New divorce transparency rules introduced this week are at risk of being ‘weaponised’ by HNW clients, leading family lawyers have warned.
After the 2021 review of transparency in the family courts, the family court has embarked upon a 12-month pilot scheme in London, Birmingham and Leeds that aims to provide greater transparency in financial claims on divorce.
‘Members of the media, including legal bloggers, will be entitled to attend and report on hearings,’ Edward Floyd, a partner at Farrer & Co, explains of the rules introduced on Monday. ‘They will also be entitled to receive key background documents, specifically the case summary and submissions, to help them understand the case they are reporting on. However, when the media does attend a hearing, the court will consider making transparency orders that control what can and can’t be reported, to protect sensitive personal information.’
He continues: ‘Another notable change that the new rules will introduce is that published court lists will now name the parties and identify that there are financial disputes.’
Crucially, the pilot does not include Financial Dispute Resolution hearings which remain a confidential part of the process to enable parties to reach settlement with the assistance of the judge.
Some industry figures have welcomed the changes, arguing that the new rules will shine a light on a family court that was perceived to be secretive, and that they will help identify inconsistencies in the judiciary’s approach to financial claims. Yet there are also concerns.
Could divorce transparency rules become a deterrent?
Claire Gordon, another Farrer & Co partner, notes that although the new divorce transparency rules in financial remedy proceedings are intended to provide consistency, there is also a chance that it will deter some HNWs and their spouses from seeking the assistance of the court.
She explains: ‘Historically anonymity was at the discretion of each judge, whereas now there are clear guidelines which are to be applied in every case.
‘There is a risk, however, that some may seek to weaponise the new rules. The mere threat of media attendance and greater access to court documents containing sensitive personal information will, in some cases, be sufficient leverage to deter a party from seeking the proper assistance of the court, particularly where high-profile individuals are concerned.’
Floyd adds: ‘Financial divorce cases can be stressful and expensive, even without the potential of media exposure. Additionally, there is a fear held by some that the rules could be exploited by one party threatening publicity to get a better financial outcome.’
From November, the pilot will be extended to the Royal Courts of Justice, where many of the biggest and most high profile cases are heard. Floyd and Gordon agree this could lead to a greater number of disputes being settled through arbitration.
‘When high net-worth couples divorce, it generally attracts significant media interest, whilst those involved are, in our experience, often keen to protect sensitive financial information,’ Floyd continues. ‘Extending the changes to the Royal Courts of Justice may drive divorcing high net-worth couples to consider arbitration, which is the spouses agreeing to instruct a private “judge” to give the parties a binding and private decision.’
Gordon adds: ‘[This way] privacy is guaranteed, where this route can be agreed by the couple. Ironically, this will mean that some big ticket cases will continue to be shielded from public view, although this will also have the side benefit of relieving some of the ongoing backlog in the family courts.’