Tamsin speaks to arbitrator, mediator and barrister Rhys Taylor about private Finance Dispute Resolutions (FDRs). There has been a considerable amount of legal press about private FDRs recently as the courts struggle to cope. However, Rhys offers a simplified guide to the process and when they can help couples resolve their differences.
Director of Financial Planning and Chartered Financial Planner Tamsin Caine has a strong background of over 15 years within the financial services profession. She began Smart Divorce following her own experience with divorce; she now advises people in the same situation as she once was, enabling them to take back control of their life and finances. Smart Divorce website is www.smartdivorce.co.uk. Contact her by email tamsin@smartdivorce.co.uk.
Rhys Taylor specialises in money and property disputes following family relationship breakdown.
In the field of financial remedies he has a noted and sought after specialism dealing with pensions on divorce. He is very well versed with cohabitant disputes or disputes involving third party rights in financial remedy cases.
As a "family law" barrister with significant experience of contested civil trials, he is well placed to assist family lawyers with substantive and procedural advice in either conducting or resolving disputes arising under the Trusts of Land and Appointment of Trustees Act 1996.
Rhys is both an IFLA appointed arbitrator and civil mediator. He also offers Early Neutral Evaluation (private FDRs) for both TOLATA and financial remedy disputes.
He was voted “Family Law Commentator of the Year” in the 2015 Jordans' Family Law Awards. He is a co-author of the third edition of “Pensions on Divorce: A Practitioner’s Handbook” (LexisNexis/Jordans) and a member of the Pension Advisory Group. Rhys lectures on his areas of interest, including at the Judicial College on the subject of pensions on divorce.
Contact Rhys at rtaylor@36family.co.uk.
Hello and welcome to the Smart Divorce podcast. This podcast is for you if you're thinking of separating, already separated or going through divorce. My name is Tamsin Caine, and I'm a chartered financial planner. We'll speak to some fantastic specialists who can help you to get through your divorce, hopefully amicably and start your new chapter positively. Now, over to today's guest.
Tamsin
Hi and welcome to you the Smart Divorce Podcast. I am delighted to be joined this morning by my Twitter friend Rhys Taylor. Rhys, how are you?
Rhys
Yeah, fine, thank you Tamsin. Thank you very much for inviting me to speak on this podcast.
Tamsin
Not a problem! Would you like to start by introducing yourself and telling us a bit about the work that you do?
Rhys
Okay, so I'm a barrister and I've been a barrister for about 23 years. For many years I've practised purely in family work and that mainly concerns what we call financial remedy work, which is sorting out people's finances when they're getting divorced. And I also do a lot of work relating to people who have disputes about property ownership when they never got married. As a barrister, I work here in court but I also spend quite a lot of time trying to keep my clients out of court, and trying to affect settlements, which can bring expensive proceedings to a close. I'm a mediator and I'm also an arbitrator and that allows me - if parties wish me to - to sit as it were, as a private judge and to determine disputes between parties. I'm also able to offer a service called Early Neutral Evaluation. That's something that sometimes within the family law world is called a private FDR, which we're going to talk about in a moment. And that involves having the parties together to discuss what case looks like before they go off and spend a lot of money on litigation. Early neutral evaluation differs to mediation, inasmuch as an evaluator gives a view about what the case looks like to them, whereas a mediator is someone who's there largely involved to facilitate the parties coming up with their own solution without actually getting involved in the merits of the case too deeply.
Tamsin
Okay, so when we discussed recording this podcast, we talked about arbitration and private FDRs because they're probably legal terms that most people in the general public aren't familiar with. There certainly were terms I wasn't familiar with, but I knew that you were using them to work on family law cases to help people come to a settlement. So you talked briefly then about a private FDR. How do they really benefit people?
Rhys
Well, I suppose I should start by explaining what a court FDR is. If one understands what a court FDR is, then one can see the differences in the benefits which arise with a private FDR. A court FDR is an appointment which takes place within financial remedy proceedings after the parties have given their disclosure but before they're required to step into the witness box and give evidence. Although an appointment for an FDR is normally before a judge listed initially for, say, an hour, the parties would expect to be at court for the day. And really, it provides a golden opportunity to get everybody under the same roof and talking to one another and the speed at which negotiations go when you've got each side in different rooms, rather than having to write letters which can take a week or so to be responded to, and it really makes a huge difference. And the judge is there, who really is the umpire of the day and they conduct early neutral evaluation. So quite often you'll have an experienced judge who will say, looking at short summaries of the case. So the judge accepts that they're not making a final determination. They're just giving a view. The judge will say, Well, I've seen the short summaries which are available for both sides. Both sides may make oral submissions through their lawyers and the judge will say: "I think that broadly, if I was deciding this case, it might end up in this sort of parish or that sort of parish or this kind of outcome and having given those indications." It reality checks some of the arguments which one or both parties are making. And it gives them a fresh perspective to get out and have further discussions. And then the parties can come back into court later on for some further assistance. Now, then an FDR is asking a judge to do something which, in a sense, no judge should ever be asked to do: they're prejudging the case without having heard all the evidence they're just giving a quick off the cuff view as it were because they are prejudging the case without having had the benefit of hearing all evidence. It means that that judge can then have no further involvement in the case if it doesn't settle on that day. But when done well an FDR is a very effective appointment to help parties resolve their disputes and quite often cases will sort themselves out at an FDR. It's a non-binding indication by the judge and the hearing is what we lawyers call a 'without prejudice hearing,' which means that the the judge of the final hearing is not allowed to know anything that happened at that appointment and that the indication is just a non-binding, helpful indication from the judge to see whether or not he can help the parties resolve their disputes. So that's in an ideal world how an FDR works. The reason why private FDRs have come to the fore in recent years is because the court FDR doesn't always work as it should do. Our courts, it's well publicised that they're underfunded and often there are not enough judges and there's too many cases in the list, and I regularly attend courts where you'll find maybe six or seven really heavy cases in the judge's list for FDR in one day and the amount of reading that that one judge would have to do when they come into court maybe at sort of eight o'clock that morning is just gargantuan and doing the best that people can, understanding all the nuance and the detail of all those cases and not getting them mixed up is a really difficult thing to do. And because there is so much in the list, sometimes you won't be the case that gets called on at 10 o'clock. You'll be the case that gets called on at three o'clock and with the best will in the world by that time in the afternoon maybe the parties' discussions haven't developed because they were waiting for their indication and the judge is fairly exhausted, having dealt with six cases before they get to yours and it's all not quite as intricate. I'm afraid to say as well that the court of state is in a very poor shape on and there are often no conference facilities, so you may have a family attend to court with the best will in the world to try and spend the day negotiating. But there aren't any rooms to sit in. So you're sat in a corridor or if you have a room maybe there won't be satisfactory facilities. I've been in some rooms where there isn't a power supply that you're able to use, there are certainly no easy printing facilities. Quite often, the court canteen was closed years ago, and in some courts they even move the drinks machine. So it goes on. It's just a very uncomfortable place to be making massive decisions about finances and divorce, which can be one of the big moments in people's lives. So because of how busy it is for the judge because of how unsatisfactory the environment is to work in, firms of solicitors and barristers' chambers for some years now, have been offering a service privately, and that involves a solicitor or barrister acting as an evaluator and conducting the role of a judge would conduct, were the case in court. Some of the people who do this are part time judges in any event and even the ones who aren't, are very experienced in these kinds of proceedings and quite often able to be very helpful. In some instances, I'm afraid, more helpful than a court based judge. That's not to criticise the court based judge, a private evaluator only has that one case to deal with for the whole day. So you can attend at an office, you can have a room with coffee and facilities. There isn't the scrum and the panic for room space or for getting your moment in front of the judge. There isn't a problem with private FDRs and their relationship with the court. The court rules do require an FDR to take place. And the judiciary are supportive of private FDRs and said that provided a private FDR has taken place on and they would, and if the case then doesn't settle on, they would be prepared to not have, in the usual a case, a court based FDR. So the court system recognises the problem and is content, in effect to sub-contract this piece of work out to the private sector, where the parties are able to have more time, more genial facilities and the best possible opportunity trying to settle their case. I'm sorry, that's been a long answer, but that is why a private FDR has many advantages over a court FDR.
Tamsin
If a couple agreed with their lawyers that they were going to use a private FDR but a settlement couldn't be reached by going down that route. They could later go to court and see and put this in front of a normal judge?
Rhys
Yes. So I think you've got three scenarios. You've got the scenario where there is no proceedings, no court proceedings at all and parties may have had voluntary disclosure and have an FDR, and if they don't settle, then they can simply issue proceedings. And in all probability, the court would not require there to be a court based FDR because there already had been one. And you could have a case where there are already proceedings. They would have, perhaps been what we call the 'first appointment' where the court gives directions for the instruction of financial experts, maybe an accountant or a pension expert, or something like that, and requires parties to answer certain questions and various other bits and pieces. And what the court might have done at the first appointment is to say that rather than have a court based FDR, there will be a private FDR. Sometimes the court will even direct the day when it should happen. If then, that doesn't happen... I'm sorry... if that is not then successful what the court requires, is to be told that an FDR did take place. The court will want to know who the evaluator was and the court will want to be told, not what offers have been made, but the fact that offers were made, as I said earlier, it's a fundamental principle of these hearings, these FDR hearings that they are conducted without prejudice. So the court based judge doesn't really want to know what happened in the private FDR. All they want to know is who conducted it and the fact that offers were exchanged and an indication was given by the evaluator and in most cases, that will satisfy the judge. If the parties have been unable to resolve their differences, the court will then be prepared to list the matter for a final hearing for an adjudication by a court based judge. There may be some instances where a court is, for whatever reason, concerned about what might have happened at the private FDR. And there is some guidance. It's called the Financial Remedies Court Good Practise protocol, and in that it does provide that a judge may make specific inquiry as to what happened in the private FDR. Now, if that was to happen, that is a fundamental lifting of the veil of this without prejudice -privilege I've been talking about. That would mean that by having asked for some detail about what has gone on that judge would in effect, have become a court based FDR judge and would thought not then be able to continue to hear the case afterwards, but exercising the court's case management prerogatives if for some reason, they were concerned about how everything looked and wanted to lift the bonnet and find out what was going on, they'd be entitled to do so. But that would mean they could not then continue to deal with the case to be adjudicated. Although, of course, that judge could give their own FDR indication. It is anecdotally thought that that will happen quite rarely, but it may happen from time to time.
Tamsin
Okay. So it sounds to me as though a private FDR has quite a lot of benefits. We were talking before we began recording about how you would go about appointing someone to undertake a private FDR. I had obviously completely misunderstood the position that the couple would be in. Do you want to just run through how a couple will go about getting a private FDR?
Rhys
Okay, so, there's not an absolute requirement that each party is legally represented, but because this is a relatively new thing that people in proceedings are doing, quite often it's only in cases where parties have legal representation that they will be told about it. So I'll deal with legally represented parties in the first instance. Barristers who quite often would work as evaluators have their diaries managed by clerks and solicitors regularly phone barristers' clerks to book time in their diary for various hearings. And really, that's all that would happen here that the solicitors could decide on an evaluator. Then one of them would phone the clerk and book the time in the diary. It's just as simple as that. Of course parties who are unable to agree may be unable to agree on lots of things which may include who their evaluator is to be. I've had people thinking that maybe if I have a female evaluator, she'll take a particular view, or a male evaluator may take a different view. I personally don't think that's accurate. I don't think there's a male and female perspective, particularly to be brought to bear here. Most evaluators will be very experienced lawyers who will simply state the law as they understand it to be. It really doesn't matter who you have. But given that concern, if parties are unable to agree on an evaluator, as sometimes happens with the appointment of experts in proceedings, what you can do is you can have one party choose a list of three or five possible names, and then the other person can choose one of them. And so that's a way through that. Now, it would also be possible for the parties, even if they didn't have legal representation, to contact a barristers chambers and say that they'd like an appointment for an evaluation. There'd be a number of barristers who'd be prepared to do that, but it would be a rarer, a rarer thing to happen. And it may well be that some barristers would refuse to do it on the basis that there are some subtleties and complexities in understanding how the private FDR relates to the court proceedings. And so it wouldn't be for everyone. But for some people, perhaps a professional couple who are very well read up on how the procedure is supposed to work, it might work without lawyers as well
Tamsin
Okay. And once the barrister has been selected and agreed to form a private FDR, what happens next?
Rhys
Okay, so I should correct something I've said so far, which is I'm talking about barrister evaluators. And of course, you may equally have a very experienced solicitor evaluator. I'm also a retired judge, so I wouldn't want to give the impression I'm merely promoting barrister evaluators when any experienced family, justice, legal, professional might be able to assist in this regard.
Tamsin
Do they... if you are approaching a lawyer as opposed to a barrister to undertake a Private FDR - do they list themselves somewhere? Do they promote themselves as being in a position to do that or could it literally be any family lawyer?
Rhys
Okay, so the guidance, which has been given by and Sir James Munby, who was the president of the family division up until last summer, said this: "The parties may pay for a financial remedy specialist to act as a private FDR judge. A person may be a solicitor, barrister or a retired judge. No additional qualifications are acquired." So as far as the court system is concerned, it can be anyone with which the parties agree has a requisite level of expertise. Now, there isn't a central register of people who offer early neutral evaluation. But I would suggest that most senior solicitors and barristers - I'm guessing north of 15 or 20 years experience - would be willing to do so. Maybe even more junior barristers. You know, a barrister with 10 years call or a solicitor with 10 years post qualification experience, has a tremendous amount of flying hours under their belts and would be able to assist at perhaps of a cheaper rate than somebody who's been at it for over 20 years. But as I say, there isn't a central register. That's one of the beauties of having legal representation because the lawyers would know the kind of people in the area who would be well suited to do this. I can think of a retired, a very well known, recently retired solicitor in the Leeds area who, I understand, is conducting private FDRs. I don't suppose he's on any official list or anything but those in the legal profession informally know that he'd be available if asked. And most barristers chambers, all barristers chambers will have profile pages of individual barristers and they will say on their individual profile pages whether or not they offer this service and many of the specialist and family law chambers also now have an alternative dispute resolution page, which you can go to which will explain the different services which are offered, which is usually mediation, arbitration, early neutral evaluation. There'll be a list there of the people within that chambers who are offering those services, and some will also, quite publicly on the website, what costs are. But I think you asked, and I didn't yet have an opportunity to answer, what happens once the private FDR is underway.
Tamsin
Yeah!
Rhys
Let me tell you about what happens in my chambers at the 36 Group in London. We have a wing which we call the alternative dispute resolution wing, which is set aside for mediations, arbitrations and early neutral evaluations. If a member of the the 36 Group is appointed, either as the evaluator or as an advocate, within the evaluation, then that wing, which involves four rooms, is free to the parties for their use for the whole of the on duration of the evaluation. Parties reportedly turn up at about nine o'clock in the morning, the clerks would have been in touch the day before to cheque on dietary requirements, and we'll have ordered in some lunch so that people don't really need to worry about, you know, getting hungry and things like that - they will be looked after for the day. They'll have separate rooms where they can meet with their lawyers. Quite often the solicitor and the barrister will attend at about nine o'clock in the morning, and we'll have discussions for an hour or so. I say and hour or so, it might be two hours sometimes maybe even three hours. Probably by about 10 or 10.30 in the morning, the evaluator will ask to see the the legal representatives to ask where they are. Are they ready for a hearing or would they like some more time. If you're asking a judge for more time in court, sometimes because of the way to the court list you get a fairly short answer. But because this is the only case the evaluator is concerned with that day, if they want time then that's available., Once the parties have had further discussions, it may be that settlement becomes a real prospect even before the evaluation has formally started because just the fact of getting everybody under the same roof, as I've already said, enables discussions to proceed in a way which just isn't otherwise ordinarily possible. If the parties haven't resolved their issues, they'll go into the hearing . They would have a short written summary of the parties' positions, which each respective advocate would speak to. And give a potted summary of what they really say their position is and what their best points are. That hearing would probably take an hour or so. Each side would probably want 30 minutes or so to expand on their note to explain what their position is. The evaluator might have questions. The evaluator might challenge some of the submissions of the advocates and say: "Well, you say this, but what about that case, or have you thought about this?" So it's a discussion. It's an opportunity to reality check how realistic party's positions are being. The evaluator should be patient. The evaluator should be empathetic. The evaluator should be learning and listening and be interested to try and help the parties resolve their disputes. The evaluator isn't there to bully parties or to make people settle. The evaluator is simply there to be as helpful as he or she possibly can be. Once the submissions have been given, the parties and the advocates may withdraw from the hearing room for a little while for the evaluator to draw their thoughts together to give an indication. Or it may be that during the course of the hearing, the evaluator will have come to some fairly fixed views as to what they want to say and won't need any time anyway. The evaluator - when they're ready to give the indication - will then give that orally. it's not.. in the way in which these are done, it's not a written opinion, it's an oral indication, and the wise evaluator will not be too - if I can put it this way - cocksure about what they're saying because nobody really knows how litigation will turn out. Anyone who's involved in litigation knows that uncertain things happen and the result doesn't always end up as you were expecting it to be. And for that reason the evaluator will be very careful - or the competent evaluator will be very careful in the way in which they articulate themselves. They'll say: "Well, quite often the result might be this. But you know, in some cases, it can be otherwise." But they will be as helpful as they can and as clear as they can, whilst acknowledging that litigation is an inherently uncertain process. The evaluator - and for that matter - a court based FDR judge shouldn't be arrogantly, if I can put it that way, clinging to their opinion either. So once on an indication has been given, it should be open to advocates to say: "Well, thank you very much for the indication, but can I just put an alternative point of view? Or can I ask if if you were wrong on the first point you were talking about, does that change your view on the second point?" What the parties... what the lawyers and the evaluator are trying to do, is to give the parties as much information as they possibly can have to try and help them settle their case. And I don't think it helps parties with an evaluator simply saying: "Well, I've given my indication, I'm not prepared to discuss it anymore." The parties will want to see that their arguments are being tested to destruction as it were, so a confident and helpful evaluator will be open to challenge and for the advocates to come back and pick at the evaluation if they want to. Don't necessarily expect the evaluator to change their mind, but they should be open for a discussion so that the parties can see that all angles have been properly debated. Once all of that has been done, you're probably at lunch time? So you would want the parties to have an opportunity for a break. Our chambers is in Gray's Inn. Parties and go out for a walk in Gray's Inn if they want to, just get a breath of fresh air, they can have some lunch provided by Chambers. And then they are back again trying to use the indication that has been given in the evaluation to try and resolve the dispute if they can. If you get to the point where there is an agreement in principle or there nearly is an agreement in principle, then the parties would have to consider whether there's time left in the day to draft a formal order, which makes sure that absolutely everything is hammered down. And in more complicated cases, it can take a number of hours for a draft to be fully put together. And it's not always possible to attend a court with a draft because you may attend the court with the draft because you want it. But then, in the nature of negotiation, concessions are made and the final draft will look different to how you turned up at the start of the day. So, there can be some time before the parties will have a final agreement that they're ready to sign up to. Going back to your court based FDR: quite often, the judge will say: "Well, I'm sorry I can't sit after 4.30pm this afternoon." That's absolutely fine. That's when courts are listed to sit until. You have some heroic judges who will sit on until six or 6.30pm, but don't expect them to. Then some judges will say: "Well, look, you're nearly settled, I'm happy for you to leave a signed order for me to review the following morning. And the court is closed, the judge goes and then the court staff, now that the judge has gone, really want all out of the building. So, I've had the most unsatisfactory situation where you are at an extremely sensitive point in negotiations at quarter to six, and you only need another 40 minutes to sort all this out. But the core staff couldn't care less. Hoof you out into the gutter, and you've got to go and find somewhere else to continue your discussions. Sometimes probably there's a solicitor's office nearby, but I've even ended up in a pizza restaurant trying to complete the discussions. And it's not very satisfactory. That does not happen at a private FDR and you can expect, within reason, the evaluator to be willing to stay on much longer than you would ordinarily expect a court based judge to stay on. So sometimes it's not until mid evening, but everything is signed off. But then there's that massive relief and although it's been a hugely long day, everything is signed, sealed and delivered, and sorted out.
Tamsin
Yeah, that sounds more sensible. You mentioned a couple of times about advocates. Am I correct in understanding that an advocate is the is the lawyer or the legal representation of each party?
Rhys
Okay, so you've got two types of lawyer who are involved in this work. You've got solicitors and you've got barristers. The barristers historically have been the lawyers who get instructed to go to talk, to go to court - I'm sorry - to do this speaking. Whereas the solicitors are the lawyers who manage the litigation and prepare the case so that it is ready to go to court. There isn't... it's not fair to to say that one role is more important than the other. It's really important that cases are well prepared. And if they're not well compared, the advocate can't do their job properly. So a well prepared legal team will be getting all the paperwork in apple pie -order so that the advocate is then ready to run with the ball for the final dash once at the hearing. It's also the case that in recent years there's a more permeable membrane between what solicitors do and barristers do. So there are many solicitors who are very, very competent advocates. And then there are some barristers who get more involved and work more hands on with solicitors in helping manage the case. So there is still a traditional distinction. The barristers are the ones who speak in court, the solicitors are the ones who manage the litigation and put together; they work very well as a team. But you can have the solicitor acting as the advocate sometimes. It just depends.
Tamsin
Okay, All right, that's great! Is there anything else that I should have asked you about private FDRs that we haven't covered?
Rhys
You should probably ask about the price.
Tamsin
Oh yes, that would be a great idea!
Rhys
So, if you're appointing an experienced legal professional to read the papers in advance; that's perhaps one or two lever arch files files and then spend the day - however long it takes to resolve that case - then you're probably using up the best part of two days professional time. I can't be definite about the prices, because different solicitors and barristers offer different prices, so all I can do is give some broad guidelines as to what costs are. There are two different types of barrister, I should mention. You have junior barristers, and then you have QCs. I've been a barrister for 23 years, but I would still be called a junior barrister because I haven't been appointed a QC. So you can have some very senior barristers who technically are still described as a junior barrister. I would suggest that the range of fees for a junior barrister of in excess of 20 years call, to act as an evaluator in a way which I've described would be between three and £5000 plus vat. And that cost would be shared between the parties. So if you have a fee of £3000 that would be £1500 plus vat per party. Then the silk fees are higher, and they would be within the range, probably between five and £10,000for that. It's really for the parties' and their lawyers to decide where they are in the market in terms of how difficult the case is, what assets are involved in the case and to decide what is their budget for the appropriate evaluator. I mentioned earlier that you might be able to get a much more junior evaluator who would do it for cheaper than that, so that's just a range off possible fees. Now, I do appreciate that that sounds like a lot of money in comparison with having the court based FDR judge who notionally comes for free, just the court fee of issuing the financial remedy proceedings. Um, but as a percentage of global legal fees the evaluators fee is quite... is relatively low. It's common, depending on the size of the case, to see on the legal fees just of one side being anywhere between 20 and £50,000 by the time you get to a court based FDR, depending on how complicated it is. And so adding to those legal fees an additional £1500 or £2500 or £5000 doesn't massively alter the global spend. And it does give the parties a better chance, a golden opportunity of trying to settle their disputes and if they can do that then, of course, they kill the litigation dead and they stop incurring future costs as lawyers would otherwise have to go on to prepare for a final hearing.
Tamsin:
Okay, so it's no necessarily cheaper, kind of, if you just look at that in isolation but may lower the cost of the overall legal requirements, getting from A to B. Is that what we're saying?
Rhys:
Yes
Tamsin
Yes, that's brilliant! Thank you so much for joining me today, Rhys. That's been really enlightening, certainly for me. There's a lot of information there that I didn't know anything about. Thank you so much for joining us. And I'll hope to catch up with you again soon.
Rhys
That's a pleasure! Thank you, Tamsin!
Tamsin
Thank you for listening to the Smart Divorce podcast. If you'd like details of our guest today or or myself so you can get in touch, please check out the programme notes Many thanks! See you again soon!