At Davies and Partners we have seen an increase in our clients opting for a private Financial Dispute Resolution (‘pFDR’) to help them reach a financial settlement. For our clients who are looking for a quicker and more efficient process to settle their finances on divorce, many of them decide that a pFDR is the most effective way, and we agree. We saw that in the last year 90% of our cases involving a pFDR settled on the day. This article is a quick guide to pFDRs and why you should consider this route if you are trying to agree a financial settlement.
What is a private FDR?
To understand what a pFDR is, it is helpful to first know what a court FDR is. Court proceedings within financial remedies are split into three hearings: the First Directions Appointment (‘FDA’), Financial Dispute Resolution (‘FDR’) and the Final Hearing.
The FDR is the second hearing which focusses on settlement. It is held on a without prejudice basis which means that any offers made cannot be discussed at a final hearing. This allows the parties to negotiate freely without fear that any concessions they make at the FDR will later be used against them and prejudice their case. The Judge at the FDR gives an indication of how the matrimonial assets should be divided. Many cases settle at an FDR or just after.
The purpose of a pFDR is very much the same as the one held at court. However, a pFDR is held, as the name suggests, in private and conducted outside of the court process. The parties pay for a private judge to hear their case to help them reach a financial settlement. The judge is usually a senior barrister or retired judge. The private judge will give their independent evaluation of how the case should settle, and they will be available throughout the day to assist with negotiations.
At what stage can you opt for a private FDR?
Parties who are already in court proceedings can elect to have their FDR in private after the FDA. Due to the pressure on the court system, the waiting time for a court FDR can be long, so for parties who wish to expedite the process a private hearing is often preferable.
Parties who are not in court proceedings can also opt for a pFDR once they have voluntarily exchanged financial disclosure.
What are the benefits of a private FDR?
• Speed
Pressure on the court system means that there can be long waiting times for a court FDR, sometimes an FDR will not be listed for over six months. Most of our clients understandably want to achieve a financial settlement as quickly as possible so that they can move on with their lives and finalise their divorce; a pFDR can be the solution to this.
• Private Judge with specialised knowledge
A private judge is hand-selected by the parties. The judge will have had the benefit of time to read through the parties’ papers in advance and so they will have a detailed understanding of the case and issues to be resolved. This is unlike a court judge who will likely have several other cases that day and limited time to familiarise themselves with a case.
A private judge is focussed on the case for the whole day allowing more time to negotiate and increasing the prospect of settlement. The judge is available to assist the parties with negotiations throughout the day.
• Privacy and comfort
Attending court can be unsettling and there is often a lack of private consultation rooms. In contrast, a pFDR is usually held within the comfort of barristers’ chambers with private rooms for each party and refreshments provided throughout the day. This less stressful environment can be more productive for negotiations and the encouragement of settlement.
• Flexibility
The parties choose the date, the judge, and the location. This flexibility may help the parties feel more at ease and in control of the process. If there is an area of the case which requires specialised knowledge, then parties can select a private judge that has expertise in that field. In court proceedings there is no way of choosing when the hearing is – this means that parties are beholden to whatever date the court lists their FDR. If this date isn’t suitable for a party’s barrister, they will need to change their legal representation owing to the clash. This can be unsettling and does not allow for continuity.
• Parties’ willingness to settle
A pFDR is a voluntary hearing meaning that both parties are most likely invested in the process and eager to settle. This can be extremely beneficial during negotiations.
What are the disadvantages of a private FDR?
The only real disadvantage of a pFDR is having to pay for the judge’s fees. These tend to be in the region of £6,000 to £10,000 depending on the judge’s experience. However, the fees of a private judge can be less than going through the court system; delays in waiting for a hearing (which can take many months) creates unnecessary fees and procrastination. And given FDRs tend not to be as successful as their private counter-parts, should the case not settle at the FDR and must proceed to a final hearing, legal costs will spiral.
What happens after the private FDR?
If you reach a settlement at the pFDR then the terms of the agreement will be drafted into Heads of Agreement on the day. The solicitors will then prepare a formal consent order which will be filed at the court for a judge’s approval.
If an agreement is not reached on the day, the case will return to the court system and proceed to a final hearing. However, negotiations by correspondence will continue after the private FDR and an agreement can be made at any time.
Should you wish to discuss private pFDRs with a family lawyer please contact our specialist team – Hazel McNaught at hazel.mcnaught@daviesandpartners.com or Olivia Emmett
olivia.emmett@daviesandpartners.com and we would be delighted to assist.
