Divorce and Financial Provision

Would a More Formulaic Approach in our Financial Remedy Law Better Serve The Public?

FLiP Director James Pirrie offers his thoughts on the Law Commission’s review of the financial remedy law. 

On 5th April, the Law Commission announced its intention to review the law governing finances on divorce, including provision for children over 18, updating its thinking since its last report was given in February 2014 and expecting to report in September 2024.

We can all immediately think of some detailed points requiring remedy (respect for foreign pension sharing orders/the lacuna of provision for older children where an order was in place at their 16th birthday) … but there are already demands for something much more radical.

This initiative comes in the context of Baroness Shackleton’s call for divorce reforms in mid-March, saying: ‘Divorce practitioners like me make a fortune in arguing, because the guidelines are 50 years out of date’. Helen Adam, one of the jurisdiction’s top mediators takes up the theme in her blog ‘Three cheers for Baroness Shackleton’:

‘The point is not which lawyer is right, the point is that this system is a nonsense. It creates havoc for decent people who want to separate on decent terms, and who want to put their children’s welfare first.’

But elsewhere, whether we work as a mediator or as a partisan lawyer, we all want the formula that would enable us to give clearer guidance and provide superb resolutions quickly. We all sense that we could do this more easily without a legal background that, because it speaks only in broad principles, is able to whisper to each client: ‘ah but you could do so much better than this on a good day in court’.

The collaborative movement some years back talked of a couple who, disguising their identities, presented to one top lawyer in successive weeks the same essential scenario, only to be given (of course, you know what is coming) seemingly diametrically opposed prognoses. That suggests that Baroness Shackleton’s call is a strong one and should be heard and welcomed by the broadest range of families. Surely a clear matrix of ‘if this … then provision of that’ is exactly what we need?

My experience of trying to help clients find solutions is that each part of the needs and resources matrix needs to be helped to work hard:

• This person could get into job x in period y.
• This person could still provide for the needs of the children at this school provided that the rehousing fund does not fall beyond £z.
• This person probably will cope because it is pretty clear that their family will step in with a bit of short-term help.

There isn’t a formula that performs these tasks. A formula does not make all the parts work hard – it does not generate the best for both parts of the separating family. Very often it provides a refuge for those seeking to minimise the level of support they provide. And this is particularly so when everyone knows the variables entering the formula. We need look no further for evidence of this than the Child Support Act. Users are all too conscious of the bright line thresholds of £3,000 per week, 104 nights a year and so on.

We have had 30 years of the CSA ’91 figures plonked out on the table, demanding that everyone shape their futures around a fixed answer to the level of child support. Within 2 years of creation, we had departure directions in place (now morphed into the variations scheme), a huge ‘patch’ seeking to provide a measure of discretion to a system that was simply incapable of delivering fair outcomes from such fixed parameters. And one does not need to look far to find those who are furious that, in their view, it is still failing to do so.

But at least during this time we have often had the luxury of spousal orders and capital divisions to make such answers viable in more cases. We can flex these other elements one way or another around the fixed point of the CMS formula, to make some sort of sensible level of provision overall. But the idea of a formulaic approach for all of the elements of the financial arrangements should leave us truly anxious as to whether family separation would see each part of the family making a successful future for themselves. Surely what is more likely is proliferation of unlucky, unhappy outliers.

Oh, and the other thing we learned in watching the Child Support Act story unfold was that we were never able to predict the unintended consequences of the latest round of changes rolled out to solve the most pressing of the problems.

Part of the success of our financial remedy law has been its ability to protect children and the financially vulnerable from financial stress. It has done this by looking first at the financially vulnerable party’s future, rather than inputting features into a formula and reading off the result: that future comes first – the financial needs that this analysis lays bare becomes the claim. It is balanced up against the needs of the respondent to generate the answer.

We have a choice. We can decide to put these futures first and I hope we will continue to do so … or we can crank out an answer and leave families to shape their futures around it. I struggle to see how the myriad types of family are going to easily fit their lives around a formula-generated answer and how this is going to be an improvement for those most needing protection.

And that is all before someone has a go at actually laying out the specifics of the principles that are going to be fit for purpose.

The Law Commission’s 2014 report referred to the two ends of the spectrum – a minority with sophisticated financial arrangements and the majority ‘who need clear and accessible law and who may have to manage without professional advice’. I have come to think more of three groups:

• The cases that involve eye-watering sums, routinely reported and in consequence disproportionately benefitting from judicial guidance.
• Our mid-range cases, where families will really feel the consequences if they cannot settle, because of the impacts of costs on the futures that otherwise they can grasp and the impacts of the process upon their lives and the lives of their children.
• And that majority, identified by the Law Commission, progressing without professional support.

I remember in the early 90s when the National Committee of Resolution was again debating cohabitation reform and Hilary Rodgers made the devastating observation – that we were only at loggerheads because we were each holding a different stereotype in our minds. I feel passionately that our current law works so well because:

• The principles give freedom to parties to work creatively.
• And the costs of the system give the imperative to achieve conclusion.

But that is my experience and I can see that this may not work across all groups. Though I draw a blank when searching for principles much clearer than those we have already that would generate sensible solutions across the continuum. There again perhaps it is those of us whose careers depend upon doing financial remedy work whose voices should be smallest in the mix – for fear that we are conflicted in the reforms we recommend.

The Law Commission turned over rocks on the beach looking for a way forward between 2009 and 2014 on the last occasion. It may be that as we renew this task a decade later, that bit by bit we will downgrade our hopes for system-generated answers into a law that simply has clearer starting points like the Canadian Spousal Guidelines, with an expectation of departure from those norms where specific characteristics exist. Of course, by making it more specific you will lose flexibility. Who had any idea that our Matrimonial Causes Act of 1973 had within it the concepts (such as ‘sharing’ or ‘independence where achievable’) that have been ‘discovered’ following some of our ‘rogue wave’ cases since.

Whether come Autumn 2024, we have found something truly valuable or we have just all become exhausted by the search, I hope that all of us can sit together looking out to the sea of family futures, content that we have something properly fit for purpose.

This article will be published in Family Law and is reproduced by kind permission.