FAMILY/MATRIMONIAL: HIGH NET WORTH: An Introduction to London (Firms)

London Firms Family/Matrimonial HNW Practice Area Overview

Gone are the days where a lawyer’s success was measured by the amount of reported litigation. Instead, in a world where it is increasingly necessary and expected to offer a holistic approach which supports separating couples in making decisions that are right for their family, lawyers are selected on their ability to work with their counterparts to secure a family-centric settlement. It should be a truth universally acknowledged that high value divorces do not need to automatically result in high costs or high conflict. As alternatives to litigation become the norm, separating families will continue to benefit from a more amicable and cost-effective approach.

Progress has been made in recent years to improve the experience of separating families. 2022 has seen the introduction of ‘no fault’ divorce, scrapping the pointless blame game which completely undermined all messaging given regarding separating sensibly and the irrelevance of behaviour. It is hoped that this neutral start to divorce proceedings will set the tone for discussions about financial and child arrangements. This is a huge step forward and one which has been long in the making, but it must be the beginning and not the end of change of the mentality and ethos applied to every family separation, change or transition.

The Problem 

The family court system has, like many other public services, been under considerable strain for many years. The underfunding of the courts and significant delays in accessing justice were an issue prior to the COVID-19 pandemic which in turn exacerbated the pressure on an already struggling system. The most recent HMCTS data shows that on average cases in the family courts are taking almost a year to complete and we have all been involved in cases which have taken considerably longer, particularly where a final hearing is required. Court lists are often over-capacity with simultaneous listings making it impossible for a judge to give proper time and attention to each case and in some cases shortages in judicial availability are resulting in hearings and being adjourned at very short or no notice, at significant financial and emotional cost to the parties.

At the same time, parties’ legal fees appear to have been ever increasing with published judgments criticising “nihilistic litigation” and “apocalyptic” costs. London has often been described as the ‘divorce capital of the world’ but in an uncertain economic climate parties, even wealthy ones, simply cannot afford either the financial or emotional cost of protracted litigation. Indeed, the President of the Family Division has himself urged separating couples to avoid the courts if at all possible as “there are no ‘winners’ (other than possibly the lawyers) at the end of family proceedings”.

The Solutions 

A failing court system shouldn’t be the motivation behind working cooperatively, though the ramifications of such will be harshly felt should litigation be the favoured route. The increased desire from clients and lawyers alike to avoid the court system has, however, resulted in great innovation to create viable alternatives to contested litigation. Clients are increasingly seeking a more creative and family-focused approach to resolving both their financial and child arrangements and family lawyers have been striving to meet this demand in a way which empowers couples to make their own decisions in conjunction with specialist legal advice and support from allied professionals.

The events of the last couple of years have pushed non-court dispute resolution to the fore. Mediation (both in its traditional and hybrid forms) remains at the forefront and continues to constantly evolve with many skilled mediators working in innovative ways and with financial neutrals or parenting professionals where appropriate to make mediation accessible in even the most complex, high net worth and high conflict cases. The growing number of trained child-inclusive mediators offers a voice to the child of separated parents and can enable the process to remain genuinely child-focused in a way which can often be lost in high conflict proceedings and can be transformative to the families involved, as well as respecting and empowering children themselves.

For those to whom mediation does not appeal, or where it is not suitable, there are a plethora of other options, including roundtable meetings, early neutral evaluations, private FDRs and arbitration. While these non-court dispute resolution options are far from new, we are finally seeing a significant increase in their uptake as our clients look for cost and time-effective methods of resolving disputes outside of the court process. If nothing else, the uncertainty regarding confidentiality and anonymity must be a consideration for all families; obviously for those already in the public eye, but also for the everyday family given the encouragement for regular reporting of cases at all levels to lift the veil of secrecy that has been a criticism often levied at the Family Court.

Both private FDRs and arbitrations are well suited to high net worth cases, where the cost of a privately funded adjudicator can be easily weighed against the many advantages of a tailored process suitable to the parties’ specific needs, before a hand-picked judge/arbitrator with the necessary time and expertise and the absolute promise of privacy at a time when the momentum in family law is moving relentlessly towards greater transparency. The question is whether we are sleepwalking into a two-tier system of family justice and the extent to which this means that we are not properly focused on solving the problems within the court system for those either without the means to access ‘private justice’ or where one person won’t agree to it. The need to fix and properly fund the family justice system can’t be answered alone by a deferral to the private frontier.

Does the answer lie at least in part in the new ‘one couple, one lawyer’ model which looks set to rapidly expand in the early part of 2023 from the limited offering of a few to a nationwide initiative, as demand for ‘Resolution Together’ training surges? The premise, a separating couple appointing one lawyer to advise them jointly and facilitate discussion to help them reach an agreement outside of a court process, represents a fundamental shift in the approach of family lawyers although it will no doubt feel more comfortable and familiar to those with existing mediation practices. The work that Resolution have done in creating a regulatory framework approved by the Solicitors’ Regulation Authority to enable family lawyers across the county to begin working with couples is to be applauded, and while only time will tell in terms of the demand and suitability of this model for separating couples, there is a sense of excitement at the prospect of change and it is hoped that it will provide a solution-focused and cost-effective process for those who can settle things amicably.

Avoiding the court system altogether or limiting the extent of any potential future dispute remains an attractive option for many. The motivation should be there for all, regardless of means, and the role of family lawyers is to enable access to sensible separation to all. Indeed, such applies to advance as well as after the event planning. The boom in nuptial agreements continues. As these agreements have become more prevalent amongst high net worth families (as opposed to being the preserve of the ultra-high net worth) demand has increased and family lawyers are regularly creating and advising on bespoke agreements to meet a range of complex and individual circumstances, reducing the likelihood of litigation in the event of a future divorce.

Of course, despite its continued challenges, at times a court application is unavoidable, but the good news is that the family justice system is also seeking to modernise its approach to promote earlier settlement. The Financial Remedies Court Efficiency Statement released in January 2022 front loads case preparation to enable more efficient litigation and in turn this increases the chances of settlement as information gathering is completed at an earlier stage. The continued improvement of the HMCTS digital services is making it easier for lawyers and litigants in person to manage applications, and remote video hearings continue to provide a convenient and cost-effective alternative to in-person hearings, particularly for shorter directions hearings where no oral evidence is being given.

For those who do litigate, the pressure to avoid excessive legal costs is growing. Brave or foolish is the family lawyer who confidently assures their client that costs will always be top-sliced to reflect the 'no order' principle. The recent decision of HHJ Hess in YC v ZC provided a clear example of the direction of the wind on this issue, where the costs of one party were found to be “grossly disproportionate” in “pursuing combative litigation without any real care for the effect of this on the remaining pool of assets and its ability to meet both parties’ future needs” and this was addressed by way of add back. There is a growing body of case law which suggests that judicial patience has reached a limit on this point. Rumours abound of the introduction of civil style costs budgeting into the family arena. It remains to be seen whether this judicial condemnation of seemingly ever increasing costs has an impact at a practical level, but those who do not caution their clients robustly about litigating unreasonably run a risk.

The Future 

Whilst family lawyers continue to provide dynamic solutions to assist separating couples, the ongoing problems within the family justice system pose significant issues for the future which threaten to undermine public confidence if not properly addressed.

The push to increase transparency as to how family justice is enacted remains a hot topic and one which family lawyers have strong and often contrasting views on. The work of the Transparency Project, the recent Justice Committee report on ‘Court Reporting in the Digital Age’, and the comments of Mostyn J in Xanthopoulos v Rakshina, all point towards a default position where there will be no anonymity in financial remedy proceedings. This issue looks likely to remain firmly on the agenda for some time and it is important that we all keep contributing to the debate to find an outcome which best balances the needs of all involved in the family justice system.

Campaigns to provide legal protection for cohabitants continue and there is very real frustration within the profession at the lack of progress on this front. The government’s recent response to The Women and Equalities Committee’s report on the rights of cohabiting partners failed to bring the reform which is so urgently needed to protect cohabiting couples and families on separation. This is disappointing, particularly as it bucks the trend of progress towards making things better for separating families, and urgent reform is needed to extend protections to cohabiting families. Indeed, even advance planning for cohabiting lacks the momentum seen in the rise of nuptial agreements with those who opt to wed. Not only do property declarations of trust remain rare, but so do family lawyers who advise on such.

Despite the need for further improvement overall, the progress made to both the substantive law and the practice of family law in recent years has undoubtedly had a positive impact on the experience of many separating families. It remains incumbent on us all to look at what more we can do to improve this experience. An increased awareness of the ever-expanding alternatives to litigation being the default method of resolution should ensure that our approach is tailored to the specific needs of each separating couple and move us towards a position where high net worth does not have to mean high conflict or high costs.