Between 29 October and 5 November 2014, Mr Justice Mostyn heard a financial remedy dispute between two embattled divorcing parents.
Their home was worth £291k, a property portfolio worth £317k, pensions of £115k and two businesses valued at £2080k.
By the Financial Dispute Resolution appointment on 12 March 2014, they had spent £226k in costs. However, eight months later on 6 November, their legal costs rose to a staggering £920k – nearly one third of their assets.
In another case, the current President of the Family Division (in 2008 as a High Court judge) spoke of excessive costs constituting to “a scandal which must somehow be brought under control“. In 2012 Lord Neuberger had a go at costs in his lecture to the Association of Costs Lawyers, saying that hourly billing confused “cost with value”.
To avoid “the grotesque leaching of costs”, like Lord Neuberger before him, Mostyn J proposes fixed costs legal services to replace hourly billing, together with costs caps – and is to send the issue back to the President of the Family Courts for action.
This blogger has always been ambivalent towards hourly rate billing, believing that ‘time spent’ varies according to expertise. The lazy or inept lawyer can spend considerable time doing what the expert will do in an instant. With hourly billing, one is overpaid, whilst the other is inadequately rewarded.
But has the judiciary really grasped the nettle of costs?
The simple flaw lies deeper, in the fact that two firms of litigators, whose interests are served by protracting conflict, are permitted to take their clients into headlong battle, for which both the public and their clients pay at an hourly rate.
What do they pay for? Frequently, the ‘what is there?’ – the identity and value or the assets – is not the problem. Where divorcing couples can’t agree, they get an independent valuation. The real issue is to determine ‘what to do’ with what is there; and that is the job for their barrister.
The impenetrable form E – the court designed document intended to set out a financial picture probably fails in every regard, other than to raise rancour. What is needed is a simple schedule of assets, liabilites and income. After all, the court will attend to these (as did Mostyn J) – not the aspirations and wishes of the parties, nor tactical positions crafted by their solicitors. Why, then, should the preparation (and possible agreement) of such a schedule not be made a pre-requisite of a financial remedy claim?
What to do with the assets is frequently fairly obvious. Up and down the country District Judges hear contested cases in a matter of hours and give extempore judgments immediately following the evidence. More frequently, matters resolve at the financial dispute resolution stage when a judge (without hearing evidence) makes sage suggestions.
Why the battle lines? Why two lawyers and an adversarial process? What is wrong with simple experienced and impartial analysis to help resolve these issues? That the parties won’t agree is simply an excuse by an over-priced, unwieldy adversarial system – made possible and perpetuated by the court process.
Regrettably, what Mr Justice Mostyn did not evaluate was the significant cost to the public of hearing the case – numerous appearances before the lower court, a Deputy District Judge, Judge Bancroft’s salary, Mostyn J’s own salary over seven days, the Family Court and High Court buildings, court staff, heating and lighting – to deal with a ‘delinquent’ couple who had spent £920,000 with their lawyers.
How bizarre is it having public courts dedicated to this massively costly process, paid for at huge cost to taxpayers?