Recognizing and Addressing Emotional Investment in Mediation
Jessica Felix¹
The “sunk cost fallacy” occurs when a person is hesitant to abandon a person, a thing, or a course of action, because they have invested heavily in it, even when abandonment would be more beneficial. This fallacy is common in family law. After all, people tend to invest more time, finances, and emotional energy into their personal relationships, marriages, and the raising of children than in any other aspect of their lives. It is understandable, then, that people going through a divorce are hesitant to abandon their “investment” without a compelling reason to do so.
This approach often results in financial damages and other losses that could have been avoided had the litigant been willing to reframe his perspective to focus on the benefits of compromising or changing his existing course of action. Business schools teach their students to avoid thinking in terms of “sunk costs,” but family law litigants rarely have an opportunity to step back, cool their emotions, and think clearly and logically about their next steps. A litigant’s inability to consider alternative opportunities could be devastating to the parties and their children, and in many cases such mistakes cannot be corrected in the future. As a family law mediator, it is critical to be sensitive to this fallacy and to recognize that many—if not most—litigants are suffering from it in one form or another. A good mediator needs to know how to identify this problematic way of thinking early, how to address it head on, and, most importantly, how to provide the resistant party with alternative options that help them realize how their focus on past investments may be preventing them from agreeing to a more rewarding outcome.
Recognizing the Sunk Cost Fallacy.
In family law, the most common example of this mindset is a party who is focused on past decisions in their marriage, and that focus ultimately prevents them from considering the possibility that their life after leaving the marriage may improve. This often makes a party resistant to any proposal that will result in resolution of the divorce case. Another similar example is when a party becomes inflexible when negotiating over assets in a divorce. If a party perceives that they have invested “more” money, effort or time into acquiring the asset, they may be unwilling to walk away from it even if doing so is necessary based on the parties’ overall financial circumstances. Likewise, a party who feels she has already “spent” so much time, energy or money pursuing an issue in a divorce may be psychologically unable to compromise and might fall into the trap of needing a “judge to decide” even when they know that there is an enormous risk in doing so. In all these cases, parties may be blind to the fact that compromise might allow them to improve their future financial outlook or, at the very least, that walking away from a particular asset might help them reach a desirable resolution of an even more challenging issue in their divorce.
Psychological Drivers.
A mediator needs to understand what drives “sunk cost” reasoning before she can adequately address the problem. Some litigants are afraid of being wasteful. Some believe they, or the other party, need to suffer the consequences of their prior actions. Others want to be seen as “right” and believe a change of course is a sign of weakness. Whatever the reason, it is important to identify the motivation behind the problem before trying to fashion a remedy.
Many people justify a “sunk cost” approach because they do not want to be or appear to be wasteful. Feeling wasteful is a common in the midst of a divorce. Families who have budgeted their entire marriage are faced with regularly draining bank and investment accounts simply to fund the litigation. Every decision has the real potential to result in tangible or intangible losses. Most attorneys do not work for free, children cannot be cloned and their time will need to be divided. At the end of the day, the parties are dividing one household into two, along with their assets and income.
Some people are simply angry and believe that they or the other party need to suffer the consequences of their actions, regardless of the harm that will result. This motivation is often seen in cases of infidelity, fiscal irresponsibility, addiction, and mental illness. Some people just need to feel like they were right, and that the decisions they made in the past were not the cause of what is happening now. These are often the most challenging mindsets to address. If someone is entrenched, they may be unwilling to see any other perspective.
For many, the unwillingness to move on from their current position is based entirely on their fear of the unknown and/or fear of loss.
Strategies for Mediators.
If a party is worried about wasting what they have already invested, remind them that money spent is gone. Educate them that a delay in litigation almost always results in additional costs. Judges are not magicians. Thus, while resources can be reallocated, parties can be punished for unnecessarily wasting an asset, and parties can be imputed with income they should be earning, judges simply cannot replace money once it is gone. A mediator should give the party who is worried about waste concrete examples of how they can use the money they save on something valuable in the future. The cost of a trial could pay for two years of their child’s college tuition, for example.
A mediator can also show them how investing the remaining resources into a new path could result in significant benefits. Consider listing the possible outcomes if the parties continue their current track as compared with the possible outcomes should they choose a more productive path. Highlight the negative aspects of the first track that disappear when they choose the new path. And, remember to highlight how money saved now can be invested and grown over time.
Mediators should also emphasize the available choices through the use of hypotheticals. For example, a mediator might ask: “If your daughter were going through a divorce and she had to choose between…. and ……., as her parent, which do you think would be a better choice for her? Why?”
Another useful strategy is to discuss your real-life litigation experience. If you are or once were a family law litigator, your experiences can often help show a party what “really happens” in court. If you have not litigated, lean on the attorneys to offer their “war stories.”
Remind the party that Florida is a no-fault state, and much of what is important to them may not even be considered by a court. If a party is represented, have their attorney provide examples of what courts have ignored in their previous cases. A discussion on hearsay is often valuable in this setting, as most parties do not realize that out-of-court statements are rarely admissible unless made by the opposing party.
Have a party create a priority list, in order of importance. Sometimes, just having a party go through the exercise of listing and ordering their priorities will help them realize that that some things are worth sacrificing to get other, more valuable items. It also provides you with a guide to work with when prioritizing settlement terms and gauging the flexibility of the parties. Walk the party through the cost of continuing down their current path versus other available options or compromises. Remind them that their time is valuable and finite. Every day they spend litigating their divorce is a day they do not have to spend in the next chapter of their life. There are only a few issues that arise in family law cases that justify very costly or protracted litigation. There are certainly areas that do, such as protecting a child from abuse, but most areas of family law are more effectively addressed outside the courtroom.
Remind parties of the cost of litigation by actually going through the math. Contested litigation usually requires two attorneys who need to be paid for multiple days of trial plus pre-trial preparation and post-trial efforts. Add to that the costs for experts and other non-party participants (such as accountants, guardians ad litem or timesharing evaluators) and most litigants will be startled by your estimate. And, keep in mind that a party who has already paid a fortune to litigate might also be willing to pursue a costly and time-consuming appeal, which might itself result in having to retry part or all of the original case. The fact that you can win your case and still not be done paying your attorney for years can highlight how desirable even an imperfect settlement might be.
Finally, if relevant, remind the party why the divorce is happening in the first place. The litigation process does not change the parties, change their prior decisions, or remedy their financial losses or debt, so holding on or refusing to change course will only serve to perpetuate those prior issues. Peace of mind and closure are invaluable.
Conclusion.
By recognizing and addressing the sunk cost fallacy in family mediation, mediators can guide parties toward more constructive resolutions, helping them prioritize future well-being over past investments. Mediators must actively challenge entrenched thinking and encourage parties to embrace forward-looking solutions that foster healing, financial stability, and peace of mind.
References:
Bornstein, Brian H. and Chapman, Gretchin B., “Learning Lessons From Sunk Costs” (1995). Faculty Publications, Department of Psychology. 294. https://digitalcommons.unl.edu/psychfacpub/294
Arkes, Hal R., “The Psychology of Waste” (1996). Journal of Behavioral Decision Making, Vol. 9, 213-224.
Tait, Veronica and Miller, Harold L. Jr., “Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy” (2019). International Journal of Psychological Research, Vol 12, No 2.
About the Author:
Jessica manages a full-time family law mediation practice. Jessica has been practicing law since 2002. Before mediating exclusively, Jessica litigated family law matters for 20+ years and litigated civil matters for several years.
Jessica has been collaboratively trained since 2010 and has been a Florida Supreme Court Certified Family Law Mediator since 2015. Jessica is a member of the Florida Bar, the Family Law and Alternative Dispute Resolution Sections of the Florida Bar, the Hillsborough County Bar Association, and the Family Law and Mediation and Arbitration Sections of the Hillsborough County Bar Association.
Jessica has authored several articles on family law related matters and has been a speaker at a number of continuing education courses, conferences and legal functions regarding family law litigation, discovery, trial preparation and collaborative family law practice.
[1] Authored without the use of AI