Process
Early neutral evaluation
Suitable circumstances
Benefits
Case study
Comment
Private financial dispute resolution (FDR) involves the separating couple hiring a judge for one day to provide an evaluation of the likely outcome of the financial matters after separation. This article is part of a series on divorce and separation in England and Wales.(1)
A private FDR is the private equivalent of the second hearing in financial remedy proceedings at court. The main differences are that the separating couple:
- choose their judge – a solicitor, a senior barrister or a retired high court judge;
- pay the judge's fees; and
- attend the hearing out of court, at a more comfortable venue, such as a hotel conference room.
The judge will have read the case papers and, on the day, will listen to the representations of both parties' barristers before providing an indication as to the overall settlement and any particular areas of dispute. Unlike with arbitration, the judge's indication is not binding; it is intended to be an aid to settlement.
Each party will then go back to separate rooms, and the respective barristers will go back and forth to negotiate the agreement. The parties will not be required to speak or to give any evidence, save for through their lawyers.
In some cases involving children, the couple may decide at an early stage to seek an early neutral evaluation from a specialist judge or barrister as to the likely outcome of the case if it were litigated.
Private FDR is particularly suited to separating couples:
- where the parties' positions are far apart, but there is still a desire to try and reach an agreed settlement. The expert input of a neutral third party can be extremely useful in bringing the sides closer together;
- where court congestion leads to a significant wait for a court-based hearing;
- in cases that have come to an impasse – paying for the judge and attending the hearing can focus everyone's minds; and
- where clients wish to negotiate in private and away from the public eye.
There are several benefits to private FDR:
- privacy – it offers more privacy, as the venue can be far more discreet than a busy court building;
- comfort – it is far more flexible and civilised than a court-based FDR;
- specialist judge – the judge will be a financial specialist (as opposed to judges at court, who may be better versed in matters involving children). They will have read the papers and will have plenty of time to see the parties when they require the judge's input, which is often not the case in court;
- without prejudice negotiation – the parties are free to negotiate without any proposal they may make being repeated should their case ever go to a final hearing;
- speed – private FDRs can be booked on a date of the parties' choosing (subject to the judge's availability) and at relatively short notice; and
- favourable terms – if successful, being able to agree an outcome is in general far preferable to having one imposed.
A husband was advancing unrealistic arguments that money he inherited many years ago should be ring-fenced for his benefit, even though doing so would mean that the wife's housing needs could not be met. The separating couple agreed to private FDR.
Having the voice of an independent, authoritative expert explaining why the husband's arguments were unrealistic, and how he would lose that point at a final hearing, removed a major obstacle to a negotiated settlement.
A private FDR or early neutral evaluation will stand the strongest prospect of success if the judge is well-prepared and commands the respect of the parties.
Around 80% of cases settle after FDR or private FDR. Except for the cost of the judge's fees, private FDRs are far preferable to court-based FDRs.
For further information on this topic please contact Joanne Edwards, Rosie Schumm, Simon Blain or Matthew Brunsdon Tully at Forsters LLP by telephone (+44 20 7863 8333) or email ([email protected], [email protected], [email protected] or [email protected]). The Forsters LLP website can be accessed at www.forsters.co.uk.
Endnotes