Collaborative Law: An Alternative Path for Resolving Trust and Probate Disputes
Our courts are (and have been) ready: see In re Giddens, __ N.C. App. __, 841 S.E.2d 302 (2020).
What is Collaborative Law?
Collaborative Law (CL) is an alternative dispute resolution method whose popularity is fast gaining speed without making any attempt to replace litigation. Instead, CL is a new and valuable tool in a lawyer's toolbox, a tool often better suited for some parties than the traditional litigation alternative. Parties typically best-suited for CL are those with a pre-existing personal relationship underlying a dispute that does not involve elements of immediate, irreparable harm (coercion, duress, embezzlement). Unlike traditional mediation, CL focuses on bringing parties to the bargaining table before litigation ensues (not after, though CL can occur post-filing). It also emphasizes “interest-based” resolution techniques, as opposed to the often inefficiently deployed positional based approach to negotiation. Simply put, interest-based negotiation techniques help parties resolve more than just the legal tip of the iceberg. The approach is far more expansive and creative, designed to develop solutions that likely would not be available through the judicial process. In the collaborative process, clients have far more of a literal voice and, after preparation and guidance from their attorney, will converse with their opposing party. CL began in the Family Law context decades ago (codified in that field in 2003 at N.C. Gen. Stat. § 50, Art. 4) and has become codified for use in the broader civil arena by the adoption of the North Carolina Uniform Collaborative Law Act (“UCLA”), which became effective on October 1, 2020. Like its domestic predecessor, the UCLA outlines key collaborative markers:
- Tolling of statutes of limitations during the effectiveness of a validly executed CL Agreement;
- Inadmissibility of all statements, communications, and work product arising from a CL process.
- Judicial enforceability of any CL Settlement Agreement; and
- Prohibition against attorneys in the CL process from becoming litigation counsel in the event of an impasse.
What practice areas are ripe for a CL spread?
With some restrictions, CL is suitable for any place where there are pre-existing, valued personal relationships where there is some possibility (even if remote) the parties would like to preserve a working, business relationship. As a trust and probate litigator, I have often engaged in some gallows humor that the practice area was “family law after the funeral", which is a perfect segue for CL. However, litigators often push back on CL, doubting its cost-effectiveness and enforceability. On many occasions, after suggesting the CL process at a dispute's outset, my colleagues respond: “the bar isn’t ready yet." Our courts are ready. Why not us?
On March 3, 2020, the NC Court of Appeals, in In re Giddens (online opinion here; online briefs here), reaffirmed that it is ready for Collaborative, and in fact has been since the 1920s. A brief summary of the Court's opinion is included below.
Giddens involved a spouse of a decedent, who timely petitioned in probate for her spousal share under N.C. Gen. Stat. § 30, Art. 4. The estate was unable to pay the full allowance, so the spouse was correctly awarded a deficiency judgment for the unpaid portion ($13,030 later reduced to $9,547.30) of the decedent's estate. A Family Settlement Agreement was acknowledged by the Court to account for specific proceeds from the sale of real estate in the estate to satisfy the deficiency judgment. In the context of that Agreement, the Court of Appeals faced the issue of whether it would enforce a Family Settlement Agreement in probate where the terms of the agreement "deviated" from what would otherwise be "guaranteed" by black letter law. In upholding the enforceability of the Agreement (so long as it did not violate public policy), the Court acknowledged, while the Agreement plainly deviates from black letter law as such deficiency judgments are only payable from personal property (see Denton v. Tyson, 118 N.C. 542, 24 S.E. 116 (1896) (holding a deficiency is not to be satisfied from the sale of real property), “nothing in Denton restricts the rights of heirs and the estate agree, by private contract, to settle a year’s allowance deficiency judgment.” The Court made its point even clearer, to honor the sanctity of private agreements notwithstanding the mere possibility of a different outcome resulting under black letter law, quoting a decision that is nearly one-hundred years' old:
Family settlements . . . when fairly made, and when they do not prejudice the rights of creditors, are favorites of the law . . . . They proceed from a desire on the part of all who participate in them to adjust property rights, not upon struct legal principles, however just, but upon such terms as will prevent possible family dissensions, and will tend to strengthen family affection. The law ought to, and does respect such settlements; it does not require that they shall be made in accord with strict rules of law.
Tise v. Hicks, 191 N.C. 609, 613, 132 S.E. 560, 562 (1926).
In the context of CL, here's what we know, and what our Court of Appeals reaffirmed: absent a violation of public policy, our Courts stand ready—as they have for 100 years—to welcome private, contractual deviations from the often constrained remedies offered through the probate system. Our Courts have done so recognizing that doing so often prevents "family dissension" and strengthens "family affection." CL simply follows the century-old admonition from our courts and in that sense, the CL ethic is nothing new.
If you are a lawyer or a prospective client who wants to learn more about CL, please contact any of the attorneys in this directory. They will lead you in a collaborative direction.