DR Corner: Introducing Assent: Combining Arbitration and Private FDRs in a Streamlined Process based on the FPR Directions

Published: 01/07/2024 07:00

Anyone who has tried to arrange a Private Financial Dispute Resolution (pFDR) will be familiar with that sinking feeling when the process is slipping away. It starts with a low-level dispute over the judge, the date or the location of the hearing. Then a seemingly innocuous question about disclosure. A pouting email follows, barbed with the threat of pulling the hearing if the question isn’t addressed ‘urgently’. Pleas of proportionality and focus are ignored and the queries multiply. The tone degenerates and costs rise. The client is persuaded to comply with this disclosure request in the hope that the hearing will not be derailed. Another email. Another question. The client becomes dissatisfied. Unhappy with the level of questioning and the threats being received. Alternatives are discussed including arbitration. The request is ignored or refused. With no options left, parties issue. The clock starts ticking from the beginning again – Groundhog Day and round and round we go.

Delay is often in one party’s interest following separation. It was rife during COVID-19, when the court took a minute to catch up with everything that was happening (although not many minutes, such was the efficiency of the Family Court during that period). Strategic applications for adjournments based on spurious grounds were commonplace. With COVID-19 past, the agreement to engage in a pFDR provides a perfect opportunity to effect delay.

In the early days of the pFDR, the process was respected. Parties and their advisers genuinely wanted to engage and believed it was the route to achieve settlement. The hearings most often resulted in an agreement, with parties frequently accepting the indication.

Whilst the pFDR remains one of the most attractive options to attain settlement, the process has become frayed around the edges. Advantage can be taken of the lack of court engagement. Failure to settle at the hearing (or shortly thereafter) leaves the parties frustrated about the next process options, which at that stage often require agreement.

Assent is a structured process which mimics the FPR to provide agreed directions to the pFDR, with arbitration layered over the top. The appointment of an arbitrator ensures a decision maker can deal with anything that arises before and after the FDR.

One of the advantages of the process is that unlike many other forms of non-court dispute resolution (NCDR) the parties are represented and can explore any case they choose. It can be flexed to enable statements to be filed to deal with factual issues and for assets to be valued. The parties don’t need to meet in the middle, mediate or even be nice to each other. They are protected by their representation so it works for all cases, regardless of the issues which may exist.

Assent is being promoted by 13 founding partners who have come together to develop Assent because they believe in it. The calibre of those partners speaks for itself. But anyone is free to use the process – it is not limited to the founding partners. If parties agree to sign up to Assent, they and their solicitors sign an engagement letter which reflects that agreement and off they go. There are checks and balances to ensure that the process is being adhered to, including the requirement for each party to sign off on the other’s conduct during the process. Anyone who fails that final sign off is banned for 6 months.

The kicker to using the process is the fixed fees. Unsurprisingly, this has attracted the most discussion among practitioners and has been the key explanation for those who have been dismissive or sceptical (although there have been amusing reasons put forward, including that some people have never experienced any of the issues which are rife with private FDRs – lucky them, huh). There are three bands of fees, which are envisaged to cover scenarios of varying complexity. There will continue to be cases which are not suited to the process – we all know what those look like – and in those cases Assent will never be considered.

Why fixed fees? Because clients like them. It provides complete transparency and means that they are signing up to something which is organised and they can understand from day 1. It also resolves the issue around the payment of legal fees. One of the rules of Assent is that funding issues are overcome before you start. Whoever has control of the liquid assets has to make money available for the fees of Assent. It is easier to make that work if the fees are fixed and equal.

Commercially, it makes sense too. The process is based on a very structured and curtailed time period to the pFDR. The firm is ‘on risk’ for a limited period. The fixing provides an incentive to comply with the directions which, in itself, is positive to any party who wants to engage with Assent. If a solicitor makes a mistake about the band of fees they put the client into, the period of exposure is short (and they won’t do it again).

The differing levels of fees has attracted interesting commentary. One firm described them as ‘cut price pFDRs’. Another said it was ‘pFDRs for rich people’. Seemingly, the bands are just right.

Where does this go? Ideally, it will form part of the available processes for people who need help to reach a financial settlement following separation. It is self-selecting and every practitioner will know whether they have a case which will suit the process or not. Some may not wish to engage on principle, preferring the accumulation of fees on an hourly basis; that is a matter for them.

And what if Assent is proposed at the outset, with the fixed fees and curtailed direction timetable, but refused. Might a judge at a later stage question why Assent was refused, with ensuing penalties on costs. Given the changes implemented by the Family Procedure Rules (Amendment No 2) Rules 2023 (SI 2023/1324), this doesn’t seem too far-fetched. Those changes mean that costs orders can be made against one or both parties where NCDR is not properly considered or engaged with. Where Assent has been offered and refused without good reason, the costs consequences are very stark and easy to determine. It is easy to see how an offering like this could become part of a routine way to protect clients from cost orders.

How to start

If a client and their legal representatives decide to use Assent, they should write to the solicitor representing the other party and invite them to engage in the process. Once both parties have mutually agreed to the process, the parties must comply with it.

The fees

Before commencing the Assent process, it must be agreed who will pay for the fees of each party. In the event that one party has insufficient liquidity to meet the fees, and the other party has enough, they must agree to meet the other party’s costs.

Assent sets out a fixed fee schedule for solicitors. In addition, the parties shall be responsible for VAT, counsel, pFDR judge, experts and arbitrator.

There are three tiers of fees ranging from £17,500 to £40,000 plus VAT and disbursements.

The Basic Assent process fee shall be paid to the instructed firm of solicitors on account on the commencement date and any additional fees will be paid as they arise.

The firm shall raise invoices post exchange of Form E, post exchange of without prejudice offers and post pFDR, for one-third of the basic assent fee, with other bills on an ad hoc basis as they arise.

The process can be adapted to allow engagement part way through.

Basic timeline

(1) The pFDR shall be scheduled between 8 and 12 weeks of the commencement date (‘the pFDR window’).

(2) Within 5 days of the commencement date each party shall confirm to the other party who their counsel will be.

(3) Within 7 days of the commencement date each party proposes a list of three available pFDR judges and three proposed arbitrators, of which three must be male and three female. With the proposed judges must come details of their fees and three possible dates within the pFDR window. You may propose a pFDR judge who can also act as an arbitrator for issues which arise prior to the pFDR.

(4) From the list, the parties agree a pFDR judge and an arbitrator. If they cannot agree within 7 days of the commencement date, the matter is returned to Assent to choose.

(5) The other party shall choose the pFDR judge from the list within 7 days and the pFDR shall be fixed. The ARB1 is signed.

(6) The parties agree to an exchange of Forms E (complete with narrative sections) by 4:00 pm on the date 28 days after the commencement date extended by 24 hours to accommodate any bank holidays.

(7) The parties will exchange questionnaires by 4:00 pm on the date 14 days after the exchange of Forms E, limited to three pages. Each party will confirm whether they agree to answer all the questions raised in the questionnaire within 7 days of receipt. Any disputes arising from the questionnaires will be referred to the agreed arbitrator within 14 days of receipt of the Form E who shall reply (on paper) within 7 days. The costs of the arbitrator will be met equally by the parties.

(8) Also, within 14 days of the exchange of Forms E, the parties will propose any directions to the pFDR, including provision for how to manage valuations or the provision of statements on any disputes as to matters of fact of which the parties are apart (statements limited to five pages plus exhibits). Any disputes will be referred to the arbitrator on the terms set out at (4) above.

(9) The parties will exchange replies to questionnaire, mortgage capacity evidence and property particulars 14 days after the receipt of the questionnaire (or determination by the arbitrator).

(10) The parties will exchange without prejudice proposals for settlement 14 days prior to the private FDR.

(11) Any order resultant from a successful pFDR (either on the day or in the 7 days which follow) shall be prepared by the party who provided the names of the three pFDR judges within 7 days of the conclusion of the pFDR.

(12) The Assent process shall come to an end 14 days following the conclusion of the pFDR.

(13) If there is no order within 28 days of the pFDR, the parties will commence arbitration.

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