The below article, by Anna Dove, appeared in The Scotsman's Family Law Review on Thursday 17th December 2015.

Arbitration emerging as option as squeeze on court time bites

The way in which family lawyers in Scotland resolve disputes is evolving, with most firms taking pride in the fact that cases are now rarely resolved by litigation.

The primary alternative to litigation has, for a long time, been negotiation, but the hope among lawyers is that arbitration will emerge as a more popular option, particularly in response to the current court closure programme in Scotland.

“A lot more clients are seeking to resolve disputes away from the courts,” explains Shaun George, head of family law at Brodies.

“We are doing a lot of collaborative work which involves an agreement not to litigate. We are also seeing an increase in interest in other options such as arbitration.

“Arbitration hasn’t become mainstream yet. The second batch of arbitrators was trained earlier this year and we are now, I think, going to see a relaunch later this year of the arbitration option.

“It may be that the changes which are happening in relation to the court system might have an effect in terms of an interest in arbitration.”

Rhona Adams is partner in Morton Fraser’s family law team where she and a colleague are now trained in arbitration. Adams is still waiting to feel the effects of the court closure programme. “In terms of our practice, we have not yet seen any real difference but I think that there will be,” she says.

“Edinburgh Sheriff Court is already pretty busy and it will be interesting to see when Haddington and so on are added to that. It’s early days.”

Alasdair Loudon heads up Turcan Connell’s divorce and family team. He also highlights East Lothian as one of areas most affected by the closure of sheriff courts along with Fife, which lost Cupar Sheriff Court in a controversial closure last year.

“It’s difficult to see that it [the court closure programme] is something of any benefit to the public,” says Loudon.

“What we are hoping to see over the years to come is arbitration being used to a greater extent than has been the case until now.

“There’s about 50 of us who are accredited arbitrators but it’s not been taken up yet by the profession to any great extent.

“Arbitrators think there are great benefits to arbitration. There’s complete confidentiality and there’s a more tailored approach and a more focused approach than there would be in court proceedings.

“It’s not been taken on with the enthusiasm that we had hoped. There’s no doubt that this is a possible alternative to these court closures.”

Another major change for family lawyers in Scotland is the new pension legislation which came into force in April, allowing increased freedom over what to do with pension savings.

“The other big change is the fact that a lot of our [matrimonial] settlements involve the use of one party’s pension,” says Loudon.

“The law has moved a lot over the last 15 years or so. Now there’s much more flexibility for the use of pensions as a means of transferring assets between parties in order to achieve an equitable division of the matrimonial property.

“In the year to come, as we get more used to the opportunities which the flexibility in pensions now provides, we will see the pensions being used more imaginatively as part of settlements.”

George’s role with Brodies is Scotland wide, although he is primarily based in the Aberdeen office. He notes that the issues in family law differ across the country.

Two notable trends that remain the same across the board are an increase in international elements in family law cases and the increasing demand for lawyers to offer fixed fees for disputes.

“In these times of increased mobility we get more and more cases where there’s an international element,” says Adams, who is based in Morton Fraser’s Edinburgh office.

“Ex-pat Scots living abroad never go to lawyers there to sort it out, they tend to look to home. We have seen an increasing amount of cases involving people who are ex-pats or people who have property abroad or people who are married to somebody from a different country and might have assets in two or more different countries.”

In the north-east, the oil price slump has already resulted in the loss of more than 5,500 jobs. If redundancy or relocation for work coincides with difficulties at home, it can mean calling in the lawyers either to re-negotiate financial agreements as a result of assets losing value or to settle disputes over offspring.

“In particular an issue is children being moved,” says George. “The population is more mobile now and we are finding that when people are moved in the course of their employment and that coincides with a difficulty in their relationship, that can require a court order if you can’t get the other parent to consent.

“That’s probably linked to a more mobile workforce and it’s something we have noticed a big difference in, in the last year or so.

“I think we will continue to see the impact of people moving between jobs or losing their jobs or finding their terms and conditions have been varied.

“That’s something that’s probably more of an issue in the North-east rather than Edinburgh or Glasgow.”

The second trend is the change in how solicitors charge their clients. While most clients are charged on how much time is spent on a case, fixed fees are gradually being introduced for family law work in response to clients’ demand for more certainty around the price.

“We have been aware for years that the legal profession as a whole is having to look very thoroughly at the way in which it bills for its services,” says Adams.

“I would say that family law has probably been one of the slowest areas to respond to that.

“We are now looking at a lot of our colleagues in Morton Fraser being very transparent about the costs and offering the clients fixed fees. South of the border that’s happening a lot as well.

“We have tried to adapt these things as much as we can. Certainly we are now offering fixed fees for anything we think we can scope in a relatively straightforward way. I do think people like that certainty.

“What we now try to do is provide quotes where we can and sometimes at the beginning of cases when you don’t know what’s going to be involved it can be quite difficult to do that, but what we will try to do is break it down into stages. That seems to be one way in which it works.”

Loudon agrees that the move towards fixed fees is a slow process and one not without its challenges given the nature of the cases that cross the desks of family lawyers.

However, the general feeling among those working in the sector is that they will need to cater to the increasing demand for certainty surrounding costs.

“The problem for family law solicitors in offering fixed fees is that one never knows when the case starts what the attitude of the other side is going to be,” says Loudon.

“I think what’s going to happen in the years to come is that clients are going to demand and therefore we are going to have to deliver a menu of fees.

“The difficulty for us is actually working out what the average cost of these things is over the years.”

According to George, certain parts of family law, such as putting together agreements, do actually lend themselves to fixed fees.

“We are seeing an increase in agreements to avoid future disputes,” says George.

“The obvious ones are cohabitation agreements and prenuptial agreements. What we are finding is in these kind of cases fixed fees work because we are not then dependent on the reaction from the other side in the same way.

“If you have a dispute, particularly a court dispute, it’s very difficult to predict at the outset how long that will take.”