Long gone are the days where the first step upon separation is to issue contested court proceedings. There are numerous different “non-court dispute resolution” processes that can be engaged to resolve matters between you and your former partner in a quick and cost-effective manner. One of the most successful processes is often a Private Financial Dispute Resolution hearing, also known as an Early Neutral Evaluation (ENE).
What is a Private FDR (or an Early Neutral Evaluation)?
A Private Financial Dispute Resolution hearing (pFDR) is a form of alternate dispute resolution used in family law cases in England and Wales, primarily for resolving financial disputes during divorce or separation.
It is modelled upon the second hearing within financial remedy proceedings which is effectively a negotiation hearing. A court-based FDR is held on a without prejudice basis to encourage the parties to negotiate freely about their proposals for settlement. If a settlement is not reached at this hearing, then the discussions and offers made cannot be later referred to in open correspondence or in court, they are kept confidential. A Private FDR operates on the same basis but occurs outside of court proceedings which provides several benefits to you and your former partner. In the hearing, an experienced ‘private judge’ will give an independent indication as to what is a fair outcome in your case
What is the process of a Private FDR?
As it is a form of alternate dispute resolution and therefore voluntary, both of you must voluntarily agree to partake in a Private FDR. Together you then appoint a ‘private judge’ for the hearing. This is typically a retired judge or a senior barrister (often a barrister who sits as a part-time judge). In preparation for the Private FDR, you and your former partner will engage in financial disclosure to establish what assets are within the marital pot so that they can be distributed between you. Each of you will then exchange offers for settlement which enable you to establish your respective positions on what the settlement should be.
The actual pFDR itself mirrors the court process. Both parties will usually be represented by barristers who present your positions to the judge. Upon consideration of the presentations by your barristers and the evidence provided, the judge then provides an indication as to how they would divide your assets if they were presiding over your case at a final hearing and making a final order. This indication is not binding but is powerful in persuading parties to settle. The indication is then usually used for both parties to negotiate further to see if a settlement can be reached which is often along the lines of the indication.
Why might you need a Private FDR?
Private FDRs can be particularly beneficial for resolving complex financial matters more efficiently. Private FDRs are for those parties who have tried other alternative dispute resolutions such as solicitor negotiation or mediation but have been unable to resolve the issues between them and are trying to progress their settlement. It can also speed up the court process where there may be many months to wait for a court-based FDR listing.
A Private FDR provides a quick cost-effective, legally robust process by which a resolution can be achieved more efficiently and comprehensively than through litigation. While litigation is sometimes necessary to ensure a fair settlement is reached, unfortunately, the court system is very much overworked, overcrowded and underfunded. Not only are there incredibly long delays for hearings, but the Judge’s hearing list for that day is likely to be so oversubscribed with several other cases listed that they have very limited time to dedicate to you. Unfortunately, this means that at a court-based FDR hearing, the indication provided could end up being expansive and vague as the Judge may not be afforded the time to properly review the documents and evidence before them. It is also possible that the judges presiding over your hearings may not be family law experts or, indeed, have any background in family law at all, but rather in other areas of civil expertise such as property or immigration.
What are the benefits of a Private FDR?
- Control
These harsh realities of litigation noted above can all be avoided with a Private FDR because it enables you to be in control. By choosing who to appoint as your private judge you can ensure that you have an expert family barrister/judge with sufficient proficiency in Private FDR hearings and financial settlements.
A private FDR means you are also not limited by the court’s administrative processes and timings. All the necessary documents are sent to the judge in advance of the hearing so that they have enough time to prepare. With extra time to prepare, the indication that is provided is especially thorough and comprehensive, and it is a very good insight into what may occur at the final hearing. They often provide a written indication for each of you to refer to while negotiating to allow you to understand how they have reached their judgment. The private judge will allot their whole day to your case as opposed to being one of many and will remain available all day to assist in negotiations and provide any further indications or explanations as needed to help prosper negotiations, committed to the process and resolving your dispute.
- Flexibility
There is also a lot more flexibility in Private FDRs than in litigation. You get to choose the timetable for the preparation work and the date of the hearing to best suit your circumstances and at a mutually convenient time. This allows you to control the speed of the process rather than being restricted by court delays.
There’s also more flexibility in the settlement that is reached as it is by consent. At a final hearing, a Judge is limited in what they can order, and the outcomes tend to be rigid and immediate, but as it is an agreement being reached at Private FDR, you retain the ability to negotiate and can be more creative in your division of assets.
- Confidentiality
Unlike court proceedings, a private FDR is entirely confidential. This can be especially valuable for parties who want to avoid public records or media attention on their financial or personal matters. Financial disputes often involve the disclosure of personal or business financial records, assets, income, and liabilities.
For high-profile individuals, business owners, or public figures, public court proceedings can expose details that may harm their personal or professional reputation. A private FDR keeps these matters out of the public eye.
Moreover, knowing that discussions and documents shared in a private FDR are confidential allows parties to speak more freely and explore potential resolutions without fear of their words being used against them later.
- Less adversarial
Private FDRs have the added benefit of being less adversarial than litigation due to their collaborative nature. This is favourable to separating families as it aids enduring relationships post-resolution, which is very important for continuing co-parenting. Needless to say, reaching an agreement at a private FDR ensures that you have chosen and accepted the settlement at the outcome, rather than it being dictated upon to you by a judge.
- Are there any disadvantages to a Private FDR?
Private FDRs have very few disadvantages, but the main disadvantage is that both parties must be fully and completely engaged in the process for it to be successful. The voluntary nature of Private FDRs requires a willingness from both parties to openly negotiate, and appreciate the judge’s indication and the advice of their legal advisors to prosper settlement. In almost all scenarios the time and expenses of preparation provide enough motivation for parties to fully engage with the process.
In line with this, a further disadvantage is that a Private FDR does on the face of it incur higher costs than litigation initially as you are privately paying for a judge’s time. However, the cost of the judge is offset and outweighed by the benefits of a Private FDR. Long court delays, lengthy solicitor correspondence and court fees all tally up, but the control and flexibility of a Private FDR ensure it can be cost-effective.
The final minor disadvantage is that the agreement reached during private FDR isn’t immediately legally binding in the same way as the Financial Remedy Order, and therefore enforceable, but this is quite easily resolved. As the settlement has been reached by agreement between you, it can be converted into a Financial Remedy Order by consent with the help of your solicitor and submitted to the court. Once approved by a judge it is then a fully enforceable and binding order. Nonetheless, if one party reneged upon an agreement made at private FDR there are means to impose the agreement upon that party if necessary.
By providing quicker resolutions, privacy, and a collaborative environment, private FDRs reduce the stress and financial burden often associated with litigation. Rayden Solicitors are specialist family lawyers and can advise on all aspects of family law, including financial division on separation or divorce, at any stage of the process. If you think you and your former partner might benefit from using a Private FDR to help resolve your dispute, please do not hesitate to contact our divorce solicitors to discuss your situation in confidence.
