What You Need to Know About Private FDRs

Private FDRs (financial dispute resolutions) used to be the preserve of the wealthy to sort their financial divorce settlements out of the public eye. Not anymore. In recent years, more and more people have used them to bypass the creaking Court system. This article looks at what private FDRs are, and whether you should consider this route over the Court process.

What’s an FDR

In the family court system, one of the main aims is to get the parties to negotiate a settlement. The reasons for this are:

• Autonomy - No one likes being told what to do. By the parties being encouraged to reach a settlement, it means that they’re fully involved in the process, rather than having something imposed on them by a Judge. It’s felt that if the parties can reach a settlement, then they’ll go away happier than if they’d simply been told how their assets were going to be split between them.
• Amicable - In many family law cases, the parties are going to have to see each other again. This is particularly the case if they have children. If they’ve been through the Court system and the Judge imposes on each of them what they’re getting in terms of the split of the assets, it’s likely that one party will feel that they have won and the other lost. This is likely to cause further acrimony when the parties may have to co-parent their children for years to come. By encouraging the parties to settle, there is no winner or loser, but instead a compromise. The idea is that this compromise in terms of the financial settlement is that it will hopefully mean a less acrimonious relationship between the parties going forwards. In turn, this will mean more amicable co-parenting of their children.
• Cost - It’s not all altruistic on the part of the Courts. If cases settle, then they need fewer hearings and in turn less judicial time. This means significant cost savings for the Courts.

The financial dispute resolution is at the heart of the family Court process to try and achieve settlement in financial remedy cases. This is the Judge actively engaging in the dispute and trying to assist the parties in reaching a resolution. It works as follows:

1. At least a month before the FDR hearing, financial disclosure takes place with both parties completing a Form E Financial statement in advance of the hearing in order that both parties know what the asset situation is.
2. Prior to the FDR hearing, both parties make their ‘best’ offers. Both sides are saying what they want in terms of dividing up the assets, and why.
3. At the FDR itself, both parties’ solicitors or barristers put forward their cases to the Judge as to why the assets should be split in a particular way.
4. Having read the paperwork and listened to the arguments, the Judge then gives their view as to how they feel that the assets should be divided up. This is non-binding and is to give the parties a ‘reality check’ on where their positions are compared to what the Judge is saying the split should be.
5. The parties are then given some time (an hour or two) at Court to consider what the Judge has said, and they are encouraged to negotiate.
6. If the parties can reach a settlement, then the case finishes there and then.
7. If the parties can’t agree, then the case will progress to an expensive Final Hearing in several months’ time where the case will be heard by a different Judge and the parties will be cross-examined about their positions and a final, binding decision made.

The key provisions in the FDR process are that the Judge is, firstly, giving their view on how the assets should be divided, and, secondly, that this is non-binding.

It’s felt that this non-binding ‘reality check’ means that those who are overly optimistic of their positions - i.e. asking for too much or are offering too little - are brought down to earth and will therefore negotiate around the guidance provided by the Judge.

For further details about the standard FDR process, please see this article.

What’s a Private FDR?

A private FDR follows the same format as the regular FDR set out above. However, rather than it going through the Court process, it’s separate from the Court and instead is organised by the parties’ lawyers and a private Judge (usually a barrister or a retired Judge) who takes the place of the regular Court Judge.

Why would you want a Private FDR?

If the private FDR follows the same pattern as the regular Court FDR, why would you want the private one? After all, anything with the word ‘private’ before it is usually more expensive - think private healthcare and private schools. However, there are some very distinct advantages to having a private FDR, which are as follows:

• Speed - Statistics - Microsoft Word - Second Report Final Sam.docx – show that it takes on average 55 weeks (yes over a year!) for the average case to get to the FDR through the Court process. By going private, you and your former partner decide on the timescale. This means that you can get the private FDR up and running in a matter of months, rather than in a year.
• Specialist – it may be a surprise to hear that many Judges in the family Courts are not specialist family lawyers. Instead, most will be from a litigation background and will not have practised family law when they were lawyers. Therefore, if you go to Court over a family law issue, it may be that the Judge dealing with your case is not a family law specialist. With a private FDR, you pick the Judge. As such, a barrister who specialises solely in family law can be selected as your Judge for the FDR. This means that your case will be heard by a specialist family lawyer and as such you can be assured that they will understand and apply the correct law and legal principles.
• Location – most Courts are not fit for purpose. They are outdated, there are insufficient meeting rooms, which means a lack of privacy, and the facilities are substandard. It is often quite a shock for most clients when they arrive at Court to find that the facilities are so poor. However, with a private FDR, you choose the location. This will generally be a conference suite at a hotel. This means that you will have pleasant surroundings, sufficient privacy and a venue conducive to trying to achieve a settlement.
• Cost – whilst a private FDR is going to mean incurring the costs of a private Judge and a venue, the amount of time saved in your case could mean an overall cost saving. As above, most cases going through the Courts take 55 weeks to get to the FDR stage. However, with a private FDR you could have the FDR take place in a couple of months. This should mean a saving in legal. Further, the costs of the private Judge and the venue will be split 50/50 with your partner, so the costs will be shared.
• Removes uncertainty - due to how stretched the Courts are, more and more hearings are being cancelled at short notice due to Judges no longer being available, cases overrunning and urgent cases jumping the queue. If your case is cancelled, then you still have to pay your lawyers who’ve prepared for the case. The Court will not compensate you for this expense and you’ll have to wait to be provided with a new Court date and pay your lawyers for this all over again. By having a private FDR, you remove this risk.

The disadvantages

The only disadvantage of the private FDR is the additional cost of the Judge and the venue. Whilst these are certainly not insignificant costs, they should to a large part be offset by the amount of time saved in your case. Further, as mentioned above, these costs will be shared 50/50 with your ex.

Is the Private FDR binding?

No, the indication by the private FDR Judge as to how they feel the assets should be divided is no more binding than a regular Court FDR. The whole purpose of the FDR, both at Court and private, is that it isn’t binding i.e. the Judge isn’t declaring a winner and loser. Instead, autonomy and power are being given back to the parties to negotiate a settlement between themselves, but with the ‘reality check’ of the Judge giving them clear guidance.

However, if you and your ex reach an agreement at the private FDR, this can be incorporated into a Consent Order which is a binding settlement and would bring your case to a conclusion.

Need help with your Private FDR?

Belderbos Solicitors are family law specialists. Talk us to today if you want advice about a private financial dispute resolution.