Matrimonial - Grant Thornton

Matrimonial
SURVEY
2013
A changing decade
Since the inception of the survey 10 years ago, the landscape of
family law has changed considerably, with shifting family dynamics
and landmark judgments making headlines. Coupled with a
significant downturn in the global economy, all this has meant that
the issues facing family lawyers are constantly evolving.
Statistics from the ONS show that the
number of marriages has begun to increase
from a low in 2009. Divorce rates, which
reached a low in 2009, have remained
largely static following an increase in 2010.
In contrast, the levels of cohabitation
recorded have seen a dramatic increase
over the last 10 years. In 2004 there were
4.7 million couples cohabiting in the UK,
and by 2012 this had risen by 25% to 5.9
million, making cohabitation the fastest
growing family type in the UK.
The recent judgment in M -v- M, in which
the wife was awarded £54 million, was
the largest Court award in UK matrimonial
2 MATRIMONIAL SURVEY 2013
history and perhaps provides a fitting
landmark for our tenth matrimonial survey
report. Not only was the size of the
settlement very large, the misconduct of
the husband during the legal process was
commented upon at length by the judge.
Litigation misconduct, it seems, is no longer
an unusual aspect of big money cases.
This year’s tenth annual matrimonial
survey by leading business advisors, Grant
Thornton, considers the key current issues
for family lawyers, and also revisits those
areas of family law which have arisen
consistently over the 10 years in which we
have been undertaking our survey.
Key dates since the first
Grant Thornton matrimonial survey
2005
Civil Partnership Act 2004 comes into force
Oxley -v- Hiscock
2006
Miller -v- Miller
McFarlane -v- McFarlane
2007
Charman -v- Charman
Stack -v- Dowden
2010
Imerman -v- Tchenguiz
Radmacher -v- Granatino
2011
Introduction of Family Procedure Rules 2010
Jones -v- Kernott
Jones -v- Jones
2012
F -v- F
2013
Prest -v- Petrodel
M -v- M
Removal of legal aid for most family cases
MATRIMONIAL SURVEY 2013 3
4 MATRIMONIAL SURVEY 2013
Increased number of
litigants in person due to
lack of public funding
Removal of legal aid for
most family law cases
Courts not being
fit for purpose
8%
Economic downturn and
availability of assets /liquidity
9%
Lack of certainty in family law
arising from varying case law
The rights of
cohabiting couples
4%
Uncertainty surrounding
the awaited Prest ruling
2%
Enforceability of pre and
post marital agreements
2%
The requirement for all
parties to consider mediation
1%
Other
The recommendations of
the Family Justice Review
The increasing importance
of inherited assets
Proposed cuts in Legal
Services Commission funding
Increased competition from
the introduction of Alternative
Business Structures
The Divorce Debate
Key issues
Over the last ten years, we have asked family lawyers which three key issues
are at the forefront of family law. Respondents to this year’s survey said
that the increase in litigants in person due to a lack of public funding was
the leading issue, with 24% of responses. This compares to 2012 where the
key issue was the economic downturn and the availability of assets/liquidity
(23%, 2013:15%). We have set out the detailed results in Figure 1.
24%
23%
18%
19%
17%
15%
11%
10%
9%
7%
8%
6%
4%
2013
2%
2012
1%
Figure 1 - Please select the top three issues facing family law at the moment:
For the first time since 2008 the top issue is an increase in litigants in
person due a lack of public funding, whereas historically the top issue has
been the economic downturn and the availability of assets.
Litigants in person and the removal of legal aid
The issue of litigants in person has in fact elicited
a more vociferous response than many of the
other issues we have covered over the years. In
responding to the survey, lawyers have clearly
expressed their concerns regarding what seems
likely to become an increasingly significant issue,
burdensome on both heavily congested Courts
and on both of the parties, not just the litigant in
person. This, combined with the Family Justice
Council stating that further legal aid cuts risk
injustice for users of the Family Court system,
indicates that lawyers and judiciary alike are
unhappy at the current position as regards the
funding of family proceedings.
Whether costs will actually be saved as a result
of removal of most legal aid funding remains to
be seen, as does whether there will be an uptake in
alternative dispute resolution (ADR) as a means
to alleviate the costs and delays that are currently
being experienced. Whilst 81% of respondents
to our survey stated that they would recommend
arbitration as a means of settling matrimonial
disputes, 92% of respondents have yet to refer a
case to arbitration. This reflects the results of our
survey in previous years where, despite support,
ADR methods such as collaborative law have seen
limited uptake amongst our respondents.
Changes in legislation
As in previous years, we have also asked family
lawyers about the areas in which they would most
like to see a change in legislation. In 2013, the top
three issues are consistent with those from 2012
although in a different order of priority:
1st
Introduction of no fault divorce (24%)
(2012: 25%)
2nd Protection for cohabiting couples (21%)
(2012: 26%)
3rd = Clearer guidance on self-help following the
Imerman ruling (19%) (2012: 23%)
3rd = Reintroduction of Calderbank offers in
financial proceedings (19%) (2012: N/A)
The desire for the introduction of no fault divorce
reflects the unimplemented part of the Family Law
Act 1996. This would remove the existing grounds
for divorce and replace them with the sole ground
of irretrievable breakdown, a position which was
heavily supported by Sir Nicholas Wall, former
President of the High Court’s Family Division.
Previously popular answers such as the
need for pre and post marital agreements to be
made legally binding have fallen away, possibly
following the Radmacher ruling which firms up
the position regarding these agreements.
MATRIMONIAL SURVEY 2013 5
The Statistics
How old?
In response to predictions relating to increases in
‘silver splitters’, we asked lawyers about the age of
their clients. 86% said that the most common age
of their clients was 40 to 49, with a further 10%
saying 30 to 39. In addition, 53% of respondents
said that they had seen no change in the age of
people getting divorced, although 38% stated that
they had seen an increase in the parties’ ages.
Business problems
Other
How come?
The reason for marriage breakdown is a question
we have asked since the survey’s inception. In 2011
we reported that for the first time growing apart/
falling out of love had become the main reason,
overtaking the extra-marital affair. This continues
to be the case this year, with 29% of respondents
citing growing apart (the highest ever response for
this answer) compared to 24% citing an extramarital affair, the next most popular answer. Since
the introduction of the current format in 2009, the
top three answers have been the same in each year.
We have set out the details in Figure 2.
1%
1%
1%
1%
2%
Empty nest syndrome
3%
Family strains
Stress
Work-holism
6%
2%
2%
2%
3%
4%
4%
5%
6%
6%
6%
Emotional / physical abuse
Financial / money worries
Mid-life crisis
Unreasonable behaviour
Extra marital affair
Growing apart / falling
out of love
6%
5%
7%
8%
9%
10%
13%
16%
17%
24%
24%
25%
25%
29%
27%
2013
2012
2011
6 MATRIMONIAL SURVEY 2013
Figure 2 - Please select the three most common reasons for a marriage breakdown leading to one or both parties seeking a divorce
31%
32%
28%
26%
2012
4%
4%
1%
1%
2%
2%
2%
4%
7%
7%
10%
14%
17%
17%
21%
22%
21%
20%
2011
7%
£10M - £50M
£6M - £10M
£4M - £6M
£2M - £4M
£1M - £2M
£500K - £1M
Figure 3 - What is the average value of total family assets
distributed between the divorcing parties? (select one)
£250k - £500k
How much?
It seems that there has been a turnaround in the
value of family assets distributed in divorce cases
dealt with by respondents, which may be related
to economic recovery or to the increase in the
number of litigants in person dealing with the
lower value cases. For the first time since 2011
no respondents said that the average value of
assets was less than £250,000 (compared to 14%
in 2012), and 15% of cases had assets of over £4
million, with 4% of those being over £10 million
(compared to 6% and 2% respectively in 2012).
We have set out full details for the last three years
in Figure 3.
2013
<£250k
How long?
As with previous years, the majority of marriages
dealt with by lawyers were between 11 and 20
years, with 63% of respondents in the current
year saying that this was the case. This year also
showed the highest proportion of long marriages
ending in divorce, with 14% of lawyers saying that
the majority of divorces were from marriages over
20 years, compared to 4% in 2012.
MATRIMONIAL SURVEY 2013 7
The Key Issues - the economy
Number of divorces
There is ongoing debate as to whether the state of the economy affects
the number of divorces. Some commentators report that they have seen
a significant impact on the number of divorces they are dealing with,
conversely the Marriage Foundation has reported that, according to their
research, there is no link between divorce levels and the recession. We asked
for lawyers’ experiences of divorce and the economy and their responses are
set out below.
49% of respondents stated that they had seen a
decrease in the number of divorces due to the
recession (36% had seen no change). 79% of
respondents considered that recession has led
people to delay commencing divorce proceedings
(75% in 2012, 82% in 2011). Economic recovery
may therefore lead to an increase in the volume of
divorce work, as previously delayed proceedings
are instigated.
Delaying factors
As with the past two years, we asked what was
considered to be the key recession related factor in
delaying divorce proceedings. We have set out the
results in Figure 4. For the first time the inability
to fund divorce proceedings is the top answer,
with responses at a level considerably above the
previous two years.
54%
48%
47%
44%
29%
25%
13%
13%
11%
2013
8%
2012
5%
2011
3%
Figure 4 - What do you consider to be the key recession related factor in delaying divorce proceedings?
Inability to
fund divorce
proceedings
Lack of liquidity of
business assets
8 MATRIMONIAL SURVEY 2013
Lack of value
and/or liquidity of
personal assets
Other
Financial worries leading to a strain on the
relationship is again the aspect of the recession
that lawyers say has most influenced their clients’
decision to divorce, with 48% of respondents stating
this to be the case (2012: 69%, 2011: 45%). However,
this does not seem to be entirely consistent with
other responses to our questions. Where we would
expect to see an increase in the number of divorces
in a recession owing to the financial strains, this does
not appear to have been the case, as we report that
people are more likely to have delayed their divorce.
As we have set out in Figure 3, we have begun
to see an increase in the asset values distributed on
divorce, which may reflect the start of a recovery.
The British Chamber of Commerce recently
increased its growth forecast for the next two
years which may herald a change in the numbers
of divorces if the state of the economy is indeed an
important factor for divorce rates.
“In tough
economic times, when
people’s budgets are tight, it is
perhaps not surprising to see a fall
in the divorce rate. Now that there is
continuing positive economic news,
it will be interesting to see if
the divorce rate starts to
edge up again.”
Nick Andrews, Partner,
Forensic and
Investigation Services
MATRIMONIAL SURVEY 2013 9
The Key Issues - concealment of
assets and non-disclosure
In recent years and months, there have been a number of cases which have
attracted attention, not least in respect of one party’s attempts to mislead the
proceedings by failing to provide full disclosure.
We have already referred to the case of M -v- M
where, aside from the high value of the settlement,
the judge was highly critical of the husband in the
proceedings for his failure to provide full financial
disclosure.
Other recent (or ongoing cases) such as Prest -vPetrodel and Scot and Michelle Young also record
instances of misconduct by the husband, with Scot
Young having been jailed for contempt of Court for
failing to provide the ordered financial disclosure.
In both M -v- M and Prest -v- Petrodel, adverse
inferences were drawn against the husband as a
result of his lack of financial disclosure.
How many cases?
We have asked about the proportion of cases
that reveal concealed assets or non-disclosure of
information for the last five years. We have set out
those results in Figure 5. Only 9% of respondents
said that they had had no cases which revealed
concealed/missing assets or non-disclosure,
compared to around 20% in 2011 and 2012. The
number of lawyers reporting issues in 50% or
more of their cases is much lower at only 5%.
9%
None
20%
18%
49%
10%
42%
40%
25%
20%
15%
23%
10%
30%
15%
13%
2%
40%
4%
2%
4%
50%
2%
2%
60%
1%
1%
70%
1%
2013
2012
2%
2011
Figure 5 - What percentage of cases, to the nearest 10%, revealed significant concealed / missing assets or non-disclosure of information?
10 MATRIMONIAL SURVEY 2013
Asked whether the incidence of concealment or
non-disclosure had, in their experience, increased
from previous years, 88% of respondents said
no (77% in 2012). The majority of respondents
also did not think that the imprisonment of
Scot Young would act as a deterrent to people
considering deliberate concealment of assets or
information. In a recent case, a divorce settlement
was set aside by Mr Justice Coleridge due to
non-disclosure of assets. It is too early to assess
whether more recent rulings including M -v- M,
when combined with the treatment of Mr Young
and with the disparaging comments from various
judges on the issue of non-disclosure in these
cases, will have more of a deterrent effect on
potential non-disclosers. This is an issue to revisit
in next year’s survey.
The legacy of Imerman
The 2010 Imerman ‘self help’ ruling continues
to create issues for family lawyers. 32% of
respondents stated that they had cases where they
knew about hidden or undisclosed assets but were
unable to rely on documents, because these had
been obtained by the clients themselves.
“The key issue
in detecting concealment is
that you don’t know what you
are looking for. In a post Prest
world, concealment, particularly
in corporates, will require
detailed analysis of the financial
records in order to confirm the
true position.”
Chris Clements,
Partner, Forensic and
Investigation Services
MATRIMONIAL SURVEY 2013 11
The Key Issues - cohabitation
The rights of cohabitants is an area of law on which most family lawyers
have an opinion and is one which we have touched upon in most years that
we have undertaken our survey. That said, only 7% of respondents cited the
rights of cohabiting couples as one of the top three issues facing family law
(2012: 10%).
62%
of respondents
Do not think
that cohabiting couples
should be given the same
legal rights as married
couples, with some
respondents stating this
should be subject to
certain conditions
(2012: 59%)
21%
of respondents
12 MATRIMONIAL SURVEY 2013
Would like to
see a change in
legislation to protect
cohabiting couples
(2012: 26%); 57% of
respondents do not think
the law on cohabitation
is any clearer than 10
years ago
It is clear that, with changing family dynamics
arising from the increase in cohabitation, there
is a desire for at least a clarification in the law.
The decision in September 2011 that there
would not be a change in the law, despite the
recommendation of the Law Commission, was
met with some disappointment. This lack of
change also goes against Sir James Munby’s words
in October 20121 where he said that reform “is
desperately needed”. This may be remedied
following the recent introduction of a private
member’s bill which aims to give cohabitants
limited financial rights.
In this year’s survey we asked what were
considered to be the main factors behind the
lack of legislative protection for cohabiting
couples. The answers are set out in Figure 6.
It is interesting to note that the most popular
answer by some margin was political pressure to
protect the idea of marriage and family values.
The Prime Minister’s idea of ‘Big Society’ which
includes the belief that marriage is the bedrock of
strong communities perhaps explains some of the
reluctance of the current government to support a
change in the law.
Despite the fact that there is currently
perceived to be a political obstacle to any change,
73% of respondents think it is at least likely that
there will be a change in legislation regarding
cohabitation in the next 10 years. This would
appear to support Sir James Munby’s comments
that reform is “inevitable”.
61%
26%
7%
6%
Figure 6 - What do you think are the main factors behind the lack of legislative protection for cohabiting couples despite support from much of the family law community?
Other transitional
changes in the
family law arena
meaning that this
is not considered
a priority
1
Political
pressure to
protect the idea
of marriage and
familty values
Too
complicated to
accommodate
all possible
connotations
into legislation
Other
Taken from Family Law March 2013, article based on the keynote address delivered by Sir James Munby at Jordan’s 25th Family Law Conference
MATRIMONIAL SURVEY 2013 13
The Future
We could not reflect on the trends of the last 10 years without considering
what the future might bring. We asked respondents to let us know how they
consider their roles will change over the next 10 years. We have set out the
details of their responses in Figure 7.
27%
24%
17%
12%
11%
6%
3%
14 MATRIMONIAL SURVEY 2013
Other
Problems created
from increasing
litigants in person
More time spent
regarding contesting
marital agreements
More advisory work (pre/
post marital agreements,
cohabition agreements)
Increasing impact of potential
overhaul of legislation with
regards to divorce and financial
proceedings / cohabitation
Increase in
enforcement proceedings
Impossible to tell
Figure 7 - How do you expect your job to change over the next ten years?
Over a quarter of respondents stated that they
expected their work in an advisory capacity
to increase, be that in the form of drafting
cohabitation agreements or pre/post marital
agreements. With the law as it stands in respect of
pre-marital agreements following Radmacher and
significant rises in cohabitants, this may not come
as a big surprise.
What might be considered to be more
surprising is the proportion of lawyers (24%)
who considered that the biggest change in their
role would be dealing with the problems created
by an increasing number of litigants in person.
This is perhaps a consequence of the decision
to remove legal aid in most family law cases,
which will put pressure on what is already a
Court system under strain. Time will tell whether
the introduction of a single Family Court will
alleviate the current difficulties.
Reported judgments
It seems that widely reported judgments and
cases have an unpredictable impact on the work
of family lawyers. In respect of pre-marital
agreements, 74% of respondents stated that they
had seen an increase in this type of work, while
24% stated that it had stayed the same. Of those
lawyers who said they had seen an increase, 72%
said they thought that the increase was or was
probably linked to the ruling in Radmacher and
Granatino.
This response compares with responses relating
to the imprisonment of Scot Young, where
68% of lawyers said they did not think that this
would act as a deterrent to people considering
concealment or non-disclosure of assets. At
present it is too early to determine what the effect
of rulings such as Prest -v- Petrodel will be on
people’s behaviour.
“Our own impression
is that there is a trend
towards divorcing parties
seeking to reach a collaborative
resolution, as well as there being
an increase in pre- and post-nuptial
agreements, as spouses try to
obtain a degree of certainty
over the outcome if or when
the marriage ends.”
Nick Andrews,
Partner, Forensic and
Investigation Services
MATRIMONIAL SURVEY 2013 15
Key contacts
Should you require any further
information in respect of
Grant Thornton’s Forensic and
Investigation Matrimonial Services
please contact:
Nick Andrews
Partner
T +44 (0)20 7865 2174
E [email protected]
Chris Clements
Partner
T +44 (0)7968 338 895
E [email protected]
Fred Brown
Director
T +44 (0)7771 974 282
E [email protected]
Louisa Plumb
Associate Director
T +44 (0)161 953 6355
E [email protected]
The survey
canvassed the opinions
of a cross section
(numbering 85) of the
UK’s leading family
lawyers based on their
client work in the 2012
calendar year.
Our matrimonial team
This tenth annual survey of the UK’s leading law firms specialising in family law was
carried out by Grant Thornton’s Forensic and Investigation Services practice. We are
regularly called upon to provide advisory or expert witness services to assist lawyers,
their clients and the Court in investigating and understanding the financial aspects of
family cases.
We advise on a full range of resolution methods, including traditional litigation as
well as alternative dispute resolution methods such as collaboration and mediation. We
have a team of specialists that has the experience to provide relevant and cost effective
advice to lawyers and lay clients.
Within this context, we advise clients in a wide range of sectors, both in respect of
their individual and corporate arrangements. We are able to draw on this experience
when valuing businesses and advising on liquidity, taxation and personal financial
planning as an individual or between married couples. We can also advise on corporate
arrangements and restructuring, including issues arising from assets held abroad.
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