Who’ll stand a round of fixed fees all round: reflections on Mostyn J’s judgment in J v J

In J v J [2014] EWHC 3654 (Fam) Mostyn J has both taken up the cudgels and thrown down the gauntlet on two fronts. In a strongly worded treatise he declares war on twin pinnacles of waste: of costs generally, and of time effort and expense spent on excessive documentation. To which one might add, the waste of court space involved in a 7-day trial the outcome of which was the distribution of what were originally £2.9M of family assets as to 38.9% to the wife, 29.2% to the husband — and 31.9% (£920,000) to the lawyers and accountants involved.

The judgment makes compelling and should be compulsory reading. The message is that is not enough to repeat the mantra ‘something must be done,’ and indeed Mostyn J outlines his suggestions as to what those somethings may be.

But in relation to financial arbitration two separate points emerge at paragraphs 18 and 53.

To dispose of the second first: the suggestion is made (perhaps not entirely tongue in cheek) that if parties really wish to circumvent the most recent PD 27A requirements and, perhaps in particular, their refinement in paragraph 8 of the Statement on the efficient conduct of financial remedy final hearings allocated to be heard by a High Court Judge whether sitting at the Royal Courts of Justice or elsewhere (issued on 5 June 2014), and can afford (or don’t care whether they can afford) that luxury then they can contract for as many bundles as they like with an arbitrator prepared to take on their issues at a cost which will no doubt reflect the consequent volume and complexity of the process and the time to be spent on it. I do though find it difficult to contemplate how arbitrators will articulate this as a selling point: ‘arbitration allows you to burn as much money as you want’ sounds unattractive.

At paragraph 18 Mostyn J suggests: ‘… 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.’

The suggestion is not novel. It was as far as I’m aware for the first time articulated by the President in a discussion about the various forms of dispute resolution at a workshop organised by the Leicester Family Justice Council in October last year, and raised again when he spoke at the launch of Dennis Sheridan’s handbook Family Law Arbitration in June.

An offer to both parties by all the professionals involved and the arbitrator of a fixed fee to cover the whole dispute from the agreement to arbitrate right through to the Award would surely appear attractive for parties who would like to put a pre-determined and fixed cap on their fighting fund. But there do seem to me to be some practical complexities with which we would need to wrestle before such an arrangement could be marketed. To start with there would be the difficulty, or as it seems to me the near impossibility, of fairly pitching an overall fee apt for even the most apparently straightforward of cases. And what would be the prospect of agreement amongst the professionals on the allocation of the total as between themselves? To this latter difficulty arbitration may however provide the answer: the legal professional participants should bind themselves in advance to be bound by the allocation decision of the arbitrator and should foreswear launching any challenge based on his or her alleged lack of impartiality!

But the President and Mostyn J are undoubtedly correct that if it were possible to reduce the risk, so ever-present in in-court litigation, of runaway fees careering out of control, that would be a significant additional potential advantage for arbitration as a process.

Already one knows that arbitrators are being approached by prospective customers asking for an all-in quote. The obverse of that is that the customers and their lawyers do need to be forthcoming about what the case truly involves in terms of complexity and the time likely to be spent on it. There is no reason why arbitrators should be dependent for repeat business on buying (or in this instance selling) a pig in a poke!

Are there specialist family law practitioners or firms of solicitors out there who would be prepared in these challenging times of change to contemplate charging their client a fixed fee for the work involved in their participation in an arbitration? And, if counsel are to be instructed, would they be prepared to do the same? Unless there are such hardy trendsetters around such a scheme could not get off the ground. Even then it would not provide immunity against such contingencies as, for instance, the need to instruct an expert.

I really do not wish to pour cold water on this proposal, as if it could be stitched together it would obviously make arbitration an even more attractive option in an appropriate case. So if any of you can think outside the box of ways to make it work please do discuss them here.