We focus on achieving the best possible outcome for clients as quickly, and as cost effectively as we can. We can do this by the parties engaging in a private FDR.
Whilst this is not appropriate in every case, we believe that a private FDR often offers an ideal balance between having a high probability of achieving settlement in a relatively short period of time and not incurring high legal fees.
Below we set out a guide to private FDRs. If you feel that your case may be well suited to a private FDR, or wish to discuss anything arising from the below, please do not hesitate to contact us to arrange a free initial consultation.
What is a divorce financial dispute resolution (FDR) hearing?
Before getting into what a private FDR is, it is important to understand what a traditional FDR is and how it works.
The court process for resolving finances in most divorce cases is a three stage process. The first stage concerns identifying what the assets and liabilities in the case are and how much they are worth. The parties complete their disclosure on Form E which sets out their full respective financial positions.
At the first court hearing (known as the first directions appointment) the court is concerned with ensuring that there is as much agreement as possible between the parties over the nature and value of the assets. The court will make directions at the first directions appointment so that their is a clear understanding of the assets and liabilities so allowing the parties to negotiate a financial divorce settlement at the following hearing; the FDR.
The second stage of the court process is focused on settlement. The FDR is a without prejudice hearing, where the parties do not give any oral evidence. Without prejudice means that any offers or concessions made at the FDR hearing cannot later be brought to the next judges attention. This allows parties to negotiate without fear that any concessions made them will later be used against them, so prejudicing their case.
If the parties do not settle at or after the FDR, the case moves into the third stage, which is preparation for a final hearing (1 day or more with oral evidence and x-examination) at which a judge will determine the fair outcome of the case.
What is a private FDR?
Private FDRs have grown in popularity over recent years as an alternative to the court FDR. The former President of the Family Division, Sir James Munby described them as:
‘A private FDR is a simple concept. The parties pay for a financial remedy specialist to act as a private FDR judge. That person may be a solicitor, barrister or retired judge. No additional qualification is required. The private FDR takes place at a time convenient to the parties, usually in solicitors’ offices or barristers’ chambers, and a full day is normally set aside to maximise the prospects of settlement. It takes the place of the in-court FDR.’
Parties who are already in the court process can opt for a private FDR instead of a court FDR.
Those who have not started court proceedings can also agree to attend a private FDR once they have exchanged disclosure on a voluntary basis and, if they do not settle at the private FDR, they can use the arbitration process to go straight to a final hearing without having to go through the full court process.
Advantages of a Private FDR
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One key advantage to a private FDR is that you are not competing for a judge’s time with other cases. At court, hours can be spent waiting to appear before a judge, without whose input for the negotiations the case cannot progress. With a private FDR the judge is entirely focused on your case meaning that there is more time for negotiations, increasing the prospect of reaching an agreement.
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As the judge at a private FDR is being hired privately, they will have set aside sufficient time to be completely on top of the facts of the case. Given pressures on the court, this is not always the case with a court based FDR.
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Private FDRs offer much greater flexibility to parties in terms of issues to be guided on and the progress, both in respect of the preparation for the hearing and on the day.
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A private FDR is a voluntary hearing, as opposed to a compulsory one in the court process. The parties are at the private FDR by agreement and so are keen in coming to an agreement if possible. Parties are therefore more likely to attend with a real desire to reach an agreement.
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A private FDR judge, who is usually a senior barrister or a retired judge, can be agreed between the parties. This means parties can use me for a hearing of a private FDR.
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Courts are busy with lots of cases which can mean that it might be months before there is a date which all parties can attend. Delays invariably lead to increased costs and uncertainty for the parties.
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Whilst there are always the additional costs for a private FDR judge, more often or not these costs, which are normally split between the parties, are offset by the savings by having the matter dealt with as soon as possible and not having lawyers for 2 court hearings.
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Courts can be busy and hectic places, often with insufficient room for the cases which are being heard. Normally a private FDR is heard in the barristers’ chambers or conference rooms where rooms for negotiations and the hearing itself will have been reserved. A more relaxed environment is more conducive to reaching settlement.
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Whilst the issues before the private FDR judge will be the same as those before a judge at court, private FDRs generally tend to feel less adversarial to the parties.
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Court based FDRs generally have a high chance of achieving settlement. However, critically, private FDRs, as a result of much of the above, appear to have better chances of the parties settling the case. The risk of going on to have to incur the additional costs of preparing for a final hearing are therefore minimised.
Are there any disadvantages to a private FDR?
Unlike a court FDR there is the additional cost of the private FDR judge’s fees. However, as set out above, these are often offset by having the matter dealt with quickly, and can reduce the chance of the case going onto to a final hearing, which significantly increases costs on both sides.
Additionally, where parties who are in the court process do not settle at a private FDR, they are likely to have to attend a directions hearing at court in order to have the court order directions for the final hearing, which they might not otherwise have to. It could also be the case that if a party were intent on delaying proceedings for whatever reason, it may be easier to do so without a hard court deadline looming.
However, in most cases any downside is significantly outweighed by the advantages.
Preparation for a private FDR
The key to success at a private FDR is preparation.
A judge at the hearing is not going to be in a position to determine any issues of fact between parties (such as differences in opinion on value of assets of length of a marriage), so it is important to narrow any points of dispute and, where they cannot be agreed, ensure that any evidence on the point is clear, easily understood and as compelling as possible.
It is highly recommended that both sides make without prejudice offers in good time ahead of a private FDR. This allows both parties time to reflect on what the other is offering initially.
Both parties or legal teams for the parties will prepare a position statement for the private FDR judge. This document sets out the facts of the case, the areas of agreement and dispute and the respective positions on, and arguments in relation to, the points which are not agreed which they are inviting the private FDR judge to give their opinion on. These position statements are exchanged the day before the hearing.
A bundle, with all of the key documents, will be agreed and prepared by one of the parties’ representatives. The parties will also exchange information with regards to their legal fees setting out what they are and how much is outstanding.
What to expect at the private FDR
If you have lawyers each party should meet with their legal team on the morning of the private FDR. Negotiations can take place at any stage during the course of the day and it might be that there are some such discussions before appearing before the private FDR judge.
The parties appear before the private FDR judge with their respective legal teams. The parties are not expected to give evidence. Submissions are made on their behalf by the parties’ lawyers.
Having heard all of the submissions, the judge will then give an indication as to what they believe the appropriate outcome of the case should be. The private FDR judge will not have heard evidence from the parties, which can have a material impact on the ultimate outcome of the case, but they will give their indication based on the papers that they have considered and the submissions by the legal teams. They might give a precise indication of their view of the outcome of the case or they might give a range of possible outcomes.
Having heard the judge’s indication, the parties and their legal teams go to separate rooms to discuss the judge’s comments. Whilst there is no obligation on the parties to negotiate, it is common that one party will then make an offer which will usually move them in the direction of the judge’s indication. Without prejudice offers then normally pass back and forth until either agreement is reached or it becomes clear that this will not be possible.
If agreement is reached it is set out in a heads of agreement, which will normally be prepared and signed by the parties on the same day.
What happens after the private FDR?
If agreement is reached then this is set out formally in a court order. This is drafted, agreed by the parties and then filed at court for a judge’s approval. Once the order has been made the parties will normally apply for decree absolute, which dissolves the marriage (finalising the divorce) and implement the terms of any agreement.
If agreement cannot be reached at the private FDR, the case moves forward towards final hearing. Just because agreement was not reached on the day of the private FDR does not mean that negotiations stop. It is common for negotiations to continue over the following days and weeks.
If the parties are in court proceedings then they may need to attend a directions hearing for the court to set out what needs to be done, and by when, ahead of any final hearing. If they have not started court proceedings, consideration needs to be given to whether an application is issued at court or whether it is preferable to begin arbitration proceedings and go straight to a final hearing.
In preparing for a final hearing the parties need to set out their full case in a section 25 statement (referring to section 25 of the Matrimonial Causes Act 1973, which sets out the factors which the court must take into account when deciding the case). Additional evidence might be required. The parties must then attend a final hearing, which may run to several days.
The costs of going to a final hearing need to be taken into account when negotiating – if the gap between the parties is less than the cost of going to final hearing it may be pragmatic to settle the case.
If you would like to discuss private FDR please contact us to arrange a free initial consultation.