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If the cap fits. Should divorce fees have a limit? Analysis from family law expert Aasha Choudhary

Written by Aasha Choudhary, partner and family law expert at law firm, Shakespeare Martineau

Popular culture can make it appear that the only option for divorcing couples is a bitter court case, which often comes with an expensive price tag. However, there are other ways for clients to separate that can help keep costs down, while minimising the stress involved for all parties.

Some of the key considerations are explained in this article for IFA Magazine by Aasha Choudhary, partner and family law expert at law firm, Shakespeare Martineau. There have been a number of high-profile cases that have hit the headlines recently, where separating couples with extremely high divorce fees have been showcased.

This includes Lazaros Xanthopoulos and Alla Rakshina, where the parties racked up in excess of £5.5 million in divorce costs in under two years, leading some to query whether caps on divorce fees should be introduced.

It is important to note that many family law advisers sign up to the Resolution Code of Practice, which promotes a constructive approach to family issues and taking steps to preserve the family unit.

Advisers not only have a statutory duty of care to ensure cases are dealt with in a proportionate and cost effective way but they are also obligated to keep clients clearly informed about costs, meaning the divorces that are often shown within the media are the exception, not the rule, and excessive costs would not be so likely for your average couple.

Obtaining expert advice early on very often reduces legal costs in the long-run and can also help to minimise the stress involved in an already difficult process. Going to court should always be a last resort. This is not only because this tends to be the most expensive option, but it inevitably makes a bad situation worse. Court proceedings are usually issued when communication between the parties has broken down completely and they are not able to reach an agreement without the help of a judge.

It is important to remember that divorce proceedings are not ‘one size fits all’ and taking time to learn about the possible options can help separating couples to choose the right one for them. One way separating couples can keep costs down when going through a divorce is to pick their battles wisely. The process of divorce and financial settlement require negotiation and ultimately for both parties to compromise.

Before seeking advice from a family adviser, it can be helpful for your client to make a list of their ‘deal breakers’, so that it is clear which points take priority and which can be conceded, and their objectives are clear. They should try to create the list in a calm, rational frame of mind, so that decisions are not made based on emotions – although this can prove difficult and sometimes near on impossible.

It is worth bearing in mind that arguing every single issue to the bitter end will require more of a lawyer’s time and will likely increase the overall costs of the process. For this reason, taking a commercial view of the situation may be more beneficial in the longer term.

It is common for clients to use their lawyer for both legal and emotional support. Whilst this is part of a family adviser’s job and while many advisers fully acknowledge how life altering a separation can be, time needs to be spent wisely and your client should try to focus on the legal issues otherwise their costs can quickly escalate.

Of course, it always going to be necessary for your client’s lawyer to understand the background and detail is needed to present the best case, lawyers do charge an hourly rate and therefore it can be more economical to provide only the most relevant information. It is not at all unusual for divorcing couples to need additional support to deal with the emotional aspect of a separation, and here the services of a licensed mental health professional can help.

Court action should be avoided if possible, mediation is a logical first step when trying to reach an agreement, and should always be encouraged. It is also mandatory to have attempted mediation before starting financial or children proceedings in court.

Put simply, mediation involves an independent third party who cannot advise but can provide information to facilitate without prejudice (i.e. which cannot then be referred to or relied upon in any subsequent court proceedings) discussions and negotiations. As a prerequisite, parties must provide financial information to each other.

If an agreement is reached, this is recorded in a document called a Memorandum of Understanding, which is then enshrined in law as a Consent Order when approved by a judge. However, one of the disadvantages is that the Memorandum of Understanding is not legally binding, and one of the parties can renege at any time, leading to terms having to be re-negotiated.

As mediation also involves separating couple negotiating and reaching a solution between themselves, it requires a certain level of communication and so does not work for everyone. Although, there is no enforced end date or limit to the number of mediation sessions that might be needed, if effective, mediation is thought to be more cost-effective than taking court action.

A less well publicised route to settlement is a roundtable meeting where the parties sit in separate rooms with their respective legal advisers and there are negotiations with a view to thrashing out an agreement, which can provide a cost-efficient option for divorcing couples. Round table meetings are voluntary and also used to reach an out of court settlement, however, unlike mediation, clients do the majority of negotiation through their advisers.

Again, there is an exchange of financial information between the two parties, but this is managed by their advisers who carefully analyse and challenge the information provided to get to the truth of the assets. This adds a level of transparency, which can provide comfort to couples particularly if part of the reason they are separating is due to a breakdown of trust.

Prior to the round table meeting, the advisers also agree a timetable for provision of financial information, raising and answering any questions, valuations of any assets and a date for the round table meeting is then fixed. If this the timetable is not adhered to or the parties do not reach an agreement at the round table meeting, then both parties are still at liberty go to court. This time pressure can provide an effective way of maintaining some momentum, fast tracking a settlement and keeping costs under control.

There are other dispute resolution options, such as collaborative law and arbitration. Collaborative law is a relatively new alternative to conventional negotiation, where it is agreed beforehand that parties will not use the court process and instead resolve matters in a series of meetings. Arbitration is a formal process and is binding, with the final award being resolved by an independent arbitrator. The benefits are that it is faster and less expensive than going to court and you can also effectively choose your own judge.

It goes without saying that divorce can be an extremely distressful time, and whilst it is easier said than done, taking a commercial view of the legal side of divorce can be beneficial to your client in the long term. By using a range of techniques from mediation, roundtable meetings and simply using a family legal adviser to best effect, can reduce the financial burden of separating couples and keep the process as straightforward and pain-free as possible.

 

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