How can divorcing couples reach a financial settlement in the most cost-effective way without going to court?
When a marriage ends, you can use alternative dispute resolution (ADR) such as mediation, arbitration and collaborative practice to reach a financial settlement without having to go to court. Sometimes assistance from the court may be unavoidable in order to obtain necessary financial disclosure of assets, a financial settlement in a timely manner, or, the financial award that one party is entitled to receive. Some ADR processes can still be considered after court proceedings have been issued. At every stage of the court process, the court must consider whether ADR is appropriate. The court can adjourn the court proceedings to allow you to attend a form of ADR.
Unless there is a good reason not to do so, you will be expected to show to the court that you have “negotiated openly, reasonably and responsibly”. Your failure to do so could mean some of the costs of the court proceedings are claimed against you.
What is the benefit of considering alternative ways to reach a financial settlement during a divorce?
Trying to reach a financial settlement using the court process is stressful. As soon as a financial application is issued, you will need to start gathering details about your financial assets and thinking about your future needs. Not all of this information may be relevant in order to settle your matter, but it will be required by the court. It can unnecessarily increase costs along with the added costs of preparing for court attendances that can be delayed and often at short notice.
Using a form of ADR means the parties can have some control over the process to agree on the timetable for financial disclosure and what is to be disclosed with their spouse. There may still be some essential documents that need to be provided to give advice or give a final decision but a more stream lined approach can be more cost effective. ADR is a more conciliatory approach which is important if the parties still have dependent children together and need to co-parent or they will have future family events to attend together such as weddings and christenings.
What are the alternative ways to reach a financial settlement during a divorce – using the collaborative practice?
Before court proceedings are issued the parties can use the collaborative practice. It can be agreed at the outset that neither party will issue court proceedings with their current solicitors advising them. A settlement will be reached with the assistance of their own solicitor, the parties and possibly any experts such as a financial adviser or an accountant in attendance using a series of 4-way meetings. If after agreeing to this process one spouse decides not to engage, and in the absence of a reasonable excuse, this could be used as an example of unreasonable conduct to obtain costs orders against them for prolonging the process and unnecessarily increasing costs.
What are the alternative ways to reach a financial settlement during a divorce – using mediation?
There are several different ways to mediate either with a mediator and the parties, or with their solicitors in attendance. As with the collaborative process, these discussions are also “without prejudice”. Any agreement reached is not legally binding until it is approved by the court. Even if solicitors are not directly involved, either party can take legal advice whilst mediation is ongoing.
What are the alternative ways to reach a financial settlement during a divorce – using Arbitration?
Arbitration provides a legally binding agreement at the end of the process. You appoint an arbitrator, who is a specialist lawyer, from the list of qualified arbitrators at the Institute of Family Law Arbitrators. They sit as a quasi-private judge to determine the issues between you and to make a final decision. The process can be adapted to suit your precise issues that need to be resolved and hearings held at a time that is convenient for you. An arbitrator’s decision can be appealed if there is a real prospect of showing the wrong decision has been reached.
What are the alternative ways to reach a financial settlement during a divorce – using private financial dispute resolution appointments?
Private financial dispute resolution appointments are the same as the court financial dispute resolution (FDR) hearings except you pay privately for a jointly appointed specialist lawyer, usually a barrister or retired judge, to hear the dispute and give you guidance on the likely outcome the court would adopt at a final hearing. The costs of paying privately for the appointment are outweighed by the costs of a delay in the process. A private appointment offers more flexibility with judicial time and location. Again the discussions are “without prejudice” and the outcome is not legally binding until it has been confirmed in a financial order that is approved by the court.
What should you consider doing next?
We can help you to decide and advise you upon which ADR process is suitable for your situation and needs. Irrespective of which ADR process you use, we can help you to prepare and advise you upon the most appropriate documents to disclose and use to reach your financial settlement without financially prejudicing yourself. We can help you prepare for any ADR meetings, Arbitration hearings and private FDR appointments, and represent you at those meetings and hearings too.