FIXED FEE ARBITRATION – resolve a fully contested dispute for global fees of less than £12,500 plus VAT per party?

March 2, 2015 Posted by:

There is a continuing pressure on the legal profession to turn off the hourly billing ‘taxi-meter’ and move towards fixed fees for the provision of legal services. The pressure comes not only from the market but also the judiciary, as the judgment of Mr Justice Mostyn in J v J in late 2014 demonstrates. Many lawyers point out, quite rightly, that the vagaries and vicissitudes of litigation make it difficult (reckless, even) to attempt to predict the amount of work required in a case and to agree a fixed fee. For example, can anyone truly predict how long a case will take to resolve? Although many arbitrators under the IFLA scheme do agree a fixed price for arbitrations they do so with a sense of anxiety as they also face the same risks of the work required exceeding the fee agreed, especially where the parties and their representatives have an indeterminate amount of work to do over an indeterminate period (i.e. they are unconstrained by any fixed fee).
But what if the parties agree to place their family dispute into the hands of an arbitrator to arbitrate and at the same time agree with their lawyers to deal with the arbitration on a fixed fee? All stakeholders in the case then have a common interest in dealing with the case within the agreed time frame and on the basis of the agreed fees. The lawyers have the reassurance of knowing that the arbitrator will bring the case to a conclusion in a period of only 3 or 4 months (if not sooner). The arbitrator has the reassurance of knowing that both parties are committed to dealing with all the issues in a focused and controlled manner.
It could be a perfect synergy.
Thus far no solicitor has sought to offer such a service. That was until 25 February 2015 when just such a service was launched by Hodge Jones & Allen. The launch event was attended by the President, Sir James Munby, and a number of leading barristers, solicitors and mediators. Sir Peter Singer and Andrzej Bojarski of both spoke about the manifest advantages of the family arbitration scheme. Live tweets from and summarising the event can be found on Twitter under hashtag #HJAfixedfee.
Toby Hales, head of family law at Hodge Jones & Allen, explains the vision behind the Hodge Jones & Allen scheme:

‘Many solicitors are extremely wary of offering services at a fixed fee, and there may be cogent reasons for this. However, it is our firm view that clients want and appreciate the certainty that a fixed fee brings. And the Arbitration scheme offers both certainty in timescale and definition in procedure that makes a fixed fee a viable option. We believe that a conventional financial remedies dispute should take no more than four months to resolve from start to finish. This is, of course, not a timetable that is achievable in any Court. So parties always wait longer than necessary for a judicial determination, all the while suffering increasing fees, anxiety and family debt.

The flexibility of Arbitration allows parties who agree to engage, to select their choice of Arbitrator and date of hearing at the very outset. The lawyers, in conjunction with the Arbitrator, determine the scope of the dispute and precisely what steps are required in preparation. The discipline of a fixed fee regime demands that we as legal professionals focus our efforts on the steps that are really necessary to resolve the pertinent issues; that we control our clients and the way in which they want to approach the dispute. This can only be to the parties’ benefit.

We at Hodge Jones and Allen have for some time offered fixed fees to clients whenever we have been able, but never for the entirety of proceedings because the variables inherent with Court proceedings are too great. Arbitration gets around that problem. And our overwhelming experience is that clients with whom we agree a fixed fee pay as required (up front or in stages) and do not complain. We want to discuss the scheme with, in particular, firms of solicitors who are interested in offering the service, so that both clients can be represented by a solicitor on the same fee basis. Anyone interested in more details, do contact Toby Hales on’

The scheme launched upon the basis that in most cases a fixed fee of £10,000 + VAT would be offered by each solicitor offering the fixed fee service, with the arbitrator charging a fixed fee estimated to be in the region of £3,000 – £4,000 + VAT. The combined cost of such a fixed fee arrangement is likely to keep fees to a global figure (i.e. for both parties) of no more than £25,000 + VAT in most cases. This is a significant saving on the usual costs of fully contested litigation, even allowing for the arbitrator’s fee.
Certainly all at can see a combined fixed fee structure working in a way which brings far more parties into family arbitration rather than following the conventional court process. Once a few solicitors offer this service the market is likely to demand that others follow.