Comparing Collaborative and Litigation: The Client’s Perspective

April 27, 2015 by
Filed under: Uncategorized 

Bruce Pruitt-Hamm

By Bruce Pruitt-Hamm

At Pruitt-Hamm Law & Mediation Services

I was reviewing with Sam (fictional) the 3 main options for resolving the disputes involved in his divorce case: litigation, mediation and collaborative divorce. Sam responded directly: “I want to know: 1) how long will it take; 2) how much will it cost; and 3) what outcome do you predict.” Sam was stating succinctly what I had heard from most of the clients coming in to my office when considering how to choose between various dispute resolution options.

Comparing the options of litigation, mediation and collaborative process on these 3 measures is a legitimate, but challenging, task. Ultimately, of course, no professional can predict accurately how long, how much or how good any one particular client’s case will be. But can we give any information that is helpful or “evidence based”?

In this article I provide some possible answers to these 3 questions of “how long”, “how much” and “how good” (aka outcome). First, studies on how long collaborative cases take compared with litigated cases. Second, I review IACP data with other claims about the costs of litigated divorce and review a small scale study comparing costs. Third, I provide a summary analysis of outcomes from a case that reached a collaborative settlement and then (due to one disputant believing a “salesperson” lawyer that she could do better in court) went into litigation.

How Long?

I told Sam that the length of time to expect was directly proportional to how quickly the parties could reach an agreement. For example, if he agreed to everything proposed by his spouse, the agreement could be drafted immediately. He understood my point, duration hinged on acceptability of settlement.

Beyond that though I advised that a 2010 study by the IACP found 58% of collaborative cases settled within 9 months. http://www.cnbc.com/id/101602760. In comparison, the King County Superior Court caseload report found that in 2014 76.22% of litigated domestic relations cases had settled (or been adjudicated) within 10 months. http://www.courts.wa.gov/caseload/?fa=caseload.showReport&level=s&freq=a&tab=trend&fileID=domcm.

But what about Sam’s other two questions?

How Much?

IACP/Collaborative versus other Estimates on Litigation Costs:
The IACP has found that the cost of a collaborative case with no children runs an average of $17,800, while those involving children average $25,600. http://www.cnbc.com/id/101602760. Figures for litigated divorces range. Nolo.com ran a self-report survey and the average of those responses was $4,000 for a litigated divorce. http://www.nolo.com/legal-encyclopedia/ctp/cost-of-divorce.html. About.com claims an average divorce costs $15,000, with no citation to any study. http://divorcesupport.about.com/od/financialissues/f/costofdivorce.htm. A 2006 Forbes.com article also states an average cost of divorce at $15,000 to $30,000, but without citation to any source. http://www.forbes.com/2006/11/07/divorce-costs-legal-biz-cx_lh_1107legaldivorce.html. Divorce360.com extrapolates from 2006 U.S. Census Bureau data to estimate that divorce would cost a couple between $53,000 and $188,000 to divorce- but that includes costs of selling a home, relocating, etc. http://www.divorce360.com/divorce-articles/finance/costs/divorce–100000.aspx?artid=1118. These figures are so disparate, and unsubstantiated, as to be of little help. Luckily, there is another study that provides some clearer comparison of cost.

Boston Law Collaborative Study:
Several years ago the Boston Law Collaborative, a large Boston law firm that provides litigation, mediation and collaborative services, conducted an internal survey of approximately 200 of its cases to compare the costs between litigation, mediation and collaborative processes. What they found was that the average litigated case that went to trial cost about $77,746. Litigated cases that settled averaged $26,830. In contrast, collaborative cases averaged $19,723 and mediated cases cost only $6,600, on average. http://www.nbcnews.com/id/22315262/%22%20/t%20%22_blank#.VT0j_CFViko. Presumptively, these were the costs for the party that was represented by the Boston Law Collaborative, since the other party’s fees would typically be unknown. This study suggests that, on average, a collaborative case usually will cost less than a litigated case, even those litigated cases that settle before trial (as the majority do).

Sam was satisfied to know that some objective evidence existed to compare costs of the processes, but the difference wasn’t’ that great, so he became even more interested in comparing the outcome. What could he expect there?

Comparing Outcomes

Clients care about the outcome. Will they get a better outcome using the collaborative process, compared with traditional litigation? This is an even more difficult question to answer, partly because we can’t take the same client/case through both a collaborative process and a litigation process and then compare the outcomes.

However, I was able to provide Sam with the next best thing: a case study of a case that achieved final resolution through the collaborative process; and then fell out of collaborative at the last moment and finally got resolved at trial. I then compared transaction costs and the outcomes: collaborative versus litigation.

Outcome Differences: A Case Study
H and W had 2 kids, both of whom were soon headed to college. Post-secondary support, spousal maintenance and property distribution were difficult issues, with significant linkage to the parenting plan. Each party spent about $5,000 and reached a collaborative settlement with the help of a financial professional on the team. Sadly, before the agreement could be entered with the court, W sought a “second opinion” from another attorney (unbeknownst to her attorney), who confidently predicted W could get “much more” by going to trial.

W withdrew her consent to the collaborative agreement and the parties transitioned to litigation. Months later, after the trial, I talked with the litigation attorney and got the result and the amount each side had spent on attorney’s fees (known due to a fee-shifting dispute). Thus, I was able to compare both the transaction costs for the parties and also the ultimate outcome for each party, which I mapped out on a spreadsheet.

Transaction Costs
In summary, the collaborative process had cost each party $5,000; but the litigation costs were $23,000 and $32,000 respectively. Total transaction costs: Collaborative- $10,000; Litigation- $55,000.

Outcomes
The outcome for the wife did not justify her additional expense, to say nothing of the additional grief and time to get to resolution. On child support W lost $25,000 in litigation compared with collaborative. On spousal maintenance, W lost $15,000 compared with collaborative. On property, W gained $9,787, while H lost $123,548, primarily because he was saddled with paying the additional costs of litigation and because the court used a more traditional award than the parties’ came up with in collaborative. In total, W lost $55,943, and H lost $122,818, by going into litigation compared with sticking with their original collaborative agreement.

The award from the court differed from the collaborative agreement in 2 main ways: 1) it was more traditional and was not “tailor-fit” to the parties’/family’s situation; and 2) there was simply less marital estate to distribute by the time they were done with litigation. What is even more remarkable is that the court, without knowledge of the collaborative agreement, reached a very similar result on most of the key issues, demonstrating that the collaborative attorneys had accurately predicted and advised their clients of what a court might do with their facts.

While the outcome of this one case cannot predict the outcome of future cases, I hope that this anecdote may help other collaborative professionals provide inquiring clients some evidence for assessing the comparative duration, costs and outcomes when choosing a dispute resolution method for their situation.

Bruce Pruitt-Hamm
©2015

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