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Collaborative law and arbitration

By Pamela H. Simon


Collaborative Law, the revolutionary non-adversarial “no-court” method of resolving divorce cases, is sweeping the country, and some foreign nations as well. It fosters full and voluntary disclosure, face-to-face negotiation, assistance from helpful third-party professionals (such as family counselors, financial planners and business valuation specialists,) a strong co-parenting partnership, a cordial relationship between the divorcing spouses, and a settlement that meets the needs of both spouses. It eliminates mud-slinging, demonizing of the other spouse, using children as pawns in the negotiations, jumping through the multiple hoops of civil procedure, and the seemingly endless, costly delays and inherent animosity of litigation.

There is, however, a catch. In its original form, Collaborative Law requires the withdrawal of Collaborative counsel if the parties cannot negotiate a complete settlement. The Collaborative lawyers must help their clients find new litigation counsel, and the clients are back to square one, suffering the loss of all evidence (such as appraisals) compiled during Collaboration. They must forge relationships with new lawyers, come up with another retainer, and begin the discovery process anew. For the rich and emotionally sturdy, this may not be a huge hurdle. However, for those whose finances and emotions are already battered and stretched thin by their separation, the problem may be insurmountable.

North Carolina, by statute, offers a solution. Although Collaborative attorneys are forbidden from appearing in court, they and their clients may choose from a menu of Alternate Dispute Resolution options without terminating the Collaborative process. The statute allows the use of both mediation and binding arbitration (under the State’s own Family Law Arbitration Act.)

Some Collaborative purists have reacted with horror. They fear the “threat” of arbitration changes the dynamics of four-way meetings, offers a too-easy “out” when negotiations become tricky, and puts the attorneys back into the dual conflicting roles of trying to make peace while preparing for war. While these criticisms are logical, they can be overcome. In fact, both a mediator and an arbitrator can serve as just another friendly but neutral third-party professional, jointly chosen and retained by the parties, whose expertise can “save the day” and the Collaborative process as well – not to mention heaps of time, money, and needless anxiety.

The possibility that Collaboration might terminate altogether -- with the attendant loss of lawyers and evidence, the expenses of another retainer and new experts, and the knowledge that litigation involves all-out, no-holds-barred warfare – is far more threatening than arbitration, particularly to the less-moneyed spouse with little control of the assets. Having experienced first-hand numerous four-way meetings based on Collaborative agreements with an arbitration ‘default” provision, I can personally attest that the dynamics of the meetings are not damaged. Indeed, the knowledge that the Collaborative process will bear fruit, because arbitration can be used as a last resort, is more of a comfort-blanket than a threat.

Most clients, particularly dependent spouses, simply lack the funds to start from scratch with litigation if Collaboration terminates. Moreover, arbitration following a series of four-way meetings, during which rapport has been established among the clients and the attorneys, is far gentler than litigation. Arbitration is normally conducted in a private place, such as the arbitrator’s office, free from the attentions of voyeuristic courtroom observers. The rules of evidence are greatly relaxed, and the atmosphere is casual. An arbitrator will not be impressed by, or receptive to, grandstanding by the lawyers. Additionally, an arbitrator, having been selected with care by the attorneys and clients, will be knowledgeable and can be counted on to render a well-considered, equitable award.

Although an arbitrator, unlike a judge, must be paid, the parties can avoid the wasteful expenses of motion hearings, delays during trial, traditional trial presentation (plaintiff’s case-in-full first, then defendant’s, then plaintiff’s rebuttal), scheduling problems and seemingly endless continuances. The arbitrator will give the case his or her full attention, and the savings in time will more than likely balance the arbitration fee.

Moreover, it is frequently unnecessary to arbitrate the entire case, resulting in further savings of time and money. The parties in a Collaborative case may reach agreement as to nearly all issues, and require arbitration of only a remaining few. The “hot spots” in North Carolina, due to clear guidance from the statutes and case law, tend to be the amount and duration of alimony, and whether a 50-50 split of the net marital estate is equitable. In these cases, the arbitrator can serve as a neutral expert, much like a business valuation expert, who is likely to find that a business is worth more than the owner, and less than the other spouse, would like.

Clients still can, of course, choose the “pure” form of Collaborative Law, requiring attorney withdrawal upon impasse. The vast majority, however, prefer the arbitration option, which is attractive to both clients and attorneys. Clients don’t want to lose a lawyer with whom they have developed a trustful bond, nor waste money on third-party expert opinions that cannot be used at trial, nor pay a second retainer, nor lose control of their case, nor fan the flames of adversity, nor face the uncertainties of litigation. They want assurances that the process they choose will resolve their case.

Attorneys, on the other hand, don’t want to lose a good client, nor acquire a reputation for being unable to resolve a case, nor for abandoning clients who need them. Nor do they want to tarnish the reputation of Collaborative Law. Most of the attorneys who have adopted a Collaborative practice are passionate about it. They firmly believe that it is a saner, more humane method of resolving divorce cases, and they hope that Collaborative Law will eventually replace litigation as the primary mode of practicing family law.

Although North Carolina’s Family Law Arbitration Act assumes that the arbitrator’s decision will be binding, and appealable only on grounds such as arbitrator bias or other misdeeds, parties do have the option of preserving the right to appeal based on errors of law, just as if the case had been litigated. If they choose this option, the parties cannot later complain that they had no recourse if an arbitrator was ignorant of or ignored the law.

Although none of my many Collaborative cases has ever required use of arbitration, the need for it is likely to arise in one of two greatly differing circumstances. First, there’s the situation suggested above, in which the parties have collaborated in good faith, but are unable to reach agreement on just a few issues, such as the amount of alimony and an equitable split of the property. The other circumstance -- which is fortunately rare -- arises when one spouse enters Collaboration in bad faith, intending all along to terminate the process and leave the other spouse hanging (and broke.) A spouse that dishonorable is likely to bet that having snookered his or her spouse and attorney, it will be just as easy to bamboozle an unwary judge. If there’s an arbitrator waiting in the wings, however, the dynamics change. An arbitrator is not going to allow name-calling, finger-pointing, histrionics or the introduction of irrelevant evidence. Choosing a good arbitrator eliminates the unpredictable and unjust results achieved by a spouse who successfully shops for a sub-par judge.

In sum: Allowing arbitration to serve as the caboose to the Collaborative-procedures train enhances rather than damages the concept of Collaborative Law. It protects the clients and helps prevent abuse of the Collaborative-Law principles. To be sure, Collaborative attorneys should heed the critics, and remain vigilant against (1) slipping back into an adversarial mode, and (2) allowing their clients to give up negotiation too quickly simply because they know where to find the caboose. But I, for one, am grateful to have arbitration as an option, and I know my clients are, too.


Pamela Simon practices law in Statesville, NC. She is a board-certified family-law specialist, an AAML Fellow, a certified mediator, a developer of and trainer for Collaborative Family-Law Workshops, co-drafter of the NC Family Law Arbitration Act and Collaborative Procedures Act.



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