Its my money. Trust me!

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Over the final half of my 37 years as a barrister in private practice, I have been arguing over money.

Not mine, I hasten to add, but other people’s. In particular, divorcing spouses or cohabitees. There comes a time after almost every separation when two people who have lived together and loved, start to argue about the spoils. Those that can afford it rush to a solicitor or direct access barrister and commence battle. Those that cannot pay may chose to go it alone.

Either way, they have embarked on a battle from which there is little respite – until they run out of money, of energy, or are crushed at court in a final hearing.

But the purpose of this blog is not to bemoan honest,hard-working people spending inordinate amounts of their money on lawyers and in courts. It is to examine the fundamental flaws of financial remedy proceedings (as the financial arrangements are called in court).

My first observation is prosaically procedural. How is it that going to court to argue financial splitting of assets can remotely be justified? The cost of this process starts at £12,000 for the couple, and soars to a dizzy £100-120,000 in more complex cases. In J v J the parties managed to rack up £920,000 in costs between them, much to the judicial amazement and displeasure of Mr Justice Mostyn. Do they get a return on their investment? J v J didn’t; and generally, the chances are – not.

Readers of my earlier blogs will recall my commentary on the alternatives of mediation and arbitration, which I will not repeat here. Guidance by a single expert makes sense, assuming the expert knows what a judge would do, and that both parties agree to be bound by the outcome. There is, of course, the other ‘questionable’ alternative of splitting at the outset by way of pre or post-nuptual agreement.

My main concern here is to do with the philosophy of division where children are involved. In fact, my problem goes further – to question of ‘ownership’ and ‘responsibility’.

The financial wars that I have witnessed rarely focus on the children. Yes, this may be the court’s first consideration when it comes to making an order, but the children seem to remain ‘bit players’ in the battles, unless they are to be used as weapons to secure a greater share of the booty for one of the parents.

So, what would happen if we changed the rules?

Imagine this. When two people decide that they are to have children, they would do so in the knowledge that they forfeit ownership of property to them? How would that be?

Simple. The law would deem that all matrimonial property vested immediately in trust for the children, and that each parent became a trustee for the child. Rather than children being ‘the first consideration’ for a court, a child or children would be deemed to be the beneficial owners of all of the property. There would no longer be the ‘divvy up’ entitlement of assets to to each parent; there would be an appropriate of provision for the parents’ immediate needs and no more. The rest would be managed exclusively to provide everything that their child would need through to the age of 21.

What a glorious world that would be – children placed, where they deserve and need to be – at the centre of decision making as the beneficiary and responsibility of their parents’ endeavours.

But will such ever come to pass? Of course not. We have neither the imagination to prioritise children over parental greed, nor the legal system to oversee it.

Instead, we will continue to subsidise the lifestyle of lawyers (of which I am one). But, long may it continue – for after all, what value the future of our children?

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Arbitration revisited

Divorce Arbitration blog in April 2012  reflected on the first 40 divorce arbitrators appointed through the Institute of Family Arbitrators. Since then, the President Lord Justice Munby in S v S has given arbitration in financial remedy cases a massive boost. A final piece of the jigsaw has been thrown down on the table by Mr Justice Mostyn in J v J – a matter which I covered in the blog Scandalous Costs.

You don’t need to be clairvoyant to detect the future for financial remedy cases. With unacceptably escalating costs in adversarial court processes, coupled with the possibility of open justice through public courts, we are unlikely to continue to litigate many financial cases as we have done in the past. The alternatives may not be as I described in Solving Disputes, but there is a lot to commend the concept of private resolution.

So, how well placed are our northern regional centres – such as Manchester, Sheffield Leeds and Newcastle – to meet future demand for private arbitrations of disputes about family finances?

A handful of individual of regional practitioners have taken the plunge to qualify as financial remedy arbitrators, yet there has been no consistent policy to produce pairings, let alone teams within barrister’s chambers or solicitors’ practices. Further, we have developed no marketing arm to promote arbitration, or practice policy to bring arbitrators together.

The Chartered Institute of Arbitrators, as a regulatory body, can do so much – perhaps mainly for London based practitioners – but it hasn’t the reach to make a difference in the provinces, and market weight will not remedy this deficiency for some time to come.

This market sector is highly specialised, so it is unlikely to attract corporate players outside the current legal community of financial remedy practitioners. But that is not to say that the regional market cannot be absorbed by London collectives.

Now may be the time for northern financial remedy arbitrators to make changes – to be less reliant on the old systems of referral – and much more focused on direct marketing with a single regional dispute resolution centre. Lord Justice Munby is paving a way that we in the north would be remiss not to follow.

Scandalous Costs

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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?

 

 

Party Animals

MUNBY

photo of Sir James Munby, President of the Family Division, courtesy of Brian Smith for the Telegraph

“Going to court about your children is almost as bad as accepting an invitation from Jeremy Kyle…you should have sat down quietly together and sorted it. Instead you go for broke and destroy your last bit of dignity in a courtroom drama?

Strong words, (I hasten to add, not from the President of the Family Division) and amusing in their invective; but containing that trace of truth that harbours an important point.

If anyone was to invent a process that was better designed to fan the flames of conflict and at times humiliate the protagonists, they may be hard pushed to beat the current ‘family court system’. Take two people who are at loggerheads, a judge who ‘has better things to do’, bring in two lawyers with their jerry cans of publicly funded fuel, strike a match and you’re sure of a big blaze. If you are legally aided, the taxpayer gets to pay for your day in court, and if you are not-so-sponsored, you can also add in a huge bill for all the damage that is sown and reaped.

For over thirty years I have played my part as a barrister in these cases. Often, there are no winners – apart from the lawyers. The adults leave court with the compromise they could or should have agreed many months before, and the children pick up the emotional tab of their parents’ conflict.

In my previous blogs I have explored the role of mediation to tame the tempest. Glance back to see my ‘mediation musings’. But in this blog, I want to explore the question of why we allow (and frequently require) the adult players to be the drivers of litigation concerning their children.

The Children Act 1989 was intended to put children first. Maybe it did, but the legislators did not seize the stinging nettle as to ‘who should manage’ competing claims. In 1989, the adversarial system was still in full flight, even in children cases, and family advocates were rated on being a “good fighter”, “doughty opponent”, or “a determined advocate”. It would have been unconscionable to remove from parents their cherished ‘party status’ through which they could both commence proceedings and seek to control them as litigators.

Now the climate has changed. The courts have felt the effect of global warming and frequently turn on the air conditioning, or even the sprinklers to cool the temperature of conflict. The Children and Families Bill seeks to remove some of the more divisive concepts concerning private law orders. So, is the right time to take that extra step – and withdraw party status from the protagonists?

Envisage a system where, when an issue arises in relation to the care or management of a child, the court is notified, and appoints a ‘children’s guardian’ as a matter of course.

Rather than allowing the adults to rush through the doors of the court, the guardian would mediate between the parties, aiming for the middle ground that is so often adored by judges. Where agreement was possible, it would be recorded as an agreement and submitted to the court as endorsed in AI v MT and re-affirmed in S v S.

Should agreement not prove possible, the guardian’s solicitor, owing an equal duty to the child and the court, would take over the whole case management. One of their tasks would be to obtain statements from the parents setting out their concerns, positions and requests. The parents /grandparents /extended family members would all remain witnesses, having a right to have their voice heard, but not to manage and control the case. Only in public law cases where serious allegations were made against a parent would the question of party status arise.

In the absence of party agreement, the Guardian’s advocate would present the contested issue to the court, calling the parents as relevant witnesses. That which had already been agreed could be outlined, and the remainder decided by the district judge.

Of course, we would have to move away from the adversarial process, and that would require cultural and legislative changes. This may already be awaiting in the wings with the advent of the Single Family Court. We would also need proper funding of guardians and their solicitors. But the saving of replicated costs of party status for parents would probably pay for a pretty good service.

The requirements of efficiency and institutional functionality would probably rule out CAFCASS as a service provider, yet with a large pool of funded, professionally regulated, independent guardians, this problem could be overcome.

European Convention articles 6 or 8 may be cited as an issue, but  the European Court in Rosalba Alassini & Ors v Telecom Italia SpA & Ors, a endorsed the introduction of compulsory mediation as a preliminary step to litigation. Here, the facilitative role of the Guardian would be a preliminary step before the right to be heard by the court.

Do you agree that the change is a timely and necessary step on the road to managing both public and private law issues competently and proportionately, keeping the child on centre stage?

But what about the poor lawyers who would lose work? …..Yes, you have a point there.