There is an excellent article in this month’s Family Law written by Prof Elizabeth Cooke a Law Commissioner and Professor of Law at the University of Reading entitled “Pre-nups and beyond: What is the Law Commission up to now?”
She explains the current position of the Law Commission, which following its review of the law in this area and a consultation process, seems to be moving towards a recommendation that there should be law introduced so that certain “qualifying” nuptial agreements would be upheld in the future. In order to “qualify” however, agreements would have safeguards in place. Firstly, as to how the agreements came to be made in the first place; these might include ensuring appropriate legal advice was given, that the timing of the agreement meant that it was not signed under pressure, and that there had been appropriate financial disclosure. Secondly, there would also be what she describes as “perhaps the most important safeguard”. Namely, that it should not be possible to contract out of a provision for a spouse’s needs given that “more is at stake here than the interests of the spouse…the state, the couple’s children if any and the wider family are all involved in and affected by such provision”.
It’s hard to argue with this position, which seems to be along the lines of the current law being applied in relation to nuptial agreements.
Since the Radmacher case we have seen that a person’s “autonomy” to enter into an agreement is becoming a fast developing area of the law (there is an excellent summary of V v V  EWHC 3230, a recent decision by Mr Justice Charles, written by barrister Ashley Murray which considers just this point). Thus if people wish to enter into a pre-nuptial agreement, and they are fully informed and advised, then their autonomy to do so will be respected by the court even if they later change their minds. They will also be held to their decision, provided that needs have been met.
By providing a safety net, the court can still step in. It’s hard to disagree that this should be the case, and it would make sense for new statute law to follow on the same basis.
But as Professor Cooke goes on to say in her article, what does “needs” mean and how should a party’s “needs” actually be defined?
It’s a very difficult question to answer, as practitioners know. Because although there is a primary and vital emphasis on meeting needs in the law from all the available assets, no couple is the same as the next and no family live their lives exactly the same as another. The meaning of “needs” to one family can be very different to another.
So, to consider this further, what guidance do we currently have in relation to needs?
Section 25 (2)(b) of the Matrimonial Causes Act 1973, requires the court consider “the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future.”
Statute law stops there, and then the parties must use their own judgement (and if they can’t agree the court will use its judgement) to decide what their specific needs are, in terms of income and capital requirements such as housing, and how they will be met out of the family pot (Note: whatever capital assets are left after needs are met are then to be shared. But how the capital assets are ultimately shared is a different topic.)
Meeting needs before deciding how to share the rest of the assets is not an easy job and the outcomes will differ for parties countrywide. It will ultimately depend on the view taken by the parties, their advisors and if necessary the court, as to their own particular needs, given their financial position and other factors that the court must take into account under Section 25 of the Act. Court practices vary too. Some Judges interpret “needs” far less generously than others. Some judges will give clean breaks to couples where there has been no compensatory capital payment, even when there are young children involved – while others will not.
So there is no uniform standard, formula or guideline to help divorcing couples. There is only the experience of those involved in the process to rely upon.
I have thought carefully about how I describe the law to a new client before advising them, as they invariably have little understanding of what the current law is or how it is applied.
Usually clients don’t know much at all. They don’t know that maintenance is payable out of income by one spouse to the other for differing periods of time, depending on the facts of the case. Nor do they know how their capital will be divided. They have made assumptions beforehand (which can be wrong, such as capital will be automatically divided 50/50 between them) and hope they will be financially okay afterwards.
Sensible people take legal advice to find out, while others choose not to do so and guess. They even negotiate and reach agreements without the faintest idea as to their rights in law; something that is very dangerous to do. Of course I know all the arguments about legal costs, but to me, taking legal advice about a life changing divorce is a “need” that always, without question, must come first. Even if you then choose to go it alone you should take informed legal advice as a first step.
No website can ever give you sufficiently good advice about your own position – and that includes this blog!
How I offer advice to clients at the outset
So what do I do when I meet a client for the first time and how do I advise them given the current state of the law?
First I take a snapshot of the client. I find out as much information as I can from them as to who each party is; their ages, addresses, their jobs, income, capital and the details of any personal debt held. I want to know about this family, all about the children and understand them. I will want to know about their lifestyle, the home (or homes) in which they live and the general style in which they live. Sometimes in more complicated cases I need to bring in my in-house forensic accountancy team to also have a quick look at the picture, and help me better advise the client on a first meeting. For example, I might need to know straight away who actually owns a property being described to me, whether there are borrowings against the properties, who owns a company and in what proportions – as well as what the figures look like. This process helps me verify what the client is saying and give better advice.
Then I explain the law, going to Sections 22-25 of the Matrimonial Causes Act and indicate how in my opinion it will affect their case. I then also turn to relevant case law, and explain how the law has been applied in similar situations.
Only then do I turn to the client and offer my considered advice.
How I understand a client’s “needs”
I have represented over ten thousand clients in my career, from the very poorest people in society living on benefits with the most basic needs, to the very wealthiest with substantial needs that their money can easily provide. So I have experience of an entire cross section of “needs” within our population.
Some things are more important to some clients than to others. To some clients, living frugally but maintaining a number of ponies is non-negotiable. To others it might be continuing to live in the family home or visiting a much loved holiday home. To some it may be continuing a modest lifestyle but keeping children at a private school that realistically can be ill afforded. To most, it will be maintaining a relatively simple life for two people out of a stretched income and a restricted capital pot.
I will want to know how the client (husband or wife) will be managing in the future, including their income, housing needs and so forth – all depending on their circumstances and also applying the various statutory criteria in Section 25 of the Matrimonial Causes Act. You take what you consider the relevant factors in law, and then use them to argue for your client. Sometimes you have to tell the client what he or she doesn’t want to hear. The client’s expectations are unrealistic. Its better they hear it from their own lawyer, take it in, start to adjust to the reality, than cocky comments from the other side.
Given most clients have no idea at the start about their future needs, (and how could they be expected to know in a first interview?) we will usually conclude a first interview by giving a client some “homework” and focussing on just that, especially where and how they would like to live in the future based on our initial expectations for them. We will also give our clients a spreadsheet to take away and use as a guideline; including sections on housing costs, personal costs and so on.
It’s a difficult job for a lawyer, but I believe a client needs a realistic steer from the outset.
Defining “needs” in context
Identifying and defining “needs” then goes further. Does the statute mean all “needs”, just “reasonable needs”, or even “bare needs”?
Arguments often develop between couples who, faced with each other’s budgets, disagree as to what should or should not be taken into account. Many budgets clients (and lawyers) prepare are too high. But many, prepared by clients acting out of ignorance of the true cost of living, are also far too low. I have noticed that getting the budgets accurate and agreed is an increasing problem where Litigants in Person (LiPs) are concerned.
The trick of course, is to get the “needs” figure agreed between the parties, but usually I have the feeling that courts may apply an unspoken cross-check. They ultimately order payment of a percentage of income that they believe in the round to be the right figure for one party to pay, and the other to receive. So, is a percentage award the right approach? Or is that too swingeing? The Child Support Agency (CSA) formula is similarly based on a percentage, and I have yet to meet a single client who believes it to be fair.
And then the million dollar question: for how long should spousal maintenance be paid? How long do “needs” last post-divorce? Many might argue that in certain circumstances they persist until death or remarriage. Others would suggest that it shouldn’t go past a few years, if at all.
Readers of this blog know that paying ongoing spousal maintenance, particularly without a cut-off point, seems to be one of the thorniest topics of all. It touches raw nerves and emotions for everyone involved. Those paying maintenance regard it as a penal form of taxation, which affects new relationships for evermore. And recipients regard tax-free maintenance as their right, earned for their contribution during the marriage and “much needed” income, without which they cannot manage.
So, I am interested to know: what do you think about this subject? What does “needs” mean in the context of a divorcing couple? How do you think “needs” should be further defined, and why?
I do hope you will contribute to this debate, one which is current and at the very heart of divorce law.