROAD. NEED PHONE ACCESS RE MSGS CONCERNING CHILD. CL NEEDS SPECIFICS IF ANY EMERGENCY.




  1. CURRENT CASE STATUS
    1. HRNG ON PRELIM INJ RESET FM 1 SEP TO 18 SEP (JUDGE GREENE)


    2. CL IS GETTING HER FORMER ATTY TO WITHDRAW FM CASE




  1. CLIENT'S OBJECTIVES

    1. PROMPT DIVORCE

    2. VARIANCE FOR CHILD SUPPORT

    3. KEEP HOUSE IN EQUITABLE DISTRIBUTION

    4. AVOID JOINT CUSTODY




  1. SETTLEMENT OPTIONS-- OTHER SIDE WANTS TO DROP EVERYTHING AND LET PARTIES HAVE A SIX-WK COOLING OFF PERIOD.




  1. TO-DO LIST

    1. GO OVER WITNESS LIST FOR CLIENT AND CALL THEM

    2. GET ORDER FOR PEREMPTORY SETTING

    3. GET CONTRACT BACK FM CL

ATCH 2 -- TRIAL OUTLINE
TRIAL OUTLINE -- LEMUEL Q. EDWARDS CASE

  1. CALENDAR CALL

    1. NOTIFY JUDGE OF TIME ESTIMATE AND ISSUES

    2. ASK JUDGE TO REQUIRE DEFT. TO TURN OVER DIARY




  1. OUR CASE

    1. ASK CLIENT...

      1. WHAT ARE YR CHILDREN'S NAMES? HOW OLD ARE THEY?

      2. WHAT VIST RTS DO YOU HAVE UNDER THE ORDER SIGNED IN DECEMBER BY JUDGE JAMES FULLWOOD?

      3. DID YR EX-W ALLOW YOU VIST RTS IN AUG WITH EITHER CHILD?

      4. IN JULY? IN JUNE?




    1. PHONE CALL ON JULY 4 AT 2:45 PM WITH PF RE KIDS AT CAMP?



    1. LETTER FM PF TO DF ABOUT SUMMER SCHEDULE -- WKS THAT INCLUDED 25, 27 JULY AND 1, 3 AUG?





    1. NO VIST IN JUNE WITH MICHAEL AT CL'S CHOICE -- "WAS NOT GOING TO PICK UP KIDS TILL FURTHER NOTICE" AND HE TOLD DAY CARE THIS?




  1. THEIR CASE

    1. PROBABLY CALL AMY JONES TO TESTIFY ABT. CL'S ABUSIVE CONDUCT

      1. ASK HER ABOUT...

      2. ASK HER IF OUR CLIENT EVER...




  1. THEIR REBUTTAL

  2. OUR REBUTTAL

  3. OUR CLOSING STATEMENT



ATCH 3: Tips for Transfer of Dependency Exemptions and Child Tax Credits

[from Chapter 7, § 7.04 of Sullivan, The Military Divorce Handbook (American Bar Association, 2nd Ed. 2011]

Sometimes it is necessary to negotiate a transfer of the dependency exemption and tax credit for a child (the two cannot be separated) from the custodial parent (CP) to the noncustodial parent (NCP). When this occurs, the strategy for the NCP usually is to obtain the best benefit for the least cost, which means a permanent and unconditional transfer. Such a clause in a separation agreement or marital settlement agreement might read as -follows:

Child Tax Benefits. For any federal and state income tax returns hereafter filed by either party, the HUSB/WIF shall have the right to claim the dependency exemption and child tax credit for the child of the parties.

This may be modified to include all of the parties’ children or one or more specific children, as can the clauses below.

For the party transferring these child tax benefits, however, it is wise to condition the benefit transfer on compliance by the NCP with all the financial duties regarding the child that are set forth in the agreement. A clause to accomplish this might be:


Child Tax Benefits. The transfer of the dependency exemption and child tax credit for a child on federal and state tax returns is governed by the terms below.


        1. To claim the exemption and credit for a child, the HUSB/WIF must be current and in compliance with all financial obligations herein as to that child (including health insurance, medical expenses and college education, if applicable) as of December 31 of the tax year.

b. If the above conditions are satisfied, then by March 15 of the -following year the WIF/HUSB shall promptly execute and deliver to the HUSB/WIF an original of Form 8332, “Release of Claim to Exemption,” (or any subsequent or additional form for transfer of the tax exemption) for the tax year.

A better bargain for the CP is to require support compliance, as set out above, as well as payment by the NCP of any additional taxes for which the CP becomes liable due to the transfer of these child tax benefits. Such a clause might read:



Child Tax Benefits. The transfer of the dependency exemption and tax credit for a child on federal and state tax returns is governed by the terms below.

a. To claim the exemption and credit for a child, the HUSB/WIF must be current and in compliance with all financial obligations herein as to that child (including health insurance, medical expenses, and college education, if applicable) as of December 31 of the tax year.


b. For any tax year in which HUSB/WIF wishes to claim these child tax benefits, HE/SHE must pay and indemnify the WIF/HUSB for any additional taxes incurred by loss of those benefits. In order to do this, the HUSB/WIF shall notify the WIF/HUSB no later than February 15 if HE/SHE wishes to claim the child’s dependency exemption and child tax credit and, no later than March 15, the WIF/HUSB shall submit to HUSB/WIF a copy of HER/HIS tax return(s), with the child’s dependency exemption and tax credit claimed and for the filing status that will show the lowest total taxes. Then the HUSB/WIF will prepare again the same tax return(s) of WIF/HUSB, without the dependency exemption and tax credit, and shall turn over the tax return(s) to WIF/HUSB along with a certified check or money order for the tax difference to WIF/HUSB due to HER/HIS loss of the dependency exemption and tax credit. At such time as this sum is tendered to HER/HIM, the WIF/HUSB will -execute and turn over to HUSB/WIF an executed Form 8332, “Release of Claim to Exemption” (or any subsequent or additional form for transfer of the tax exemption) for the tax year.

This clause only works when the NCP is in a higher tax bracket than the CP; otherwise, the tax increase will equal the tax reduction and there likely would be no incentive for the NCP to agree to this clause.

Sometimes a “hold harmless” clause is not enough for the CP. Should the CP require some additional financial incentive to turn over these tax benefits to the NCP, the attorney could draft a clause along the following lines, giving the CP a share in the tax savings achieved by the NCP, who is in a higher tax bracket:

Child Tax Benefits. The transfer of the dependency exemption and tax credit for a child on federal and state tax returns is governed by the terms below.


a. To claim the exemption and credit for a child, the HUSB/WIF must be current and in compliance with all financial obligations herein as to that child (including health insurance, medical expenses, and college education, if applicable) as of December 31 of the tax year.

b. For any tax year in which HUSB/WIF wishes to claim these child tax benefits, HE/SHE must pay to the WIF/HUSB one-half of any tax reduction he obtains because of the transfer to HIM/HER of the dependency exemption and tax credit for a child. In order to do this, the HUSB/WIF shall notify the WIF/HUSB no later than -February 15 if HE/SHE wishes to claim the child’s dependency exemption and child tax credit and, no later than March 15, the HUSB/WIF shall submit to the WIF/HUSB a copy of HIS/HER tax return(s), with the child’s dependency exemption and tax credit claimed, and a copy without these claimed. HE/SHE shall simultaneously tender to WIF/HUSB a certified check or money order for one-half of the tax reduction to HUSB/WIF. At such time as this sum is tendered to HER/HIM, the WIF/HUSB will execute and turn over to HUSB/WIF an executed Form 8332, “Release of Claim to Exemption” (or any subsequent or additional form for transfer of the tax exemption) for the tax year.

Note that, beginning with tax year 2009, the noncustodial parent who claims an exemption for a child can no longer attach certain pages from a divorce decree or separation agreement instead of Form 8332 if the decree or agreement went into effect after 2008. That parent must attach Form 8332 or a similar statement signed by the custodial parent and whose only purpose is to release the exemption.



* * *

1 “The Santa Fe Trail,” Wall Street Journal, January 24, 2003, p. A12.


2 Id.








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