There is no such thing as a simple divorce, at least not at the highest levels of wealth. There are only degrees of complexity – in terms of assets, the structures that hold them, the jurisdictions in which they’re registered and, often, in the determination of one party or the other to prevent this picture from coming into focus.
To help unpack some of this complexity, Spear’s canvassed the views of around 60 of the UK’s leading family lawyers and barristers.
Wealth preservation is cited by 46 per cent of respondents as the primary objective for clients navigating divorce. A further 19 per cent identify fair property division as their clients’ chief concern – two answers that together speak to the same underlying anxiety.
A major imbalance between the financially stronger and weaker party can be decisive in shaping divorce proceedings. According to our survey respondents, the most important factor in achieving a favourable outcome for the financially weaker party is the ability to identify and challenge non-disclosure.
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One respondent, who wishes to remain anonymous, tells Spear’s: ‘The challenge for the financially weaker party is not knowing the full extent of the resources, having trusted their spouse to deal with things during the marriage.’
The less liquid spouse can enter proceedings having to construct a picture almost from scratch, often at considerable cost and against significant resistance.
Non-disclosure sits at the heart of many significant matrimonial disputes. It is, according to 58 per cent of survey respondents, a ‘significant’ or ‘very significant’ challenge in HNW and UHNW cases. At this level, wealth is rarely held in a form that lends itself to easy scrutiny. Family investment companies, trusts, offshore entities, private equity vehicles and carried interest arrangements can all serve – intentionally or incidentally – to obscure both ownership and value.
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‘A fair settlement is impossible if the true asset base is unknown,’ notes Joanna Farrands of Moore Barlow. ‘One party may be litigating in the dark while the other controls the information.’ And the dark, practitioners warn, is getting darker: complex international structures, cryptocurrencies, digital assets and the use of AI to manipulate evidence have made the task of establishing an accurate financial picture harder than it has ever been.
‘Suspicion is rife in these cases,’ adds another lawyer who asks to remain anonymous. ‘It does not matter that the financially weaker party is clearly going to have enough money to live on. They want their fair entitlement and full disclosure – they are likely to have made sacrifices, tolerated a great deal in the generation of that wealth, brought up children or run the household.’
[See also: Luke Scarratt on putting mental health at the centre of family law]
The process of establishing what that entitlement amounts to, however, is not straightforward. ‘By the time lawyers and experts have acquired sufficient evidence to quantify the assets, the financially stronger party may well have restructured things, meaning the weaker party is always playing catch-up,’ says Maria Scotland, a barrister at 5 St Andrew’s Hill.
Battling it all out in court is not the only way to go, however. Some 74 per cent of respondents say alternative dispute resolution (ADR) is a very or extremely useful tool in HNW divorce, though its effectiveness, practitioners are quick to caution, depends on the people in the room.
More than half (58 per cent) identify a collective willingness to engage as the single most important factor in determining whether ADR will work.
‘ADR tends to succeed or fail based on mindset rather than mechanics,’ says Claire Gordon, head of the family and divorce team at Farrer & Co. ‘Where both parties are genuinely willing to engage, even highly complex cases can be resolved constructively. If one party is using it tactically to delay, retain control or avoid transparency, the process falls down.’
It’s also better to avoid rushing into such a process. ‘ADR is most successful where there has been rigorous preparation, early strategic thinking and close alignment between legal advisers, counsel and relevant financial experts before the parties enter the room,’ warns Zahra Pabani of Irwin Mitchell. ‘Where ADR is used prematurely or without sufficient groundwork, it can simply defer rather than resolve conflict.’
As has been the case for many years, the domestic court system remains underfunded, backlogged and not fit to serve its purpose. ‘We used to be able to say we would issue proceedings if XYZ did not happen,’ says Emma Morris of Burgess Mee. ‘That threat is now completely hollow. Everyone knows that if you issue proceedings, nothing happens for months. This allows misbehaving spouses to continue without fear.’
[See also: Georgina Hamblin on revolutionising how family law operates]
Across the profession, there is no shortage of proposals for reform. Luke Scarratt of Payne Hicks Beach argues for cost rules closer to those of the commercial court, where the loser generally pays – a principle that would sharpen the incentive to settle and could temper the appetite for tactical or cynical litigation.
William Longrigg of Charles Russell Speechlys calls for the reintroduction of Calderbank offers, the pre-trial settlement proposals (abolished in 2006) whose removal has allowed parties to litigate without fear of cost consequences.
Another proposal is for a dedicated Financial Remedies Court for HNW and UHNW cases, with mandatory judicial continuity and enhanced disclosure powers from the outset. At present, the consequences for late or incomplete disclosure are seldom severe enough to deter it, and delay – as practitioners repeatedly observe – rewards the party that controls the information and can afford to outlast the other.
‘The system is often forced to treat extraordinarily complex wealth structures as though they are simply a more expensive version of an ordinary case,’ says Farrands. ‘They are not.’
A version of this article appears in Spear’s Magazine Issue 100. Click here to subscribe.
