A common misconception on the breakdown of your marriage/civil partnership is that you will need to go to court with your ex-partner to resolve the finances.
Whilst the option is available to make an application to the court to issue financial remedy proceedings, this should always be considered a last resort. Court proceedings may be required, for example, where one party is refusing to disclose assets, or is simply not engaging in the process. In addition, owing to the recent Family Procedure Rule changes in April 2024, the court would want to see that you have both attempted to engage in non-court dispute resolution alternatives (where appropriate) before any application is made. The court retains power to put court proceedings on hold for parties to attempt NCDR where appropriate and can penalise parties who refuse to engage.
There are a number of different out of court settlement options, which are summarised below.
Solicitor-led negotiations
Solicitor negotiation involves the instruction of a solicitor to represent you in discussions with your partner direct or any solicitor they may choose to instruct, on your behalf. This can involve undertaking the process of financial disclosure, as required in the context of court proceedings, on a voluntary basis in order to reach an agreement. This can avoid the need to resort to court to decide how the finances should be dealt with on the breakdown of the relationship as the solicitor will focus on the financial matters and minimising any emotional arguments which can prevent parties from being able to reach an agreement.
Arbitration
Arbitration in the context of a relationship breakdown involves the appointment of an independent third party, known as the arbitrator, who will hear each party’s case with all the evidence and will make a decision applying the laws of England and Wales. The parties will then be bound by the arbitrator’s decision. The benefits of arbitration are that both parties will have flexibility in choosing their arbitrator and the timetabling of the matter. It is also a much swifter process in terms of timescales than a court application.
Private Financial Dispute Resolution Hearings (pFDR)
pFDRs mirror the second-stage hearing (known as the Financial Dispute Resolution Hearing or “FDR”) within financial remedy proceedings in terms of procedure and use. In the court process, the FDR is used as a negotiation day for the parties. Each party will put their case forward to the Judge as to how the assets should be divided, normally through the instruction of a barrister. The Judge will then, in an attempt to assist the parties, provide an indication as to how they would divide the assets as if the decision needed to be made on that day.
PFDRs operate the same in practice, with the key difference being that the parties employ a Judge to undertake the FDR privately outside of court in a location of the parties’ choosing. PFDRs are beneficial in that you would have a private Judge for the day to assist with any financial settlement discussions, in addition to saving time having to wait for the court to list the second-stage hearing.
Collaborative law
Collaborative law involves the parties negotiating and reaching an agreement together through a series of round-table meetings, with their legal representation. Whilst the parties would take the lead in these joint meetings, their solicitors would be in attendance to assist with negotiation to facilitate a settlement. It is possible to involve other neutral third parties, such as a financial advisor, to assist parties with their discussions.
The benefits of this are that all negotiations are progressed in joint meetings between the parties, and there is no formal written correspondence, which allows the opportunity to discuss practical arrangements and creative settlements suitable for those involved.
The parties agree at the start not to issue court proceedings, and it is common to agree that should the round table meetings break down, that the parties will appoint an arbitrator to determine their case.
Mediation
Perhaps the most common method of NCDR is mediation. Mediation involves the parties appointing an independent third party, the mediator, who will facilitate discussions between the parties, including taking through any issues and negotiations to reach a settlement. The mediator cannot determine matters, nor give legal advice. Mediation offers a more informal environment than court proceedings, and either party has the opportunity to take independent legal advice in respect of the discussions or settlement at the start and throughout the process.
It is also possible to facilitate a solicitor-assisted mediation, which involves the same principles as the above, with the addition of your solicitor being present to provide legal guidance and assistance during the course of negotiations.
Resolution Together
Resolution Together is a new advice-based service whereby one couple works with one lawyer to help them make a consensual decision on the outcome of their separation and the finances. This is beneficial for parties who have separated and remain on an amicable basis and wish to work together in reaching an appropriate settlement for both parties. This also removes a significant amount of costs of communication which would otherwise take place between two solicitors.
It is important to note that whilst it is possible to reach an agreement from the above available methods, it is imperative that any agreement reached is formalised by way of a court order to ensure that any claims arising by virtue of the marriage/civil partnership are dismissed in full. The Family team at Stephens Scown can assist you in drawing up a financial consent order and associated paperwork for submission to the court. Alternatively, you can call us on 0345 540 5558.