Private financial dispute resolution hearings - a BUPA to the courts’ NHS - are thriving.

The financial pressure faced by the family courts came into the spotlight once again this week, as Sir James Munby drew attention to the need to spend resources wisely.

There is no doubt that the courts are overstretched – and nowhere is this more concerning than in public law cases, where crucial decisions are being made over whether children should live with family or in local authority care.

As well as those public law cases, the family courts must also deal with many private family law matters in which the issue at stake is the division of assets on divorce. But something interesting is happening here – with the rapid growth of what is essentially a private sector alternative; a BUPA to the courts’ NHS.

At an early stage in a couple’s financial dispute, the parties will attend what is known as a ‘FDR’; a financial dispute resolution hearing. The idea is that they air their issues, and a judge then gives a non-binding ‘indication’ of what the outcome would be likely to be, were it to go all the way to trial.

The judge’s indication is not binding, but will often act as a catalyst for the parties to negotiate and settle.

In the courts system, judges can have as many as six FDRs listed in a day. Family lawyers generally support the FDR process, but they do worry that the judge has no real time for preparation, and there is a sense that because the judge is under so much pressure and cannot read the papers in advance, the outcome is unpredictable – and the FDR often turns out to be a wasted opportunity, or can even do more harm than good.

All this goes some way to explain the growing popularity of private sector FDRs, which are currently thriving.

Private sector FDRs are generally run by a retired High Court judge, or perhaps a QC. They will normally be around all day, and have plenty of time to read the lever-arch files and hear submissions. The proceedings will be entirely private. 

So in the private sector version, the parties will get a more considered opinion – but the cost of the FDR can be anything from £3,000 to £15,000.

What is emerging, then, looks very much like a two-tier system. Premium service for those that can afford it, while the rest will have to make do with a second-rate justice.

From a principled perspective it doesn’t seem right. But from a practical one, where parties choose to pay for private judging, this does at least free up the courts to deal with those all-important cases mentioned above.

This July we saw another development taking us further down the road to private justice, as the door was opened for parties to use arbitration to resolve not just financial disputes between couples, but also now battles over custody of children and visiting rights.

The past few years have seen the use of arbitration, with its speedy process and guaranteed privacy, growing rapidly in relation to financial disputes. Given the difficulty in getting private law children cases - covering issues such as residency and visiting rights - listed in the courts, the extension of arbitration to this new field seems likely to prove equally popular.

The biggest downside of arbitration, from a wider societal viewpoint, is that it denies the courts the opportunity to keep the law up-to-date and relevant through jurisprudence.

For those that can afford it, private justice clearly has its benefits in the family arena. But it should always be a choice; and the danger is that without proper financial support for the courts, private justice may soon become a necessity.

Rachel Rothwell is editor of Litigation Funding magazine

Follow Rachel on Twitter: @LawJourno