In our latest Family Finance blog, Jon Grierson looks at Private Financial Dispute Resolution (FDR) and its role and advantages as an alternative arrangement to the court process.
Information on the Private FDR Judges available at 18 St John Street Chambers can be found at the foot of the page.
Using a private FDR as an alternate way forward
We are approaching the end of the first 12 months of the implementation of Family Procedure (Amendment No 2) Rule 2023, the driving force to encourage attempts at early (I would prefer timely) alternative arrangements for resolving financial remedy arrangements.
The consideration of making a private FDR referral to a local experienced finance barrister as a private FDR Judge during litigation is still in its infancy yet calls for the same are increasing locally and nationally month on month.
So why use and have clients pay for a private FDR?
FPR 2.3(1) now includes the definition of methods of resolving a dispute other than through the court process, this includes arbitration and using a neutral evaluation process (Private FDRs) and mediation (likely to have already been considered and failed or exempted). All practitioners now have a clear obligation to look to practical and timely alternate dispute resolution methods.
Experience tells us that running alongside the pre litigation process of voluntary disclosure, written solicitor exchanges and questionnaires, is the vastly important and necessary and oft beneficial attempts by solicitors to negotiate, narrow the issues, make offers and, were merited try to settle. As solicitors, you are and remain during this period the primary and continuing interparty mediators and negotiators for your clients.
In my days as a solicitor my then senior partner’s view was that every time you got the file out of the cabinet, you opened it, had a telephone call with the client and then other side. I admit that this was in the days of actual large paper files, fax machines, (does anyone remember the continuous rolls of shiny fax paper that turned grey and curled up if you left the paper in the sunlight?) and dozens of daily actual person to person telephone conversations that compelled you be the lead point of early negotiation, that was what the client expected. It largely worked. That must and should continue, it is a vital part pre and post issue of litigation. It’s what you do and are good at.
But, sadly, the days of negotiation by each solicitor picking up the phone and speaking (frankly and directly, but friendly and constructively) to each other to drive a settlement forward on a without prejudice basis has to an extent fallen away in favour of the numerous email exchanges.
For my part I see that at times such email exchanges morph into rather abrupt and terse muscle flexing exchanges, when such would never feature in the spoken word. Does this not mean that the opportunity to settle is pushed further away? The increasing number of referrals to private FDR’s at an opportune time in the litigation (or an early, pre issue, neutral evaluation) serves to re-engage and refocus the parties and bring back the direct settlement discussions.
Mediation and constructive attempts to reach settlement through you as solicitors will always remain at the forefront of serving your client’s best interests and achieving an early and mutually fair outcome. But, as we know, parties become stuck, they can lose focus on the key issues, one may be delaying the process, mutual concerns over disclosure, and the issues of dividing the many different types of assets will frequently result in clients taking up a corner in the boxing ring based. You also have to consider with your clients the questions; how does s25 assist?, what are the needs?, what is an ‘elastic’ need? Have we moved to the compensation and sharing approach?. How will we get an objective steer on what comprises a matrimonial asset, what about gift, the inheritance, will such assets always be vulnerable to the asserted need. What of the duration of marriage, standard of living and the overarching assessment of fairness?.
Many cases may stand out as being unsuitable for alternative attempts to settle with issues of non-disclosure, add back and dissipation of assets, adverse inference claims, third party beneficial interest property claims etc etc etc. For those, the court may remain best placed to clearly decide on the issues and way forward. But at times, for example, a third party (intervenor) claims against property are resolved, then the opportunity for a private FDR once again becomes a realistic and relevant consideration.
These points emphasise the importance of considering the use of and benefits of ENE or private FDR’s at every stage of proceedings, see Re X [2024] as summarised below. The complex issues and points mentioned above can be looked at and considered objectively and considered in the round.
FPR 3.3(1) requires a view to be set out as to using non court dispute resolution
FPR 3.4(1A) (and PD3A 4.1) provides for the court timetable to be delayed to enable alternate dispute referrals
FPR 28.3(7) opens the door to costs sanctions for failure without good reason to attempt non court dispute resolution
Re X (financial remedy; non court dispute resolution [2024] EWHC 538 places a responsibility on parties to make a ‘serious effort’ to resolve their differences both before and ‘at any stage of the proceedings where this might be appropriate’
No clearer guidance can be given to the parties to have to look to, and “make a serious effort” to a process of assisted negotiation and settlement?
Admittedly, Private FDRs incur costs but can be held whenever both parties believe they know enough to proceed. They will look to you, as their legal advisor to identify the best way forward. It must now include a continuing consideration of non-court dispute resolution.
A 2024 survey conducted by a leading London law firm recorded a settlement rate of over 88% at FDR hearings.
Private FDRs can be arranged quickly without waiting for a court listing.
Costs can be fixed and agreed in advance and not duplicated, if a private FDR fails, this is likely to be sufficient grounds for the court to be invited, by consent and with agreed directions, to dispense with a court appointed FDR and list straight to final hearing.
FPR 9.15(4)(a) the FDA has been used as an FDR and has been effective (an alternate FDR has been effective) (b) exceptional reasons so it’s been tried and failed.
Importantly; the delay in awaiting the court listing is avoided, the consent application can include appropriate directions, should include open recordings as to any agreed issues, set out and limiting and identifying the disputed issues to be decided, and the usual costs position. Following the FDR the requirement for open offers should be complied wit, which can now be reconsidered and deal the real issues.
Private FDRs are not sensitive to limitations on the court appointed FDR judge having inadequate reading time, quickly scanned counsels notes and pressured preparation time and time constrained hearings. How many times do we experience District Judges with FDR listing days having back to back listings of 4, 5 or 6 FDR’s!
I would suggest that the 88% quoted above will be greater if the same survey was undertaken for private FDR hearings
All day can be made available, without any 4pmcut off! Half days can be accommodated. Considered and advanced preparation is guaranteed. Separate rooms guaranteed. Special measures agreed in advance if required.
Both parties should commit to the relevant obligations of FPR 9.17, in particular (3 and 4) disclosure and making of offers and (6) and PD9A (6.1-6.3), that they commit to use their best endeavours to reach agreement.
Solicitors and practitioners dealing with financial remedy claims now have a positive obligation to guide and advise clients to undertake non court dispute resolution or potentially face costs consequences.
The breadth of experience at 18 St John Street in Family Finance disputes arising from divorce, separation and cohabitee relationship breakdown means that we can provide a panel of highly experienced Private Dispute Resolution barrister Judges to assist in national/international joint referral cases.
Please click below to view our dedicated PRIVATE FDR page: