When a marriage ends, one of the most challenging aspects can be sorting out the finances. Whether that is splitting assets (for example the family home and/or investments), discussing spousal and/or child maintenance, unravelling complicated business interests or sharing pensions etc, financial discussions can sometimes become emotionally charged and difficult to resolve.
Many couples can sort out financial matters between themselves and if that is the case, we would always advise that a financial consent order setting out the financial agreement reached is drawn up by a family lawyer and approved by the Court to provide financial certainty. In circumstances where a couple are unable to reach an agreement between themselves, there are several different options available to progress discussions and negotiations, and further information can be found here.
Using the court system is considered a last resort when all other efforts to resolve matters have failed. Before considering the involvement of the Court, you may want to consider a private financial dispute resolution hearing (pFDR). A pFDR is an alternative to the traditional court-managed FDR, and in many cases, it can offer a more efficient, flexible and tailored approach to resolving finances. A pFDR can also be used if you are engaged in court proceedings.
What is a pFDR?
The court process to resolve financial matters typically follows a three stage Court hearing process:-
- First Directions Appointment (FDA); an administrative hearing where the next steps to progress discussions are considered (for example, what further disclosure is needed or what third party experts should provide advice/opinion). This hearing is not routinely used as a negotiation hearing unless both parties are ready to do so.
- FDR; a negotiation hearing where couples are encouraged to reach an agreement between themselves with the benefit of a judge giving an indication of the likely outcome if the Court were making a decision at a final hearing. That indication is without prejudice and not binding, but it can be hugely persuasive particularly if there has been an impasse in discussions. Typically speaking it could take 6 – 12 months for a FDR hearing to take place if you were engaged in court proceedings.
- Final hearing; a hearing where the Court hears evidence and makes a binding financial decision.
The benefits of a pFDR over a Court FDR
Whilst both court FDRs and pFDRs share the same goal in enabling separating couples to reach a financial agreement between themselves before one is made for them at a final hearing, a pFDR offers several distinct advantages:-
- Flexibility – as touched on above, court FDRs are subject to the court’s timetabling and availability. This can often lead to long delays where hearings are listed several months ahead and can only be moved by the consent of both parties and the court. A pFDR gives you greater control over the timing, for example many couples will choose to avoid certain crunch points, such as a child’s exam period, school holidays or special occasions. Having control over the timing enables a swifter process if you are eager to resolve matters.
- Tailored – a pFDR gives you the opportunity to hand pick the expert facilitating the settlement discussions. That expert being known as the pFDR ‘judge’ or ‘evaluator’ is often an experienced specialist family barrister who regularly observes court judges giving out indications. This means that they have an up-to-date insight of current approaches in the family court. If your case has complex issues for example involving trusts, business assets or international aspects, it can be particularly helpful to choose an expert with specialist expertise in these fields.
The expert will also give your case the time it needs by reading the papers in advance so that they have a detailed understanding of the issues in dispute and can tackle those areas early in the day to increase prospects of success. This is in direct contrast to a court FDR, where the judge will have limited time to read the papers and will have several other cases before them on the day. In some cases and where necessary, the pFDR expert can provide further input in the days that follow which can assist in ongoing negotiations. In addition, the private expert may produce a written indication, opposed to just a verbal one which can be helpful to digest potential outcomes and consider options. It is not uncommon for clients to leave a court FDR feeling like the judge did not fully listen, grasp the issues or give them the time they deserve, which can understandably be disappointing given the cost and stress involved in reaching this stage. The court process can unfortunately feel impersonal and rigid, whereas a tailored approach can give you the confidence that your case is being handled in an experienced and bespoke way.
- Comfort – Court FDRs are conducted in a formal courtroom, which can unfortunately add to the stress and tension. Court buildings are often dated and have limited facilities and privacy. Whilst a pFDR remains a difficult experience, they typically take place in a more neutral and comfortable environment such as a barrister’s chambers. This makes it a more comfortable experience for everyone involved, with ample space to hold your private discussions with your legal team, have refreshments provided throughout what can be a long day and generally conduct negotiations in a more cooperative atmosphere. A more relaxed setting can make a significant difference to temperaments, increasing the likelihood of rational decision making and agreements being reached.
- Prospects of success – in our experience pFDRs generally have a higher chance of success than a Court FDR and when considering the above factors, it is easy to understand why. Even if a case does not settle on the day of the pFDR, often common ground has been reached on several issues resulting in more focused and narrowed negotiations taking place in the days after where necessary. If a settlement is reached on the day of a pFDR, both legal teams can work together in drawing up and settling a legally binding agreement, which saves significant costs in dealing with this later.
- Cost – As with the court FDR process, you will still pay the costs of your solicitor and barrister, however in a pFDR you pay the fee of the private ‘judge’ and this cost is often shared between both parties. A pFDR judge’s fee depends on their experience and can vary between £3,000 – £10,000 plus VAT. Whilst that might seem a significant upfront cost, a pFDR tends to be more efficient with less waiting time and fewer satellite hurdles arising in between and therefore the overall financial outlay can be significantly lower. By resolving matters quickly and avoiding lengthy court delays, you may save costs but also time and emotional strain.
- Next steps – if a pFDR does not lead to a resolution, you can seek to fast track your case for a final hearing within the court process. Another option to consider is arbitration, which is a private and binding alternative to going to court. Arbitration can be a faster and more flexible way to get a legally enforceable decision without the delays of the traditional court process. With the experience gained from the pFDR you may be better positioned to move your case forward in an efficient manner.
Is a pFDR right for you?
If you are facing a financial dispute needing court input and you want to avoid the lengthy, costly and often stressful process of attending court, a pFDR could be a wise option. With its flexibility, tailored approach and faster resolution time, it allows a separating couple to retain control of resolving financial matters in a sensible and pragmatic way with the benefit of a well-considered indication.
However, pFDRs may not be suitable in every case. In some situations, court involvement may be necessary if the dispute is particularly entrenched or if one party is unwilling to participate reasonably.
Every situation is unique, seeking advice from a specialist family lawyer early on can help you to explore your options in your specific circumstances. Please do not hesitate to get in touch if you would like to discuss your situation with a member of our experienced team.
