It is well known that legal costs in divorce cases can easily escalate out of control, especially where proceedings continue over many months or even years. The recent divorce case of Xanthopoulos v Rakshina heard in the High Court is a perfect illustration of just how high these costs can be; described by Mr Justice Mostyn as “exorbitant”. Here we will take a closer look at the costs accrued in this case and what can be done to avoid such outcomes following separation.
What happened in the case of Xanthopoulos v Rakshina?
The case of Xanthopoulos v Rakshina, heard in the High Court in April 2022, concerned a Greek-born resident of Russia, Lazaros Xanthopoulos and his wife, Alla Aleksandrovna Rakshina. Ms Aleksandrovna is described in the judgement as the 75th richest woman in Russia with assets of over £300m and as holding a senior role with a Siberian supermarket. The parties married in Moscow in 2006 and separated in 2020. A Russian court agreed to the divorce in March 2021, but a financial remedy was not finalised at this time. Mostyn was highly critical of the parties on the basis that their filings missed the deadline set, and their skeleton arguments exceeded the 350-page limit by some 1,500 pages. On this matter, Mostyn stated:
“This utter disregard for the relevant guidance, procedure, and indeed orders is totally unacceptable. I struggle to understand the mentality of litigants and their advisers who still seem to think that guidance, procedure, and orders can be blithely ignored”. He also stated that he “struggled to find the language that aptly describes the exorbitance of the litigious conduct of the parties”.
The High Court was asked to consider a range of costs by the parties. In total, costs have amounted to between £7.2 million and £8 million, including £5.4 million incurred prior to the High Court hearing. This is eye-watering by any measure. Summing up his concerns about these costs, Mostyn stated:
“Figures like this are hard to accept even in a conflict between the uber-rich…to run up in domestic litigation costs of between £7 million and £8 million is beyond nihilistic. The only word I can think of to describe it is apocalyptic”.
Strong words indeed.
Explaining how the system could be improved to avoid such high legal costs in family law disputes, he recommended that statutory measures be put in place to limit the scale and rate of costs. Alternatively, he suggested that the Family Procedure Rule Committee need to find a solution to the problem.
Echoes of the past?
This case may remind some of the fictional inheritance case of Jarndyce v Jarndyce in Charles Dickens’ Bleak House. The plot of this imagined case concerned a vast inheritance and legal proceedings that went on for so long that by the end, the entire estate had been swallowed up in legal costs, hence rendering any final decision moot. Explaining just how futile the proceedings were in the first chapter of Bleak House, Dickens writes, “Jarndyce and Jarndyce drones on. This scarecrow of a suit has, over the course of time, become so complicated that no man alive knows what it means. The parties to it understand it least; but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises”.
The story of Jarndyce v Jarndyce was itself inspired by historical examples of legal cases in which legal proceedings have gone on for decades, such as in the case of Sir George Downing in the late 1700s, which lasted for more than 40 years.
Admittedly, the more recent High Court case of Xanthopoulos v Rakshina did not lead to costs which exhausted the marital assets; it is nevertheless a reminder of just how far family disputes can extend if not kept in check.
How can divorce costs be kept under control?
The single most effective way to keep divorce-related costs under control while achieving a mutual and amicable outcome when it comes to financial and other agreements following divorce is to use Alternative Dispute Resolution (ADR). ADR includes a range of non-confrontational methods of reaching an agreement even on highly complex matters, such as mediation, negotiation, and arbitration.
Family law Solicitors who are members of the organisation Resolution have the skills and training to resolve matters such as child and divorce disputes outside of the court system. Resolution was founded over 40 years ago and is made up of family Solicitors who advocate a non-confrontational approach to family law issues, providing a better outcome for families and their children.
Outcomes are often much better than traditional court-based litigation as parties are encouraged to work together to find a mutual agreement. This results in improved compliance with any outcome reached (i.e. a long term willingness to abide by what is agreed between the parties) and helps to preserve relationships for the benefit of any children involved in the proceedings.
Furthermore, in most cases where mediation, arbitration, or negotiation are used to reach a financial resolution following divorce, costs are typically much lower than traditional court litigation.
As Mostyn makes clear in his remarks in the case of Xanthopoulos v Rakshina, legal costs for divorce proceedings need to be capped or controlled in some way to prevent endless litigation, wrangling, and the excessive use of court time. As such, the courts do not offer the optimal route for such disagreements, even where settlements can reach millions of pounds. ADR methods such as those advocated by Resolution are not just for straightforward disputes of lower value; they are equally suited to highly divisive high-net-work divorce proceedings.
Edwards Family Law is a niche London-based firm specialising in complex family law cases following the breakdown of a relationship. We are members of Resolution, an organisation of Family Law Solicitors that abide by a Code of Practice that promotes a non-confrontational approach to family law practice.
To find out more about financial dispute resolution and financial orders following divorce, please phone +44 (0)20 3983 1818 or email firstname.lastname@example.org. All enquiries are treated in the strictest confidence.