FIXED FEE FUTURE FOR DIVORCE??

For some time now I have advocated the need for the profession to implement a more flexible and modern way of charging legal fees. There is a growing dissatisfaction amongst the public with the traditional way of structuring legal costs. Clients, understandably in my view, are craving more certainty with what a divorce is going to cost.

The problem exists in the very nature of the proceedings. Decisions made in divorce and family law cases are often shrouded by emotion. A difficult opponent, intent on making sure his or her spouse does not receive a fair share of the assets, does nothing to dilute this toxic mix. Throw in expert fees and suddenly you have a recipe for growing costs. Against this background it remains very difficult for a family lawyer to provide a truly accurate estimate at the outset. Indeed, and this is one of my ‘pet hates’, a sharp practice has developed amongst some firms who will underestimate at the outset to secure the instructions of the client only for those costs to rise beyond the initial estimate. It is important to give the client a realistic and transparent estimate at the start of the case. This is, however, often to my detriment when a client tells me that they have had a ‘cheaper’ quote down the road. Quite frequently the dissatisfied client makes contact with me 6 months later… I am sure you can fill in the blanks!

It is a fair point to say that a fixed fee, particularly in money cases, is unworkable where the future costs can be so uncertain. But actually – with a leap of faith – is it so difficult after all?

The main stages of a money cases are in all but exceptional cases:

1.    Preparing a Form E (financial disclosure);

2.    Preparing and providing representation at the First Appointment;

3.    The instructions of experts;

4.    The second hearing known as the Financial Dispute Resolution Hearing (FDR). This is where about 85% cases settle. In my own caseload I would say about 95% cases settle at this stage – if not before;

5.    The Final Hearing. Going as a far as a final hearing is extremely expensive and particularly unpleasant. In my view it should be avoided where possible.

I tailor my charges to these key steps. This usually works well for the client. They know how much it is likely to cost to complete the Form E, then to represent them at the First Appointment and finally how much it will cost to the FDR. Though it is almost impossible at the very start to estimate the costs to a Final Hearing, I explain to the client that we should work very much on the basis that we will reach a settlement at the FDR and, if that doesn’t happen, we will of course consider how much a final hearing is likely to cost. It is extremely important to carry out that analysis to enable the client to make commercially effective decisions (there really is no point, for example, spending £10,000 if the difference between settlement is £10,000!!) .

I therefore read with interest the recent comments of Justice Mostyn in the case of J v J. He said as follows:

“In this case since the failure of the FDR a mere eight months ago the parties have between them spent on costs the staggering sum of just under £700,000. I must confess to have been almost lost for words when the scale of this madness was revealed to me. They have spent a total of £920,000 in costs…”

He quoted Lord Neuberger who stated:

“That no-one has suggested a viable alternative is something which needs to be remedied, and the sooner the better. An approach to litigation costs based on value-pricing rather than hourly-billing is one which urgently needs to be worked out and applied. Rather than treating time as the commodity which is being sold, we should be adopting an approach where skill and experience are the commodities which are sold….”

Mostyn J continued…..:

“Two and a half years later nothing has happened …Perhaps the culture is just too ingrained to be reformed. In my opinion a litigant should be able to demand a fixed price for each of the three phases of an ancillary relief case namely (1) Form A to First Appointment, (2) First Appointment to FDR and (3) FDR to trial…”

Whilst I have to say, and this will be probably get me in trouble, there seems to me an element of irony in the learned judge’s comment given that he was himself a leading barrister in this area of law for many years and no doubt, having appeared in various high profile cases, would have been at the heart of the very “culture” he now condemns. In a recent case he said this about himself:

“Without being hubristic, I can, I think, rightly claim to be specialist in the field of what used to be referred to by the profession, and is still referred to in the Matrimonial Causes Act, as "ancillary relief". I myself, when at the Bar, appeared in the House of Lords in the case of Brooks v Brooks. I appeared in the House of Lords in the cases of White v White and Miller v Miller. I appeared in the Supreme Court in the case of Granatino v Radmacher….”

……..

Fixed Fee Future?

Irony aside, fixed fees are a great way to provide certainty both the client and the lawyer seek. One should, however, remember that these types of cases are often the exception not the rule. We must also remember that costs can vary depending on the area of the country.

I am always happy to discuss and consider with the client a fixed fee pricing structure and at the very least structure costs to the stages of the cases so that the client can manage a budget. Keeping costs estimates up to date and making sure prior approval of the cost being incurred is sought by the client helps to ensure there are no unpleasant surprises. Being treated as you would like to be treated must also be the driving ethos behind delivering a service. 

If we are, however, to truly implement a change in the way we charge for family law services it involves, not only a change in the culture, but also support from the SRA who inhibit the use of fixed fee by stipulating that any fixed fee should be paid in advance. It is frankly unfair and all too easy to place the blame entirely on the doorstep of the solicitors and barristers. What we really need is for every practitioner, governing bodies, the judiciary, wider organisations (such as resolution etc) to lobby and work together for change.

If you would like to discuss fixed fees or any other matters please feel free to get in touch with me on 0121 203 5309 or mark.hands@irwinmitchell.com