Out of Court Settlement: How and Why To Do It

Posted on 17th August 2020

One of the impacts of COVID-19 has been the closure of courts for several months across the country.  This has resulted in a massive backlogs of hearings that were cancelled,  as well as new cases needing hearings, and it will take a considerable period of time before the backlogs are cleared and the courts are back on track. Even then, a financial case from start to finish if it runs the whole length of proceedings will take approximately 18 months to 2 years to conclude.  It is always best to try to settle out of court and there are various ways that this can be done.

“Kitchen Table” Deal

There is nothing stopping the parties from agreeing the financial settlement in whatever way they choose.  However, if you do choose to do this you will still need to have the agreement set into a court order, called a consent order, and ratified by the court.  It is also very important that you take legal advice from an expert family solicitor who specialises in financial provision to make sure that your agreement is a fair and workable one.

Mediation

For most people, a kitchen table deal will not be easy to achieve and they may need some assistance. Mediation is recommended as an alternative which will still enable you to negotiate your financial settlement outside of the court forum, but be guided and assisted by a trained mediator. Jacqueline Major, head of the Family Team at Hodge Jones & Allen is a qualified mediator and says:

“Mediation can be a very effective forum for the parties to negotiate on all aspects of their relationship breakdown, including what happens with finances. The mediator’s role is there to assist the parties with their negotiations and help them in a neutral and even-handed way. For parties who are confident they can sit down together, in a neutral environment assisted by an independent mediator, this can be a very effective way of moving forwards to an out-of-court settlement”.

If you choose mediation Jacqueline advises that you choose a mediator who has good experience as a solicitor in financial provision, this would usually be a qualified solicitor who is also qualified as a mediator and who practices in the area of financial provision. Hodge Jones and Allen have qualified mediators who are experts in financial provision, and we offer a cost effective and first rate mediation service.

Solicitor-led Negotiation

This is the most popular route that people take if the above options are not appropriate or have been tried and failed. This involves each party having a solicitor (although there is no requirement for both parties to be represented) and the solicitor will help with full and frank disclosure of all assets so that it can be seen what is in the “marital pot” for division and then help with negotiations sometimes by letters of offer, sometimes by roundtable meetings to arrive at a fair settlement.  Many people choose this route because they feel supported by having legal advice so they know that they are having the process done properly, with disclosure of all assets, and with the knowledge that they have been advised on their proposed settlement. The solicitor will then draw up the consent order and submit this to the court.  This is a very successful way of achieving an out-of-court settlement which can then be ratified by the court.

Private FDR

FDR stands for Financial Dispute Resolution.  This is a court hearing which would ordinarily take place within court proceedings and be conducted by a judge in court.  However there is an option to have a private FDR which is where the parties engage their own “judge” who is usually a senior practitioner who also sits as a part-time judge and has plenty of experience in adjudicating on financial provision cases.  The cost of this varies depending on the seniority of the “judge” but the advantages are significant:

  • No waiting a year or so for the court to give an FDR appointment;
  • Guarantee that your “judge” will have read all of the papers, be fully available for your case only (unlike court lists which are usually chock full of other FDRs at the same time) for a whole day;
  • Guarantee that your judge will be there to assist you with negotiations as the day progresses and the judge will also give a detailed evaluation of what that judge would decide should they be the final hearing judge.  Obviously judges’ decisions do vary but it is likely that your private FDR judge will give a very good and fair and detailed assessment of what the parties could expect to achieve if they were to reach a final hearing and most cases that are conducted on a private FDR basis do result in a settlement.

Arbitration

Finally, there is the option of the arbitration. Very much like the private FDR, you choose your arbitrator who will sit as your final hearing judge. The difference between the private FDR and arbitration is that arbitration is binding whereas a private FDR is a consensual process and the parties cannot be forced to enter into an agreement i.e. no order can be made unless the parties agree.  Arbitration though is binding and therefore offers the certainty of a swift final solution at relatively little cost (really just the cost of the arbitrator) and is much quicker than awaiting the court process and final hearing.  Arbitration is an increasingly popular area in the world of family law.

Jacqueline Major is a staunch supporter of out-of-court settlements. She has a very high success rate of achieving agreements for her clients.  Jacqueline says “it is always better for parties to be able to reach their own tailor-made solutions rather than have something imposed on them by the court.  It is also far more cost-effective to have an out of court settlement than running a case through the court.  There are so many options available for people that one is bound to succeed provided the will is there on both parties to negotiate their settlement fairly and sensibly”.

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