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30 JUL 2018

The rise of private FDRs

Rhys Taylor

Barrister, arbitrator and mediator

@RhysTaylor32

The rise of private FDRs

Sir James Munby’s parting shot.

In his last interview for the Family Law Bar Association’s Family Affairs magazine, Sir James Munby ruminated that 'I should have liked to do more on the money front'. In the same interview, when pondering his next steps, he makes clear, 'I’m not – and I tempt the fates by saying this – I am not going off to become a private family mediator. I am not going to do private FDRs'.

Late afternoon on the 27 July 2018, after all the fanfare of Sir James’ valedictory, yet another circular from the President appeared on the wires. Innocuously named 'President’s Circular: Financial Remedies Court Pilot Phase 2' it deals with the further roll out of a specialised money court. Of more immediate note is a section entitled 'Private FDRs' in which Sir James expressly endorses the growing practice of the private financial dispute resolution appointment.

He states:

'A private FDR is a simple concept. The parties pay for a financial remedy specialist to act as a private FDR judge. That person may be a solicitor, barrister or retired judge. No additional qualification is required. The private FDR takes place at a time convenient to the parties, usually in solicitors’ offices or barristers’ chambers, and a full day is normally set aside to maximise the prospects of settlement. It takes the place of the in-court FDR.'
Of real significance, the following guidance is also given:

'Usually, where the parties have agreed to a private FDR the order made at the first appointment will record such an agreement in the recital, and will provide for a short directions hearing shortly after the date of the private FDR. The directions hearing can be vacated if agreed minutes are submitted following a successful FDR. If it has been unsuccessful then directions for the final hearing can be given. An alternative is for the case to be adjourned generally while the private FDR takes place.'
With this last brandishing of his Presidential pen, Sir James may have done something very profound on the money front. Article continues below...
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Lingering judicial resistance to private FDRs 

Most practitioners, the writer expects, will be familiar with the following. Upon attendance at court the judge’s list is stuffed full to bursting with FDRs. Each case has its own complicated twists and contentions. How any one judicial mind can hope to fully and properly engage with the volume and complexity of such a list is to be marvelled at. However, whilst the market for private FDRs in London is well established, one still sometimes comes up against judicial resistance to a private FDR. 

The barely concealed sentiment in such resistance is as follows: Your suggestion is an affront to the dignity of this court – you can spend your money how you like, but if you do not settle privately then this court will insist on an in-court FDR. 

The request for a private FDR, in some quarters at least, feels like one is seeking to cock a snook at what the court has to offer. That is not the case, the list on the door of the court should speak for itself, but a threat of an in-court FDR following a failed private FDR is enough to make the lay client waver. 

Sir James’ guidance should stop such resistance in its tracks and perhaps see a flourishing of private FDRs throughout England and Wales.

The door of the court: support and supervision

In many respects, the idea of a private FDR, sandwiched between a first appointment and a further directions’ appointment, bears some similarities to the relationship between the court and an arbitral tribunal. Under the Arbitration Act 1996 the court is there to supervise and support the arbitration in a number of respects. With a sandwiched private FDR, the court will have ensured full and frank disclosure and the necessary directions for the matter to be set up for a private FDR. If the private FDR fails then the court will pick up the pieces and list a final hearing.

There is one aspect of Sir James’ circular which this writer does not find attractive –namely adjourning the court proceedings generally for the private FDR to be conducted. This writer finds that there can often be unjustified ducking and weaving when trying to fix a date for mediation. Having everyone work to a court ordered date keeps feet to the fire. The 'door of the court' concentrates minds wonderfully. So, this writer would prefer a reasonable time set by the court between a first appointment and a further directions hearing, rather than to adjourn generally. Otherwise the case may risk floating off into the ether.

Who should conduct Private FDRs?

Sir James also makes clear that there is no qualification required beyond being a relevant professional in the field. In the market place there are a host of different skills and specialisms which may be called upon. 

A silk, whose letters patent have conventionally been acquired in the crucible of fighting big money cases in the higher courts, may well have the clout to tell it how it is in a heavy dispute. 

On the other hand, a solicitor or junior barrister (of whatever seniority) who has developed skills in the mediation and collaborative law field may have different and equally effective skills to bring to bear in the forum of dispute resolution. Those who sit part time or have relevant arbitral experience, may also have useful experience in this context.

Some practitioners may also have a deep pocket of particular knowledge which enables them to engage more readily with a particular problem such as when trusts, companies or complex pensions require consideration.

The legal underpinning of the private FDR

The private FDR should retain firm legal underpinnings. It is a sui generis type of appointment, which is something of a cross between mediation and formal advice being given to each side at the same time. 

The privileged and confidential nature of such appointments should be made express with a contract which the parties, representatives and 'private FDR judge' all formally sign up to. 

It may be that in time there will come to be market accepted 'private FDR contracts' in much the same way as there are standard mediation contracts available from various mediation bodies, such as CEDR. Borrowing from the mediation context, there are other standard clauses which might also be usefully incorporated into the private FDR contract. Given the Presidential imprimatur for such appointments, it would be good to see Resolution and FLBA consider whether a standard contract might be promulgated.

Another feature of private FDRs should be impartiality. Whilst those within the profession appreciate that members of the same chambers will offer each other no quarter if instructed against each other, this firmly embedded DNA of the Bar may be a harder sell for a lay client if counsel and the 'private FDR judge' emanate from the same chambers. It is for this reason that it may be more practical not to have a 'private FDR judge' appointed from the same chambers as one counsel. There is nothing, however, legally objectionable provided that each party has had the position explained to them and they expressly consent to such an appointment. 

The case law on bias should be borne in mind and the same level of care (eg emails copied to all) adopted when dealing with a 'private FDR judge'.

Some more practicalities on appointment

One of the difficulties in the early days of family arbitration was solicitors’ anxiety for 'getting the blame' if a decision went against their client, after having recommended a particular individual. IFLA will appoint an arbitrator in the absence of the parties’ agreement as to the identity of the tribunal. Other neutral ways of appointing have also been developed, eg one party selects a list of 5 arbitrators and the other picks one.
Of its nature, some litigants are going to be disappointed by the indications given and it is for this reason that payment should be made in advance of the appointment.

Given that the 'private FDR judge' will have been paid for by the parties, one might expect a more 'service driven' tone to the appointment. The writer is aware of solicitors who have indicated a more ready willingness to conduct their own 'FDR advocacy' where they have appointed a solicitor colleague or a barrister, rather than face a judge whose temperament on the day may be being driven by the size of their list.

Privatisation of justice?

There will undoubtedly be some who bemoan the development of private FDRs upon the basis that, if the court system was properly funded, this is a function originally designed to be undertaken by a court. The privatisation of some aspects of justice has its naysayers in the same way that private medicine and education also does. The fact is, we are where we are. 

It may be that less offence would be taken if we stopped calling such appointments 'private FDRs' and individuals 'private FDR judges' (which the writer accepts he has done throughout this note, adopting the terminology of the President’s note) but rather referred to them as 'early neutral evaluations' and to 'evaluators'. 

A criticism of family arbitration, from some quarters, is that a well developed family arbitration scheme would prevent the development of the law via judicial precedent. Whilst the writer does not accept this criticism of arbitration, it is not even one that can be levelled in this early neutral evaluation context, as the evaluator is just there to help the parties make their own decision, not to impose one.

For those engaged in matrimonial finance litigation, the cost of the appointment of an evaluator is likely to be a very modest percentage of overall costs, and, as with arbitration, potentially a saving if it can swiftly bring a dispute to a close.

Out with the old!

The benefits of early neutral evaluation, now officially backed with this last Presidential circular, are legion and hardly require reciting. Gone is the surly welcome at the door by a jobsworth, gone is the frantic search for an empty room, an electric socket, printer, refreshments and the soul destroying hours’ long wait which seeps the energy out of all involved. The parties’ chosen tribunal for the day will start at a time convenient to all and have only their case to concentrate upon.

This writer has previously opined about early neutral evaluation in the Chancery context. Much of what was said there is apposite here.
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