Terzo: Arbitration is viable alternative in family law disputes

October 7, 2015

By Carol Terzo

terzo-carol-mug Terzo

When I mention family law arbitration, the typical responses I receive are:

“Family law arbitration is an idea whose time has come.”
“Is family law arbitration something new?”
“Don’t you mean plain old arbitration?”
“Court hearings are free. Arbitration is expensive.”

My replies:

“No, unless you consider over 20 years to be ‘new.’”
“No, family law arbitration is different from civil arbitration and has its own chapter under the family law section of the code.”
“There’s no such thing as a free lunch!”

Most people understand arbitration. It is quite common for arbitration provisions to be included in contracts. My guess is that you have probably signed such a contract at least once in your life. The Federal Arbitration Act, enacted in 1925, made such provisions enforceable in courts. Thereafter, the Uniform Arbitration Act was presented in 1955, and the Revised Uniform Arbitration Act in 2000.

It wasn’t until the 1990s that arbitration began to be seriously considered for family law cases. At that time there was no statute specifically directed to family law arbitration, and Indiana had no caselaw regarding family law arbitration. Family law attorneys were leery of using this means to resolve their cases. The major concern was the issue of whether the arbitrator’s decision was binding and, therefore, whether the right to appeal was waived.

Our current statute, I.C. 34-57-5-1, et seq, was enacted in 2005. It answered many of the questions attorneys had, especially about the right to appeal the arbitrator’s decision. Recent caselaw affirms the right of appeal, and the method to appeal is identical to the method one would use to appeal a court’s ruling. The exception is that the arbitrator, not the judge, corrects the error or modifies the award upon remand.

The benefits of arbitration:

1. Scheduling. A family law arbitrator generally has a much less congested calendar than the court’s calendar, so hearings can be set for an earlier date. You can, with a simple conference call, schedule a hearing that is convenient for all parties. You, along with the arbitrator, determine the amount of time necessary for the hearing.

2. Location. A family law arbitration hearing is generally conducted in the arbitrator’s office around a conference table. The environment is certainly much more relaxed. Snacks and drinks may be available. Depending upon the arbitrator’s location, free parking may be available.

3. Choosing your arbitrator. You control who will hear the case, choosing an arbitrator known for his or her knowledge, skill, experience and temperament. You will never be surprised by a pro tem. You may choose an arbitrator with a particular knowledge on a subject. For example, if commercial real property is a major component of the marital estate, then you may choose an arbitrator who has knowledge and experience in commercial real estate.

4. Cost. Yes, the parties must pay for their arbitrator – usually splitting the cost equally. But the overall cost of the case is reduced. There is no need to file motions, such as for continuances or for discovery, as those issues have been handled initially by way of a phone conference. The client is not paying for your travel time to the courthouse to file motions. As the rules of evidence are encouraged to be waived or relaxed, there is no need to bring in a witness for the sole purpose of admission of a document. The cost of bringing in certain witnesses may be reduced by a simple submission of an affidavit.

Further, the hearing starts at the time designated. There will be no waiting for prior cases to finish, and no additional attorney fees for that “down” time. With a quicker hearing date, parties are not being “strung along” paying for expenses that, once the decision is made, may no longer exist.

5. Confidentiality. The arbitration hearing is confidential, similar to an offer of settlement or a mediation. There is no one in the hearing room, unlike in a court gallery, to make noises of disgust, wave their hands or be disruptive. The nosy neighbors can’t come by the arbitrator’s office in order to read financial declarations. Only the arbitrator’s decision, upon submission to court, becomes open for public knowledge.

The negatives of arbitration:

1. Fear of the new. The major hurdle for family law arbitration is that it is a relatively new method of resolving family law disputes. Older lawyers remember the time in the 1980s when family law mediation was avoided as an untried form of ADR. Mediation has now become routine. It is my belief that family law arbitration will gain the same routineness.

2. Unawareness of the right to appeal. Many lawyers, having been schooled in the “old” family law arbitration of the 1990s, are concerned that they have lost the right to appeal. But I.C. 34-57-5-11 clearly gives the parties the right to appeal. Ozug v. Ozug, 4 N.E.3d 827 (Ind. Ct. App. 2014) has affirmed this right and has described the manner of the appeal. If an appeal is filed, the Court of Appeals remands the case to the arbitrator, not the judge.

3. The blame game. Attorneys may be concerned that they may be “blamed” for the selection of the arbitrator if their client does not like the arbitrator’s decision. But for your comfort’s sake – I know of no caselaw or disciplinary action that ever addressed the issue regarding the decision to attend arbitration or the selection of the arbitrator.

So try it, I think you will be satisfied with the process. Try it on a single-issue case. A particularly well-suited case for family law arbitration is one involving relocation. Quite often, the moving van is in the driveway and the client is shocked (and angry at you) when they learn that a decision regarding the relocation could take months to be heard and decided.•

Carol Terzo is a founding member of The Mediation Option. She has been trained as a family law arbitrator by both the American Bar Association and the American Academy of Matrimonial Lawyers. The opinions expressed are those of the author.