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The hourly rate is dead, long live the fixed fee? – the rise of value-pricing

The advent of ABS’s and the current development in the Family Justice System provide a ripe environment for change in the world of family law. From my experience, the consumer almost always ask 3 key questions:

1. What will be the outcome?

2. How long will it take?

3. How much will it cost?

Whilst some aspects of family law process and procedure have been relatively easy to predict, such as the basic uncontested divorce, it remains the ancillary and often far more important issues concerning finance and children which create the problem for family lawyers when trying the give a clear and accurate answer to these questions at the very outset of a case. As  family lawyer, I know that  one key prevailing factor is that the outcome, time and cost are not just dependent on what the person in front of you says and does, but also on the far more unpredictable X factor of what their spouse/partner also thinks should happen.

I read with intrigue the recent new attempts organisations such as the Co-Op, Dovetail and Riverview are making to address the costs issue by seeking to offer fixed fees for family law services. The detail in the terms and conditions are likely to be the determining factor when at the end of the family dispute a client considers whether they have received  the service they wanted at the price they expected. Certainly the combination of Legal, IFA and Coaching skills from a range of professionals is very positive step in the right direction by Dovetail. In family cases, lawyers simply don’t know all the answers and I’ve long been an advocate of working closely with non-legal support for people resolving a family problem.

However, whilst quoting a price can be extremely difficult, this must be the way forward in a legal process which is consumer lead and outcomes focused. It’s not about being cut price or bargain basement, but the consumer expects to know that they are paying a fair price for a quality service. I agree with Lord Neuberger that the days of the arbitrarily  set hourly rate are over. Whilst the cost of a case should reflect complexity and time involved in achieving the desired outcome for the consumer, the cost must be based on the value to the consumer weighed against resources required and the margin of profit.

Unless lawyers develop a stronger business sense, then the business advantage might be gained not by those who know the law best but by those who can sell their services best. This creates the risk of a decline in the quality of the actual family law legal services provided to the public if non-lawyers gain an advantage in the market, and I for one believe that family lawyers owe it to the public at large to ensure that this does not happen.

Sources:

http://www.legalfutures.co.uk/latest-news/co-op-to-launch-family-law-service-in-london-before-nationwide-roll-out

http://www.legalfutures.co.uk/latest-news/riverview-unveils-groundbreaking-fixed-fee-divorce-service-for-wealthy-couples

http://www.legalfutures.co.uk/latest-news/law-firms-team-up-to-launch-fixed-fee-collaborative-law-one-stop-shop

http://www.telegraph.co.uk/news/uknews/law-and-order/9260912/Hourly-billing-for-lawyers-should-end-says-top-judge.html

Trade and Tribulation – How to divorce without destroying your business

With it being Budget Day, I find my mind turning to business issues.Traditionally, when a marriage falls apart the family business comes under scrutiny; How much is the business worth? Who should run it? Should it be sold?

Heated emotions can erupt into costly litigation, with a tug of war to decide what should happen with the business. The fallout from this process can result in large legal costs and also a detrimental emotional effect on both sides in the dispute. This eats into the financial resources available to the couple and can also have an adverse impact on the productivity and profitability of the business. Anxiety and concern can also creep in amongst employees, who fear whether the business will survive and the result this could have on their jobs. None of this is good for the business and is best avoided if possible, but how? There is a far better way to deal with the separation and divorce of a couple whilst helping them keep their business going.

To avoid the problems of the traditional adversarial process of divorce and dividing up the family business, a better and more modern approach helps a divorcing couple focus on their common goals. This includes discussion and agreement on how a family business can continue to successfully trade with the common benefit of maintaining income and capital wealth for both parties. It is seldom to anyone’s benefit for there to be an expensive and protracted legal dispute in court to decide how a family business might be kept by one party or perhaps even split up or sold. Dispute Resolution avoids going to court and keeps control of the family business in the hands of the business owners, rather than giving those important decisions to a Judge.

Different methods of non-court dispute resolution include Mediation and the Collaborative Family Law process, and enable a divorcing couple to work together for the common good of the business and achieve long term financial security. Another benefit of resolving family and business problems away from the court, is that other, non-legal professionals can also be involved in the process of reaching an agreement, such as ensuring that any final settlement takes into account tax implications. Therefore, it’s important to family lawyers to work with non-legal professionals such as Accountants and Financial Advisors. With the divorcing couple in control of the process, the end result can be tailor-made to best support the business; something which is often not achieved if a Judge makes the final decision in court.

Another way to safeguard a business is by a couple entering into a written agreement which takes into account what should happen with the business should they separate and divorce at some point in the future. Often called a “Prenuptial Agreement” (or “Prenup” for short), this type of agreement can actually be entered into before or after the actual date of marriage. If a Judge does then have to make a decision about the business as part of the divorce process, the Prenup should be very persuasive when convincing a Judge that there should not simply be a 50/50 division of the business assets between the divorcing couple. This is particularly relevant when a successful business has been built up by one party before they meet and marry their spouse.

Family Arbitration Scheme – is another type of “court” the right way forwards for family dispute resolution?

The Family Arbitration Scheme has now launched to “provide another means of resolving family law disputes relating to finance or property, outside of a formal court process”. It is important to note that this does not  include non-financial children issues (ie. residence/contact/shared parenting).

Whilst a method of dispute resolution away from the official court process may have a positive impact, by enabling couples to avoid the inevitable problem of delays following cuts in court services and the limited availability of the judiciary to resolve contested cases, I consider that arbitration rather misses the point of trying to encouraging a non-positional approach via the other non-court based dispute resolution options including mediation and the collaborative family law process whenever possible.

It is stated that the arbitration process “should enable parties to resolve financial disputes more quickly, cheaply and in a more flexible and less formal setting than a court room”. However, I fear that arbitration will merely be another type of “court” for which a couple and lawyers will still adopt a hostile litigious approach. Whilst I accept that “court” is the only way for some couples to resolve their differences, I believe that easy access to arbitration is not what is really needed in the majority of family disputes and will more probably lead to greater animosity and bad feeling rather than benefit.

At least the court process for financial matters on divorce includes the Financial Dispute Resolution (FDR) appointment to encourage compromise, and the judge has the final say with case management powers. However, won’t a couple who want an answer quickly and cheaply, just ask for this answer from the arbiter without wishing for the arbiter to consider how a compromise might first be achieved? Won’t the arbiter’s hands be tied by what they are being paid by the couple to achieve? What say will the arbiter have in dictating to the couple how their case should be dealt with, rather than how the couple want their case dealt with?

As more information is released, then more answers should become available. For the time being, I for one remain sceptical about the whole process and wait to hear from a family arbiter to change my mind.

Source:

Family Arbitration website: http://ifla.org.uk/

Press release: http://ifla.org.uk/cms/wp-content/uploads/2012/02/Press-release-Family-Arbitration-DRAFT-Final.pdf

Gay marriage = Gay divorce – is it time to review divorce law as a whole?

A recent article about the prospect of gay marriage, has as caused me think about the inevitability of some gay marriages ending in divorce.

Currently, a civil partnership is the closest we have in England to gay marriage. However, whereas a “straight” marriage can end in divorce due to adultery, the dissolution of a civil partnership does not allow this option. I presume that the prospect of gay adultery (ie. a gay relationship outside of  the same sex civil partnership)  was to much for Parliament to consider.

This current law is in line with the fact that “adultery” for the purpose of a straight divorce does not include the husband going off with another man, nor the wife going off with another woman. These are both circumstance which I have come across in practice, and both cases have resulted in divorce for “unreasonable behaviour” by the unfaithful spouse, rather than for the “adultery” which is what has actually happened.

Therefore, when we see new legislation to allow gay marriage (which I think is inevitable in our society), then why shouldn’t there also be gay adultery being recognised in law? This would require new law for both gay and straight divorce and should finally do away with the current legal imbalance between straight and gay couples.

An alternative approach, would be to reform divorce law entirely, doing away with the “fault” based divorce options of adultery and unreasonable behaviour altogether. This doesn’t have to mean that divorce is any easier nor that marriage is any less important, but for the majority of couples I deal with would help both people (and their kids) move on more smoothly without the need to apportion blame when the marriage has irrevocably broken down. Time to re-exam the proposed legislation in the Family Law Act 1996?

Sources:

Telegraph: Don’t legalise gay marriage http://www.telegraph.co.uk/news/religion/9045796/Dont-legalise-gay-marriage-Archbishop-of-York-Dr-John-Sentamu-warns-David-Cameron.html

Parent’s legal rights – is new law the solution?

The Family Justice Review (FJR) came out last autumn (see my blog 07/11/11) and now the Government is warming up to publish it’s repsonse. However, early indications from the Children’s Minister Tim Loughton (The Telegraph, online – 05/01/12) suggest that the Government is missing the point when it comes to children sharing their time with both parents.  If the Government believes that new law alone will help, then I say the Government is wrong!

The Family Law community (ie. judges and lawyers) recognises that the law is a blunt instrument. The law simply does not, and cannot, provide all the answers to the many problems that crop up when a relationship between parents breaksdown. That’s why I (and many other forward thinking family lawyers) frequently work with non-legal professionals who can provide essential non-legal help to couples, such as counselling, coaching  and family therapy. I believe that this is very large part of the solution to resolving problems between parents and is already adequately supported by the legal powers of the court within the Children Act (as amended since 1989).

There must be both a carrot and a stick approach, not just a legal stick. You cannot simply dictate to parents what’s best for their kids. You need to help parents  learn what ‘s best for their kids, which includes helping them work through their complex emtions, such as  anger, fear, confusion and  feelings of loss.

However, the underlying problem remains the question of funding – who’s going to pay for this? Legal aid remains at real risk of being cut, with the Legal Aid bill moving through Parliament, and I do not see any new cash being made available from anywhere else soon. But, failure to fund help for families at an early stage of their relationship breakdown will be a false ecomony in the long term, both in social and economic terms.

Finally, one point made by Mr Loughton, when he says that judges made the mistake of seeing shared parenting “as being about equality of time”, is plainly wrong. Case law since 2004  [starting with A v A (shared residence) (2004) 1 FLR 1195], has developed to recognise that “share residence” (and I suggest therefore, also “shared parenting”) does not only occur in exceptional cases, but is already more common and also is not based in kids spending equal time with their parents.

We await the Governments formal resply to the FJR,  so what this space ……

Telegraph articles:

Divorced mums and dads could get legal right to see their children http://www.telegraph.co.uk/family/8995395/Divorced-mums-and-dads-could-get-legal-right-to-see-their-children.html

Legal right to access to children dropped from official review after Australian experience http://www.telegraph.co.uk/family/8995866/Legal-right-to-access-to-children-dropped-from-official-review-after-Australian-experience.html

A New Year, a fresh start. Time to reconcile or divorce?

The New Year often leads people to consider a fresh start, and in some cases couples consider their future together. Whilst commonly thought of as the time for a post-Christmas rush for new divorce client’s, it’s refreshing to see the courageous effort of leading family judge Sir Paul Coleridge (The Telegraph, 03+04/01/12) who is setting up a new organisation, “the  Marriage Foundation”, with the supoprt of a number of other highly regarded family lawyers.

Any decent family lawyer will inform their client at that very start that there are several options available to couples to help them maintain their relationship and overcome their domestic problems. Also,  if a couple is divorcing, then the family lawyer acting for the Petitioner has to lodge with the court a “Statement of Reconciliation” with Divorce Petition, which hopefully the family lawyer will have given more than just lip service to.

However, sadly some relationships have simply come to an end. Family lawyers don’t cause a relationship breakdown, but are very often influential on how the couple shape their future away from each other. When this happens, it’s important to remember that there are also several options available to help a couple split up amicably and with dignity, without the stress and acrimony of expensive court proceedings. One option is Mediation, which provides a couple with a way of discussing solutions to their problems in a controlled environment away from the family home with a help of a neutral person; the Mediator.

Another options  is the Collaborative Family Law (CFL) process; a way for a couple to meet together “roundtable” with their specially trained CFL lawyers, and also with other non-legal advisors, to consider constructive options to reach a agreement with dignity away from the court process.

What might prove useful for the Marriage Foundatrion to look into, would be what information is required by law to be conveyed to a couple (whether married or unmarried) when they first seek advice. Perhaps family lawyers should be required by statute to take on more of a role in trying to keep couples together, by early referral to relationship support organisations such as Relate? There is already the need to consider mediation, with a MIAM, before court proceedings begin, so should something similar apply before a divorce petition can be issued?  We might be returning to the idea of information meetings as set out in the Family Law Act 1996? (see my earlier blog 20.10.11). But, isn’t it often to late for the couple if that information is having to be made available by the lawyers?

Telegraph articles:

3rd Jan 2012 http://www.telegraph.co.uk/relationships/divorce/8988995/Judge-launches-foundation-to-reduce-disease-of-divorce.html

4th Jan 2012 http://www.telegraph.co.uk/relationships/divorce/8991211/Judge-launches-campaign-to-promote-marriage.html

Unmarried couples and their family home – my initial thoughts following judgement in Kernott v Jones

I must admit to having several other pressing tasks to attend to at work this morning, but the anorak in me simply can’t resist a look at the Kernott v Jones judgement handed down today (relatively short thankfully, with just under 30 pages, and I’ve concentrated on the leading judgement of Lord Walker and Lady Hale).

My initial thoughts on the general principles concerning unmarried couples and sharing the equity in the family home are:

• Whether the family home is registered on purchase in the joint names of a couple or only in one of the couple’s names, remains a crucial starting point. So, getting it right at the start is essential, with the correct advice from the conveyancer and proper completion of the Deed of Transfer form TR1 (possibly also with a separate Declaration of Trust) to clearly show what is intended by the purchasing couple.

• The non-owner of a sole named family home starts at a severe disadvantage when later trying to show that they are entitled to a share of the equity. So, get a written agreement in place when you buy (especially if you’re not going to be named as neither the property owner nor on the mortgage).

• The joint purchase and registration of ownership of a family home shows “a strong indication of emotional and economic commitment to a joint enterprise” (para 19), and so this is 1 reason why an equal share of equity is presumed. Also, “the notion that in a trusting relationship the parties do not hold each other to account financially is underpinned by the practical difficulty…” of an unmarried couple potentially living many years together in the family home and merging their finances before splitting up (para 22).

• Therefore, at para 25 it is consdiered that, “The time has come to make it clear … that in the case of the purchase of a house or flat in joint names for joint occupation by a married or unmarried couple, where both are responsible for any mortgage, there is no presumption of a resulting trust arising from their having contributed to the deposit (or indeed the rest of the purchase) in equal shares. But that presumption can of course be rebutted by evidence of a contrary intention, which may more readily be shown where the parties did not share their financial resources”

• But, how did Ms Jones today retain 90% of the equity in her home owned jointly with Mr Kernott, not just 50%? The answer (without getting into any great detail) is that the Supreme Court found sufficient evidence that  following their separation in 1993 (with Ms Jones staying in the family home), Ms Jones’ and Mr Kernott’s “intentions did change significantly” (para 48).

•  The moral of the story is therefore; if you want to avoid a nasty surprise in the future (as Mr Kernott has just had) record all issues in a Separation Agreement soon after you split and not to just let matters drift unresolved for years and years without having anything in writing (or do so at your folly).

 

• So, will there now be a change in legislation? Is new legislation now necessary in light of this judgement? Take a look at my previous blog on this subject  https://poolefamilylaw.wordpress.com/2011/09/21/cohabiting-couples-and-the-law-how-much-longer-before-reform/

 

Well, I hope this has been of interest to you dear reader, but it’s back to the grindstone to me . I’m sure that will be a tsunami of other comments on this subject in the days and weeks and months to come…

Source:

Kernott v Jones – judgement 9/11/11 – http://www.supremecourt.gov.uk/docs/UKSC_2010_0130_Judgment.pdf