Thank you for your interest and we hope you find the article informative.
The proposed new subscription service - Brief Premium - is at an early stage, and your sign-up entitles you to enjoy any Brief Premium product we release, on a free trial basis for 4 weeks. We will be in touch to keep you informed of our progress.
In the meantime please enjoy the article you requested...
© Times Newspapers Limited 2016.
Registered in England No. 894646. Registered office: 1 London Bridge Street, SE1 9GF.
Big-money divorce cases may make headlines as warring couples fight tooth and nail to protect their extravagant lifestyles but lawyers at the coal face warn of more profound problems in a family justice system that is “bursting at the seams”.
Sir James Munby, president of the Family Division, issued a stark warning recently about the dire state of the family justice system, saying the sustained increase in child-care cases, coupled with increasing numbers of litigants in person in private family law cases, meant the courts are heading for a crisis with no clear strategy to manage it.
Marilyn Stowe, senior partner of Stowe Family Law, despairs of getting hearings listed, while Ayesha Vardag, founder of Vardags, paints a depressing picture of clients spending “hours waiting on nailed-down plastic chairs in rooms where the windows don’t open, tempers fraying and legal fees escalating. When they do get into court, the judges simply don’t have the time to get a real handle on the case and progress it to a settlement”.
Vardag says there needs to be a more punitive regime for those who hide assets so parties don’t think the potential gain is worth the risk. “In the US,” she says, “there is a trend towards making non-disclosers pay for their fraud in hard cash. A divorcing lottery winner who hid her gain from the Californian courts had to hand the lot over to her husband. If we did that routinely in England it would change the risk equation for those considering a cover-up.”
Full and frank disclosure is the “first commandment”' of financial remedy law, says Suzanne Kingston, a family partner at the law firm Withers. But the difficulty, says Stowe, is the general principle of no order for costs in family cases because, in the end, it all comes out of the same pot.
“People have taken the view that it might be worth the risk to put pressure on one side or go back to try to win more,” she says. “But courts are now starting to make tough costs orders on conduct grounds against both husbands and wives to try to even the playing field.”
When it comes to splitting assets, practitioners are waiting on the outcome of the appeal in February next year by Randy Work, a former key executive in the Texas-based private equity company Lone Star, to see if the concept of the “stellar” contribution is alive and well. Work is seeking 63.5 per cent to reflect his role in generating the assets.
The trend, says Jane Craig, a family partner at Penningtons Manches, has been for the courts to dismiss the special contributions argument. “Clients who have been the generator of wealth always say ‘but, but, but … it is my business’.
“And you have to remind them what the court has said about not discriminating between the contributions made by those running the home and bringing up the children and those generating the wealth. It has to be exceptional. But what is ‘exceptional’ is a terribly difficult question to answer so I am glad Mr Work is appealing, though I am not convinced it will be as helpful as practitioners are hoping.”
The issue of “need” takes on a whole new meaning in big-money cases. Russian-born Ekaterina Fields, 43, went back to court to argue that her former US lawyer husband Richard Fields, 60, should pay more than the £3.3 million she had been awarded because it wasn’t enough for a “reasonable standard of living”.
However, Craig says the courts are increasingly making it clear that the former marital standard of living isn’t a “lodestar that will decide your needs for the rest of your life. I think courts are trying to introduce a note of realism and encourage a clean break and they are looking more closely at younger wives’ ability to go back to work”.
Stowe agrees, saying courts are taking a much more uniform approach that “at some point a non-working or lower-earning spouse would be required to go back to work and that maintenance could no longer be regarded as a meal ticket for life”.
Another key issue in these high-profile cases is privacy. In AB v CD, the judge said that the wife must not be named to protect the anonymity of their children from previous marriages and other members of the family.
Practitioners are hoping to get some guidance on the issue from the Court of Appeal which is expected to determine whether the identities of a wealthy foreign businessman and his former wife who have been involved in a lengthy financial remedies dispute should remain secret because of safety concerns.
Stephen Foster, head of the family law department at Stewarts Law, says there is confusion whether family proceedings are, as Mr Justice Mostyn says, “quintessentially private” or should be held in open court, as Mr Justice Holman says.
“To have two such eminent High Court judges espousing diametrically opposing views is rather like a modern-day papal schism,” he says, “and it should be resolved without delay.”
That uncertainty is one of the factors behind the growth in alternative routes such as private financial dispute resolution, early neutral evaluation, mediation and family arbitration where confidentiality is guaranteed.
Foster says there is a move towards giving parties greater individual autonomy. “Although arbitration is not for all cases,” he says, “particularly those involving third parties like trustees, clients are attracted to arbitration by the guaranteed anonymity, control of the process, speed and the ability to agree the identity of the judge. As one of our clients said, what’s not to like?”
Kingston at Withers maintains that if cases are properly screened as suitable, arbitration can save costs and time. This will be welcomed by senior judges who are increasingly outspoken about the huge legal fees in some cases.
In another development Deborah Jeffs, head of family law at Seddons, says many lawyers are now seeking to conduct at least part of their work on fixed fees. It isn’t possible in every case, she says, because there can be so many variables that a fixed fee would have to be very high to make the case commercially viable and clients may then prefer an hourly rate.
However, at the heart of concerns over family law is frustration that successive governments have failed to tackle statutory change around no-fault divorce, cohabiting couples and nuptial agreements. There is a body of case law developing around pre, post and even mid-nups but, unless they have a statutory footing, practitioners say they can never be “bomb proof”.
Jo Edwards, a former chairwoman of Resolution and head of family law at Forsters, says there are no signs of any changing attitudes towards cohabitation reform. But she is more hopeful about no-fault divorce where there are signs of a change in attitude among policy makers. She attributes that to the government’s promotion of mediation and moves towards making divorce a more administrative process.
And as with so many legal issues, Brexit could also have a significant impact on family law. Kingston predicts that enforcement across EU borders could be seriously jeopardised. The recast Brussels II a, which says that, in the EU, whoever issues divorce proceedings first seizes the jurisdiction, and the EU maintenance regulations will no longer automatically apply.
Grania Langdon-Down is a freelance journalist specialising in legal affairs
Key cases and events
Moving on …
The most recent move is Lee & Thompson partners Catherine Bedford, Mark Irving and Nicholas Westley taking their family team to Harbottle & Lewis, with timing still to be announced.
Earlier this year Jo Edwards, left Penningtons Manches to become head of family at Forsters. And John Nicholson, a partner at Irwin Mitchell, left to join forces with his former colleague Brigid Turner, forming Turner Nicholson.
The experts’ view …
The high-net-worth family market in London remains buoyant with the top-tier, often boutique, firms dominating, reports Somaya Ouazzani, a senior consultant at Michael Page Legal, a London recruitment agency.
Clients based in Russian, East Asia and the Persian Gulf continue to keep lawyers busy, with firms actively seeking to recruit senior lawyers that are familiar with those regions and have appropriate language skills.
In London there is high demand for both partner and senior associates at firms wanting to replicate in the capital the practices they have built in the regions. And several successful partners have left well-known family teams to establish, on their own or with others, boutique firms that are often offering fixed fees for middle-income clients.
Unaffected by Brexit, the high-net-worth and ultra-high-net worth client base continues to keep divorce teams across the City of London busy with team billable hours reportedly exceeding those of the previous year.
Breaking up is costly to do
High-net-worth divorce is not all about Brangelina - fraudulent non-disclosure, stellar contributions and privacy versus openness are issues jostling in a system that is bursting. Grania Langdon-Down reports