Non-court dispute resolution: the key benefits of early evaluation and arbitration
Covid 19 – and the steps taken by civil authorities to combat the spread of this insidious virus – has had a huge and potentially irreversible impact on all quarters of society. Within the justice system, the temporary closure of courts, the reduction in the number of hearings capable of being conducted with all parties in physical attendance, and the ongoing need for social distancing (and therefore reduced court capacity) has exacerbated the huge backlog of cases that existed even before this crisis.
Family lawyers will be all too keenly aware of the increased delay, stress and uncertainty in resolving family disputes at the moment: the anxious wait to find out whether your hearing is still going ahead at all, and, if so, via what medium; cases being vacated at the eleventh hour and relisted many months into the future; parties worried about physical attendance and/or struggling with remote technology.
Whilst the wheels of justice may have slowed (if not entirely ground to a halt) and the capacity of the court system has been much reduced, the need for people to have access to justice and a fair and timely determination of their disputes has remained undiminished.
Indeed, in certain cases, the pandemic has actually resulted in even greater litigation ‘traffic’, with solicitors’ firms reporting increases in enquiries and requests for advice, occasioned by novel difficulties resolving child arrangements or straightforward cases being ‘derailed’ by unanticipated factors such as the need for new valuation evidence or the loss of a spouse’s income.
The logistical challenges of ‘lockdown’ and home-schooling children, anxieties over the health of loved ones, the prospect (or manifestation) of redundancy and the loss of employment have all contributed to a level of domestic strain which for many families may prove too much to bear. Whether there proves to be a ‘surge’ in the level of family breakdown remains to be seen but, given the ‘pressure-cooker’ environment so many will have endured over the last few months, no one could be surprised at such a development. The risk is that, at just the moment when more families need recourse to speedy, fair and cost-effective dispute resolution, the court system finds itself bogged down with even more cases and less able to cope.
Family or relationship breakdown invariably forces people to confront and deal with, life-changing decisions:
- How do we now divide the care of our children?
- Must we sell the family home and, if we do, how do we fairly apply the sale proceeds?
- Will we all be living in the same part of the country?
- Do the children need to move schools?
- Will I have enough money to live on?
Where parents, spouses and former partners cannot find agreement on these issues, there needs to be a mechanism for finding resolution.
That mechanism self-evidently, needs to be fair but it also needs to be efficient, and not so unwieldy, protracted and expensive that the process itself creates as many problems as it purports to solve.
Thankfully, family lawyers are well versed in, and increasingly ready to help their clients exploit the benefits of, forms of dispute resolution that purposefully stay away from the court system, collectively known as “non-court dispute resolution”. In short, the idea is to replicate, modify and use the ‘good’ bits of the court-based system (authority, objectivity, independence and legal competence) whilst jettisoning the ‘bad’ bits (delay, expense, unnecessary confrontation).
Whilst the label “non-court dispute resolution” encompasses many different individual models, schemes and philosophies, there are effectively three main pathways that can be taken: mediation, early neutral evaluation and arbitration. The latter two are addressed below.
Early neutral evaluation
The central idea behind early neutral evaluation is that where parties (whether with or without the support and input of their own lawyers or a mediator) have been unsuccessful in reaching an agreement, they jointly appoint an independent, objective and neutral third party (usually another experienced family lawyer, or a retired judge) to assist them.
Critically, this third party – or ‘evaluator’ – does not decide the case for the parties: the role of the evaluator is to absorb and analyse the parties’ suggested settlement proposals and thereafter provide non-binding guidance by identifying and predicting what a judge would be likely to do, were the matter to proceed all the way to a contested trial in court.
It is deliberately part of the process that the evaluator does not have the power to simply decide the dispute there and then: instead, the function of the evaluator is to stress-test and ‘reality-check’ each parties’ suggested settlement position, identifying the strengths, weaknesses and (importantly) risks of the competing proposals. The circumstances of the dispute – whether focusing on finances or children – will vary enormously from case to case. Sometimes the dispute will be amenable to a binary, ‘either / or’ indication: for the most part, the indication will outline a bracket of likely outcomes, together with the evaluator’s more finely-tuned view as to where within that bracket the would be best advised to look for common ground.
In financial cases the process – whether a face to face meeting, a virtual video-conference or simply a referral to the evaluator ‘on the papers’ – is intentionally enveloped in ‘without prejudice privilege’, meaning that the terms of the offers made, the proposals advanced and the evaluator’s indication and advice cannot generally (there are, inevitably, some limited exceptions) be referred to subsequently if settlement proves elusive and the matter proceeds, unresolved, into the court arena.
By knowing what ‘cards are on the table’ and illuminating to the parties what would be likely to happen at court, the evaluator creates an environment where settlement ought to be more likely.
What, one might ask, is the point of introducing a third party to do that? Surely the parties’ own lawyers will give clear, robust, reliable and accurate advice about that is likely to happen if the dispute was resolved by a court? That is unquestionably usually the case but it must be borne in mind that in family disputes, most of the core statutes and case-law confer a huge amount of significance on the notoriously elastic concepts of ‘fairness’ and ‘best interests’, and consequently vest a huge amount of discretion in the judge in how they determine a dispute. If the legal matrix underpinning the parties’ dispute is inherently discretionary and flexible, there is inevitably a “generous ambit of reasonable disagreement” as to how matters might fairly be resolved.
In that situation, having a scrupulously independent and objective third party involved, who is not aligned to either party and has no involvement in the case other than to provide a neutral evaluation can be incredibly powerful and very, very often proves to be the key that enables parties to overcome previously unbridgeable gaps or move from entrenched, ‘red-line’ positions.
To have maximum benefit, the indication needs to be provided as early in the process as it can be.
The main advantage to an early indication is that the parties learn, as soon as practicable, the likely size and shape of a court-based outcome, without having to await an actual full-blown contested trial at court. This usually translates into a great saving in potential legal costs (and, significantly, savings in time and stress).
Whilst a neutral indication obtained at an early stage in the proceedings might, by its very nature, be given at a time prior to extensive disclosure and without the parties having prepared or challenged detailed evidence, the majority of cases do not require expensive resolution of factual disputes in order for a Judge to arrive at a fair outcome.
Moreover – and crucially – in the authors’ experience it is actually those cases that have been allowed to trundle along for months and months, indulging in extensive requests for further disclosure, or pursuing lengthy ‘trial by correspondence’ that cause disputes and resentments to become entrenched and where settlement prospects reduce. The longer the litigation goes on, the more polarised parties become.
Where the resolution of the disputed evidence one way or another will make no (or little) difference to the outcome, irrespective of the strength of feeling on each side, there is enormous benefit in obtaining an early indication before parties spend time and money on what can prove to be a wild goose chase. This can be particularly important for modest asset cases where the costs incurred quickly become disproportionate.
Of course, within the court arena, it is usually the case that the timetable will include an ‘evaluative’ type hearing, aimed specifically at facilitating early settlement (although for disputes about finances and disputes about child arrangements, the form, structure and parameters of these hearings is very different).
However, the parties will inevitably find themselves competing for judicial attention with many other cases, with the judge hopping between cases. Sometimes the actual ‘face time’ with the judge will be limited and can feel very rushed. Often, the judge will have had no time properly to absorb any of the background reading, may not have received all the paperwork at the right time, and may be impatient, particularly if the case has been included in an already busy list or the Judge feels ill-equipped to deal with it.
Far from instilling confidence, the whole experience can leave both parties thoroughly dissatisfied. With early neutral evaluation, the parties know they will be engaging with a process that deliberately provides sufficient preparation time for the specialist evaluator, they will each have ample opportunity to ‘have their say’ and the evaluator will have proper time to consider the arguments and formulate their indication. Whether the evaluative indication ultimately is or is not in their favour, each party will know that their arguments have been properly considered by a genuine specialist.
Given the magnitude of the sorts of issues that are usually thrown up on relationship breakdown, it is far, far better for any outcome to be designed, built and agreed between the parties themselves, and not imposed by a stranger. Solutions are far more likely to be durable, palatable and workable if constructed by those they most affect. By stepping outside the formal court process but remaining within the framework of targeted legal guidance, the parties can significantly improve the prospects of reaching agreement.
Whilst early neutral evaluation, particularly in the form of the private FDR, is nothing new, the current pandemic has provided greater and renewed impetus to adopt it.
First, private FDRs are not only for ‘big money’ cases. Family lawyers are acutely aware that it is often the lower value, needs-driven cases that are the hardest to crack. Where money is plentiful so are the options for settlement. Where one or both parties face a tight (or dire) financial situation, greater creativity (and sensitivity) is often required.
The huge advantage of the private FDR process is that it is entirely bespoke. If the funds aren’t available, you don’t have to instruct the most senior of senior juniors or a silk as your ‘judge’. Specialist family counsel of a more junior level of call will be very used to encountering the issues arising in your case (it is often more junior counsel who are instructed in more modest claims and who are already experienced in resolving them at court).
Flexibility doesn’t stop at your choice of FDR judge; it also extends to the process itself and these are a few examples:
- A private FDR can be convened on a date and at a time of day to suit the lay clients rather than being shoehorned into a busy court list. Court FDRs can be fraught at the best of times but at present with parties (and lawyers) working from home and perhaps juggling work commitments with home schooling, or with a divorcing couple stuck under the same roof, there are myriad practical difficulties assisting parties to participate fully in a Court convened virtual FDR. The private FDR can be arranged using state-of-the art video conferencing technology at a time to suit (including outside ‘usual’ hours if that suits the parties’ other commitments) and as quickly as the parties want;
- A private FDR judge is available for as long as you need them to be and will be completely focused on resolving the case. In our experience, the prospects of settlement are greatly increased when the parties have the confidence that their tribunal fully understands the detail and has had an appropriate amount of time to read the papers and listen to the competing arguments. In modest asset cases (including where a ‘reality check’ may be required) it is vital to have a judge who is able to deliver a ‘robust’ indication with kindness and sensitivity and without appearing rushed or brusque;
- An effective private FDR (especially if undertaken early on in the process) will often significantly reduce costs in the long run. Conversely, an ineffective or disappointing court FDR, whilst notionally ‘free’ in terms of the cost of the tribunal (the Judge), can be very costly if the parties plough on to a final hearing when they could have settled the case with a bit more time and a more finely calibrated steer;
- Whilst the Courts strive to keep ‘children’ issues and ‘money’ issues strictly separate, often this is highly artificial. Frequently a financial case will stall because the parties can’t agree the child arrangements or one party is manipulating their stance on one aspect to influence the outcome of another. There is no reason why, in an appropriate case, the private FDR process cannot be adapted to encompass an early neutral evaluation in respect of child arrangements issues as well. Ultimately, it is up to the parties to agree how they would like to be assisted.
An agreed settlement is not, for a whole host of reasons, always possible. Sometimes, one or other (or both!) parties will be unreasonable. Sometimes, even having had the benefit of early neutral evaluation, one or other party still wishes to proceed to final hearing as they are more confident in the merits of their position than indicated by the evaluator. In other cases, circumstances will dictate that a decision must be arrived at as rapidly as possible, and the parties will decide to by-pass the early neutral evaluative process altogether. That does not mean, however, that the only avenue now available to the parties is the pathway to court.
Since 2012, the main species of family finance disputes have been capable of being authoritatively determined under the Arbitration Act 1996 under the auspices of the scheme developed by the Institute of Family Law Arbitrators (“IFLA”). In 2016 the scheme was expanded to deal with certain disputes relating to the care of children.
Again, the objective of arbitration is to replicate and modify all the ‘good’ bits of the court-based system whilst ditching the ‘bad’. Essentially the parties form a binding contractual agreement jointly to appoint a neutral, objective, and independent third-party to decide their case. The third party – the arbitrator – is specifically empowered under the terms of the Arbitration Act 1996 and the subsidiary scheme rules designed by IFLA to fashion and deliver to the parties a comprehensive decision on the points in issue that will be just as authoritative and binding (indeed, on one view even more so) than a decision made by a judge.
Notably, whilst the arbitrator must apply the substantive law of England and Wales (the scheme does not permit the adoption of foreign or religious law), the parties and the arbitrator have a very free hand in terms of procedure. The beauty of the IFLA scheme is that is provides great flexibility as to case-management, enabling (where appropriate) a streamlining of evidence and procedure and imposing on the parties only that amount of preparatory work that is either agreed to be undertaken or is, in the arbitrator’s view, truly necessary. Where it is appropriate, the procedure can of course fully and closely replicate the full rigours of the court process (for example in the requirements of disclosure or the obtaining of expert evidence). In other cases, a more ‘light touch’ approach will be appropriate. Either way, a bespoke process will be custom-built around the specific circumstances of the individual case.
Importantly, efficiency and economy does not come at the expense of ‘cutting corners’: where expert evidence is required in either a financial case or a dispute about child arrangements, the arbitrator has power to commission reports from suitable expert witnesses. In purposefully stepping away from the procedural straight jacket of the court-based process, considerable savings in terms of time, costs, industry and general friction can be made.
Notably, the arbitral process isn’t necessarily mutually exclusive from court-based litigation, nor is it confined to situations where all the issues are disputed. Specific, discrete issues can be hived off from broader, court-based dispute and referred out to arbitration. For example, the parties might be engaged in a dispute which is working its way through the court system but a case-management issue (let us say, a dispute about the identity of an expert witness) unexpectedly crops up. Rather than referring the matter back to the judge and awaiting the listing of a hearing to decide the issue (which might only take place at some delayed, far off date, thereby causing problems for the remainder of the case-management timetable), the parties can refer to issue to arbitration and, with a suitably streamlined procedure adopted, be delivered of a swift and authoritative decision. An interim dispute (such as interim maintenance or short-term child arrangements) might arise which, if left in the hands of the court to decide, could lead to a serious problem. In such a case, the parties would be well advised to refer that discrete point off to arbitration, and sort it out all the faster.
Often the resolution of family disputes is obstructed by a single, preliminary ‘big issue’ (for example: Is a financial liability claimed by one party entirely genuine? Can one parent relocate to another part of the country?) which creates a blockage to effective negotiations. Here, arbitration can provide a speedy, targeted and focused decision, which (one hopes) unlocks the remainder of the parties’ dispute.
The parties will also be assured that their arbitrator will be a specialist in the relevant field of law. The individual arbitrator will be chosen and selected by the parties by agreement (with, obviously, the help and guidance of their own lawyers) or, if there is no agreement, can be appointed by IFLA from a panel of identified specialists. This does not mean, for example, that either party can seek tactically to manipulate the selection of the arbitrator towards one seen as more likely to be “in their camp”: the arbitrator must be scrupulously independent and impartial.
As noted above, family separation usually means people have to navigate a way through some fairly big and potentially difficult life decisions. The emotional strain of relationship breakdown can make it hard to focus on what is really important.
Many couples will be able to reach an agreement without ever seeing lawyers. Where finding common ground is more challenging, it is critically important that the process of dispute resolution does not itself introduce more problems: whilst remaining fundamentally ‘fair’ it must be geared towards efficiency and utility.
Sometimes the court arena can become an unhelpfully combative and gladiatorial forum. Of course there will be cases where, for a whole host of reasons, proceeding to court is the right course of action. However, where outcomes can be so heavily influenced by the process, family lawyers and their clients must be ready to explore, engage with and utilise all forms of non-court dispute resolution.
More about our guest blog writers:
Tom Carter’s practice is predominantly centred on financial remedies, cohabitation disputes, pre-nuptial agreements and Schedule 1 claims. Tom has built up considerable experience in complex financial cases including those involving asset tracing, third party claims, off-shore trusts, contentious company valuations and international issues. Tom regularly acts as a private FDR judge and as an arbitrator.
Laura Moys has a maintained a purposely versatile practice dealing with complex financial and private law children disputes. She is recognised for both her skill as an advocate and her ability to assist her clients to resolve difficult and emotionally-charged cases by agreement. Laura was appointed as a family Recorder (part-time Circuit Judge) in 2018. She is an experienced private FDR judge, provides Early Neutral Evaluations in children cases, and has a keen focus on enabling parties to reach out of court solutions to a range of interrelated family problems.
How Family Law in Partnership can help you:
At Family Law in Partnership we are specialists in out of court dispute resolution processes including arbitration and private FDRs.
To find out more about Family Arbitration and how it can be used in your family law case, take a look at our dedicated Arbitration page.
Further information on Private FDRs can be found on our website page Solicitor Led Negotiation and Private FDRs.