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BLOG: The value of out of court settlements

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Written by: Richard Phillips, head of family, IBB Solicitors
27/05/2015
Ekaterina and Richard Fields have just been involved in a ten-day final hearing in divorce proceedings battling over the division of £6m of assets. They are also disputing the level of maintenance payments Ekaterina is seeking from her husband. It is estimated they have spent over £1.25m in legal costs.

The High Court judge hearing that case had urged the couple to reach an out of court settlement on the eve of the hearing.  Mr Justice Holman told Mrs Fields (a Russian-born former beauty queen, aged 42) and Mr Fields (a former lawyer and now businessman who has been married 5 times, aged 59) that divorce battles are “like a boxing match”.

He reminded them that they were married for ten years and had two children together.  He added that it was a painfully destructive experience for them to have to give evidence against each other in open court when they should be negotiating a fair out of court settlement.

Other options

Mr Justice Holman’s sentiments are certainly admirable and worthy. There is no doubt that reaching an agreement without litigation is a much better way both emotionally and financially. More and more people are looking at alternative ways of resolving marital breakdowns.  The most common model is mediation.

In essence, it is a process where an independent person helps the couple to reach an out of court settlement by facilitating meetings and looking at options with them.  Importantly, particularly for the wealthy, the process is private and confidential unlike some court hearings.

Third parties can be invited to help such as relationship counsellors, child consultants and financial neutrals, such as accountants and financial advisers. Legal advice can be provided alongside mediation and should certainly be obtained when a mediation agreement is reached since it is non binding at that stage.

There are other options such as collaborative law.  In brief, the couple and their lawyers sign a participation agreement saying they will not litigate so there is a commitment to a process which is driven by meetings rather than court or lengthy correspondence between solicitors. Again independent and impartial advisers can provide support where needed. Alternatively, others are using arbitration.

This has many advantages where the parties have unresolved issues to sort out which they cannot sort out through mediation or through the collaborative process without a binding decision from an arbitrator.  It is private and confidential, much quicker than the court process and the same arbitrator will deal with all stages of the case whereas in court proceedings, there are often changes in the Judges hearing the case so it can lack continuity.

Alternatively, people are seeking a joint advice from an experienced barrister or former judge though this is not binding unless the parties agree.

Conclusion

The take up of alternative ways of resolving family disputes is growing daily.  It is becoming more mainstream.  However, out of court settlements are not possible for some.  There may for instance be issues of dishonesty, lack of financial disclosure, an imbalance of negotiating power, domestic violence or mental health issues.

There is a limit to what even a very experienced and skilled mediator can do.  Some couples are bent on trying to destroy each other without regard for their children or themselves as anger, hurt and fear overwhelms them.  Those of more modest means than Mr and Mrs Fields usually come to realise that they cannot afford to keep litigating.

Wealthy couples can keep spending huge amounts on their hired guns.  In view of a family judge’s wide discretion to order what is fair and reasonable, it is very risky to leave it to a judge to decide the financial future rather than take control and have destiny in one’s own hands.

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