The True Cost of Divorce

One of the most daunting things for a couple going through a divorce is the unknown aspect of legal costs. Things are often stressful enough without going through a process that is completely foreign to both parties in an industry where costs are not always transparent and can quickly and very easily spiral out of control. 

Divorce 

When parties separate, the divorce itself is often relatively straight forward, particularly since the introduction of no-fault divorce. A couple can now get divorced online quite a simply in that the timeframe is transparent, and the process is clear. At present the online court fee for a divorce is £593.

It was very nearly increased by 10% to £652 in May 2024 in line with wider increases in court fees but, following feedback during the consultation period, it was decided that an increase of this nature would not be proportionate¹. 

This follows a consultation by the UK Government on court fees generally which has resulted in 172 court fees being increased 10% with effect from May 2024 with a view to generating additional annual revenue of £34-£42m¹.  

Whilst the divorce court fee remains stable at £593 for now, there have been other increases affecting family law in that the fee for an application for a Child Arrangements Order will rise from £232 to £255 and the fee for a Financial Order will rise from £275 to £3031.

Parties can deal with the divorce themselves paying only the court fee (except those on low incomes or in receipt of certain benefits as they may qualify for help with fees) or they can engage solicitors to deal with the divorce for them. Money Helper recently put the legal costs for an online divorce at up to £400 but, in reality, these can be up to £1,000-£1,500 depending on the type of firm instructed and the seniority of the solicitor with conduct i.e. whether it is a high street, boutique or commercial practice and whether a junior or senior lawyer is dealing with the case.

The unexpected element of the divorce is the amount that it costs to resolve either the arrangements of children and/or the financial settlement associated with the divorce. This is not something that happens automatically and can easily spiral out of control depending on the approach taken by parties. 

Various Approaches to Resolving Financial Arrangements

When it comes to resolving financial arrangements following divorce, much will depend on the method used and the approach taken by the parties. This is possibly the key thing that will have the biggest impact on costs.

There are various options available and most people will try several elements of these before they are able to reach a conclusion and each will have their own cost implications:-

1. Direct discussions 
   
   In an ideal situation the relationship and trust between the parties will remain and they will feel able to talk openly and honestly about their asset base and how best to share that on divorce. If parties can reach an agreement directly, all they would need solicitors for is to draft the Financial Consent Order and associated documents and submit those to court for approval albeit it does help if they each take independent legal advice to understand their respective legal position. 
   
   Money Helper states that the legal costs for drawing up the Financial Consent Order following an agreed settlement could start at £250 + VAT² but, in reality, depending on the type of firm instructed and the seniority of the solicitor this could be more like £1,000-£2,000 + VAT.  That would be in addition to the court fee of £58.
   
   
2. Mediation 
   
   Mediation is a process in which an independent, professionally trained mediator (usually a family solicitor or barrister) helps a couple work out arrangements for children and / or finances following divorce³. 
   
   It can be a cost-effective method for separating couples who wish to resolve matters amicably but aren’t quite managing between themselves. Having an independent person in the room can really help keep negotiations on track and discourage negative behaviours.
   
   The most successful mediations are when each party has their own independent legal advice alongside the process so they each understand the legal framework in which they are operating as well as their best and worse case scenarios which then creates the settlement parameters.
   
   An agreement reached in mediation will be drawn up into a MoU (Memorandum of understanding) but this does not result in a binding outcome. The MoU will then have to drawn up into a Financial Consent Order by a solicitor and submitted to court for approval so that it is enforceable, just like an agreement reached in direct discussions.
   
   The Family Mediation Council states that, as a guide, FMC mediators charge an average of £140 per hour per person for mediation sessions⁴. It usually takes between three and five mediation sessions to come to an agreement and the cost of the independent legal advice from solicitors and court fee will be in addition.
   
   
3. Solicitor negotiations
   
   This is often the most common starting point in which parties exchange financial disclosure via their respective solicitors, formulate settlement proposals and seek to negotiate a settlement. Their respective solicitors will then collaborate to draft the Financial Consent Order if an agreement can be reached.
   
   Money helper states that legal costs for a negotiated financial settlement range from £2,000-£3,000 + VAT² but this, again, depends on the type of firm and level of solicitor. Costs can also be higher if there are complexities such as unusual pensions, business assets or trust structures which may require expert advice or valuation.
   
   Most solicitors operate on an hourly rate albeit they are under a duty to give the most transparent and best cost information they can which usually means an indication of what they expect the various elements of their work to cost.  
   
   There are other options available such as fixed fees, capped fees and unbundling i.e. where solicitors are not fully retained to do everything for the client, rather they do clearly defined elements of the work (e.g. collate financial disclosure, draft offers, prepare statements etc). Transparent conversations around fees should always be had and parties can limit the costs in fairly easy ways such as drafting simple paperwork themselves and only using the solicitor for strategic advice and communicating in a concise manner.
   
   
4. Collaborative law
   
   Under the collaborative process each party appoints their own collaboratively trained lawyer and has a series of four-way meetings to try to resolve matters⁵. Those wishing to use collaborative law will enter into a participation agreement that commits them to trying to resolve the issues without going to court. The idea being that everyone is committing to reaching a solution by agreement, but it does mean that, if an agreement cannot be reached, the parties must start again with new lawyers to try another method.
   
   The costs of collaborative law can be difficult to estimate and are usually based on the solicitors’ hourly rates, but Money helper estimates them at £8,000-£15,000 + VAT.
   
   
5. ENE (Early Neutral Evaluation) / Private FDR (Financial Dispute Resolution) 
   
   These terms refer to appointment of an experienced family solicitor, barrister or retired judge to give a view on the potential outcome of a case.  
   
   In court proceedings, the second hearing is called the FDR (Financial Dispute Resolution hearing) and it is a negotiation hearing in which both sides present their position to the court and the judge gives an indication which is designed to facilitate negotiations and settlement.
   
   The private FDR seeks to replicate this but with an experienced lawyer of the parties’ choosing rather than a judge sitting in a formal capacity within proceedings. An ENE (Early Neutral Evaluation) tends to be a very similar process but tends to be the term used when dealing with a dispute about arrangements for children rather than finances.
   
   Whilst a FDR / ENE cannot provide a binding outcome, they can often be quite successful in breaking a logjam in negotiations and often work well when coupled with negotiations between solicitors or direct discussion between the parties. In addition to the respective solicitors’ costs, hiring a private judge can cost anything from £2,000-£10,000 + VAT per day but it does present a much quicker and more bespoke alternative that getting to an FDR within court proceedings.
   
   
6. Arbitration 
   
   Arbitration is a form of dispute resolution in which parties enter into an agreement to appoint a suitably qualified person as an arbitrator to adjudicate their dispute and make an award⁶. It is akin to hiring a private judge and results in a binding outcome which sets it apart from any of the other NCDR options. Arbitration is a voluntary process so both parties must agree to participate as they will both be bound by the outcome, but it does present a much quicker and often cheaper option than litigation.
   
   A real benefit of arbitration is that it can deal with discrete issues as well as global settlement and the range of costs reflects this. Like with a FDR or ENE, there will be the arbitrator’s fees as well as the respective solicitors’ costs. Arbitration costs can vary enormously with some regional barristers quoting £2,000 + VAT for a 1 day arbitration hearing and top London KCs quoting in excess of £20,000 + VAT. The choice of arbitrator can be matched to the complexity of the case and level of experience required.
   
   
7. Litigation (Financial Remedy Proceedings at Court) 
   
   The final option for resolving finances on divorce is a Financial Remedy application at Court. This triggers a court timetable which generally follows a three-hearing process; first appointment (directions), FDR (the negotiation hearing) and a final hearing where evidence is given, and an order is made by the Court.
   
   The costs associated with litigation can vary widely. There is a £303 court fee to commence proceedings and parties do have the option of representing themselves which means there would be no associated legal costs. However, in reality, most people instruct solicitors to advise them and prepare their case for court and barristers to represent them at the hearings.  
   
   Cases can settle by agreement at any point during the proceedings and, in reality, many do. It is a very small proportion that reach final hearing and naturally cases that settle following one or two hearings will incur significantly lower fees that those that run to final hearing.  
   
   Money helper² states that a fully contested Financial Remedy case that runs to a contested final hearing can cost £30,000 + VAT but a small proportion of cases do go far beyond this. Truly eyewatering legal fees are often a result of unreasonable litigation behaviour by one or both parties or complexities that require extensive and varied input by others such as professional valuers, accountants and third parties. 
   
   Whilst the majority of solicitors will charge on an hourly basis, barristers often offer fixed fees for conferences and hearing attendance with a range of £250 + VAT for a junior barrister to conduct a 1 hour conference up to in excess of £25,000 + VAT for an experienced KC to run a 1 day hearing.

In a divorce situation, where emotions are often running high, the approach that will be taken by each of the parties is often an unknown at the outset. Often, when there is a separation, one party is playing catch up. The decision to end the relationship has usually been made or at least lead by the one party and the other is left feeling out of control and vulnerable, which can create an unequal dynamic. It often gives rise to mistrust and suspicion which does not bode well for pragmatic discussion and negotiation. 

The best situations (and those with the lowest legal costs) are where the parties feel they have parity and can approach these discussions in a transparent and fair way but unfortunately, and perhaps not unexpectedly, this is a rarity. It can be very disappointing when you have one person who wishes to use one of the more conciliatory (or NCDR – non court dispute resolution) approaches just to have the other party not being frank with disclosure or perhaps having unrealistic expectations around settlement which then necessitates litigation. 

Changes to Law 

As of 29 April 2024, new law came into force (under The Family Procedure (Amendment No. 2) Rules 2023) which impacts the approach to non-court dispute resolution in family matters⁷. As a starting point, the definition of NCDR was broadened to mean:-

“methods of resolving a dispute other than through the court process, including but not limited to mediation, arbitration, evaluation by a neutral third party (such as a private Financial Dispute Resolution process) and collaborative law.”

As things stand, parties are required to attend a MIAM (Mediation Information and Assessment Meeting) before they are able to issue court proceedings unless certain exemptions apply such as domestic abuse, urgency or child protection concerns. The changes narrow the list of exemptions and also require MIAM providers to triage cases and give parties all of the options for NCDR rather than there being any bias towards mediation.

The parties must then submit a new form to court along with their application setting out what forms of NCDR they have attempted and why they have failed. Theoretically, the court have the power to adjourn cases to send parties back to NCDR and / or make cost penalties when a party has refused to attempt or engage in NCDR.

Clearly the intention behind these reforms is to encourage dispute resolution and keep family cases out of the court system which is overwhelmed, under-resourced, slow, and uncertain.

The most recent figures published by HMCTS⁸ show that the mean average divorce case is taking 42 weeks from application to final order. The figures around Financial Remedy cases are less clear, but it is not uncommon for a contested matter to take 12-18 months to resolve through the court process. 

Thoughts have been mixed around the reforms. There is obviously a need to keep family cases out of the court system wherever possible but similarly there must be no barriers to accessing the courts when it is necessary. There will always be certain types of cases that will require litigation to solve them. 

The timescales around the various methods of reaching a settlement vary enormously. Some parties can take several years following from divorce to reach an agreement by negotiation or through mediation to try to preserve a civil relationship and focus on co-parenting; some feel very strongly about retaining control over their own financial destiny rather than putting in the heads of arbitrator or judge and so will persevere with NCDR. Some have certain financial goals which they seek to achieve at all costs and so are quick to litigate whilst others may spend lots of time trying to mediate or negotiate or collaborate when, in fact, they should have commenced litigation long ago because they will never achieve the outcome the seek in NCDR. 

Sometimes it is not high value cases that generate enormous fees, it can be very simple cases or, worst case scenario, relatively low asset cases that generate them simply because of the approach of one party, or a particular complexity, or a lack of realism around the outcome. It is those cases that will need the security of the court timetable and perhaps those cases that will benefit the least from the recent reforms. 

The best advice for someone beginning divorce proceedings is to seek early advice and to consider and discuss their goals and priorities. It is essential to explore all of the options available; consider the pros and cons (including anticipated costs and timeframes) and ensure they embark on the journey that is right for them. It is very much a balance of what they want to achieve, how quickly they want to achieve it and understanding the approach of the other person. If all of those things are considered at the outset it will give the best chance or properly controlling the legal spend.

References

¹Consultation response: implementing increases to selected court and tribunal fees - GOV.UK (www.gov.uk)

² How much does divorce or dissolution cost? | MoneyHelper

³ What is Family Mediation? - Family Mediation Council

⁴ What Does Mediation Cost? - Family Mediation Council

⁵ The collaborative process | Resolution

⁶ What is Arbitration? | IFLA

⁷ The Family Procedure (Amendment No. 2) Rules 2023 (legislation.gov.uk)

⁸ Family Court Statistics Quarterly: October to December 2023 - GOV.UK (www.gov.uk)