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Financial dispute resolutions in divorce

We explain the purpose of financial disputes resolution and the advantages and disadvantages of allocating a private specialist.

23 June 2022

Financial dispute resolution (FDR) is a crucial step of the three-stage process in the financial proceedings of divorce. Below, Farishta Malakzadeh runs through everything you need to know about financial dispute resolution in divorce.

What is an FDR?

An FDR (financial disputes resolution) is held without prejudice, focusing on any potential financial settlements after divorce between the parties involved. In the majority of cases, the financial dispute is settled at this stage, as it allows the judges hearing the resolution to give indications of the likely outcome of the financial proceedings application. This helps the parties to keep their costs low by possibly avoiding a final hearing.

What is a private FDR?

The use of private financial dispute resolution has become more popular recently as an alternative to FDRs in court. In Sir James Mundy’s words, a private financial dispute resolution is where “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…. The private FDR takes place at a time convenient to the parties, usually in solicitor’s offices or barrister’s chambers, and a full day’s normally set aside to maximise the prospects of settlement. It takes the place of the in-court FDR”.

Like a court FDR, private FDRs are also held entirely without prejudice, meaning that what occurs at these meetings can’t later be used against either party in any further open court proceedings where a divorce financial settlement isn’t reached.

What are the advantages of private FDR?

The family courts have been over-stretched and under-resourced in recent years, especially since the pandemic, which has caused a delay in divorce proceedings being finalised. The use of private FDRs as a way of sorting the finances in divorce allows couples to avoid waiting for court availability. Instead, they can choose a time that suits them to start negotiations about their divorce and finances and finalise the process sooner.

Another advantage of private financial dispute resolution is that it can take place across an entire day and at a time convenient to both parties. Again, due to the backlog and the pressure on the courts, they can’t allocate a whole day for a financial dispute resolution hearing and usually limit it to two hours. This can be insufficient time to deal with certain finances in divorce, making it harder to reach a settlement.

Splitting finances in divorce is a stressful process for both parties and attending a court can also be stressful for many people. In a private financial dispute resolution, both parties can choose where it takes place, such as their divorce solicitor’s office. They can also agree together on the choice of a suitable judge with the knowledge and expertise on a particular issue of finances in divorce.

What are the disadvantages of a private FDR?

One disadvantage of a private financial dispute resolution is that a private judge must be hired, making the parties responsible for the judge’s fees. In a court-based FDR, the court doesn’t charge for the judge’s time, but there may be a very small court fee applicable.

However, this additional cost of financial dispute resolution when done privately can be offset by having the matter dealt with quickly and avoiding the possibility of a final hearing in court, which increases the costs significantly for both parties.

How can Slater and Gordon help with your FDR?

At Slater and Gordon, our focus is helping our clients to achieve the best possible outcome in their divorce proceedings, ensuring a smooth and cost-effective process.

If you’re interested in using private financial disputes resolution in your divorce, or wish to discuss anything mentioned in this article with a family law expert, call 0330 041 5869 or contact us online today and we’ll call you.

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