London firm Hodge Jones & Allen has launched a fixed-fee arbitration service for divorcing couples in the wake of judicial support for such a move to keep costs down.
The firm is encouraging more law firms to get on board, having already secured the involvement of Bindmans to offer a similar approach.
HJA said the new service will appeal to middle-income families for whom the value of their property is likely to be their biggest asset. The arbitration fee will be a “fraction” of the cost of going to court and the regime is expected to reduce the amount of time taken to reach a financial settlement from around a year to four months.
The firm said: “The certainty of outcome and procedural flexibility of the arbitration service makes it easier to streamline the level of legal work needed and to agree a timetable for the entire process… With fixed-fee arbitration both solicitors are acting on the same fee so there is no incentive to engage in overly detailed or litigious correspondence. This behavioural change, along with the absence of a witness box and the benefits of a neutral setting such as a hotel, makes for a less aggressive, more conciliatory process.”
In January this year Sir James Mumby gave the green light for divorce financial settlements to be arbitrated when he confirmed that a settlement reached through private arbitration would stand in a court and could not be appealed.
Then, in a very strong judgment about the escalating costs of ancillary relief proceedings, in November Mr Justice Mostyn called for reform and added that “the merit of arbitration in a proceeding such as this would in my opinion take off if that service offered fixed pricing as a standard feature”.
Toby Hales, partner and head of the family team at HJA, said: “It is clear that the court system just doesn’t work for middle-income families. The impact of the delays and inflated legal fees associated with agreeing a financial settlement in divorce proceedings leads either to financial hardship or an avoidance of the judicial process altogether, which results in unsatisfactory financial settlements.
“Our clients needed an alternative to the court process which was taking its toll both financially and emotionally and so we have listened to their requirements and have developed a practical service that is both swift and economically predictable…
“We hope that other family law practices will sign up to offer arbitration for financial settlements to divorcing clients and that this will spark a sea-change in how separation is handled.”
The move is the latest initiative to come out of HJA’s ‘Continuous Innovation Programme’.