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When a judge heard last year that a Russian businesswoman and her Greek ex-husband had run up lawyers’ bills of £5.4mn in their divorce battle at London’s High Court with “vast amounts of future costs in the pipeline” he described the amount as “apocalyptic”.
Mr Justice Mostyn said the legal expenses from the dispute between Russian retail executive Alla Rakshina and her ex-husband Lazaros Xanthopoulos were “hard to accept even in a conflict between the uber-rich”. In his April 2022 ruling he urged Dominic Raab, the Lord Chancellor, to consider “whether statutory measures could be introduced which limit the scale and rate of costs run up in these cases”.
Such expensive court battles underline why a major review of a 50-year-old law governing the split of financial assets in divorce is imminent.
Lord Christopher Bellamy, justice minister, has signalled that he plans to ask the Law Commission, the independent agency that reviews legislation, to examine whether the Matrimonial Causes Act 1973 needs updating. This legislation sets out statutory criteria to decide what is a fair financial settlement on divorce.
The news has been welcomed by many divorce lawyers who have long complained about the uncertainty created by the legislation, which is largely based on judge-made case law. They say clearer guidelines are needed to help couples avoid costly court battles.
London has become known as the divorce capital of the world because of the generosity of financial awards given to ex-wives and because wealth is usually split equally between a divorcing couple, even if one spouse is the breadwinner. But the current law gives judges wide-ranging discretion when splitting wealth and property assets and on making financial orders such as spousal maintenance.
In England and Wales, a judge considers a couple’s financial situation and their contributions to the relationship to reach a fair settlement, rather than using a strict set of rules. Their decisions often differ, making it tricky for lawyers to advise clients about a likely outcome. Critics also complain that the current law fails to reflect social changes such as same-sex marriage and a growing number of women in the workplace.
The legal uncertainty affects lower-earning couples as well as the wealthy. Baroness Ruth Deech, who has long called for reform of the legislation, has argued that the main court rulings often come from “big money” divorce cases which are “not necessarily helpful for low-income families.” She adds that legal aid has also been removed from most family law cases; many spouses now have to represent themselves in court.
According to Resolution, the professional organisation which represents family law professionals, the proportion of cases in the family courts where neither party were represented by lawyers has risen from 13 per cent in 2013 to 39 per cent in 2022.
Anne Barlow, professor of family law and policy at the University of Exeter, called the promised review of the law “a positive step in the right direction”, particularly in view of the withdrawal of legal aid.
“It is important to cater for need rather than adopt a simple model that doesn’t factor that in properly and leaves room for women, typically, who tend to make the most non-financial contributions, to suffer relationship-generated disadvantage even more than they do now,” she said.
Lawyers also want more guidance on prenuptial agreements — legal documents specifying how assets are to be split on divorce — and in determining the details of any maintenance payments.
Pre-nuptial agreements are now recognised by the courts but some lawyers believe the agreements should also be enshrined in law. These agreements are common in European countries, such as France, Italy and Spain.
Maintenance is another area where greater clarity is needed. Matthew Humphries, partner at Stewarts Law, said: “I do agree that nuptial agreements are the most obvious example of what needs to be reformed. Maintenance is another area where the courts may have gone too far — on the question of quantum and duration.”
Critics have pointed to so-called “joint lives maintenance”, where open-ended payments are ordered to be paid to a spouse for life, an arrangement described by some as a “meal ticket for life”.
Deech has argued for time limited maintenance, as in Scotland, where payments are made by the financially wealthier spouse for three years with the expectation that their former partner will get a job and become financially independent.
However, other solicitors point out that even without reform, courts have already started to move with the times on maintenance awards, and it is now much rarer for judges to issue joint lives maintenance orders.
Others caution that the new rules risk becoming too prescriptive. Emily Brand, head of family law at law firm Boodle Hatfield, says: “You rarely have a situation where you can fit facts into a specific box and that’s why judges are so valuable . . . At the end of the day certainty is very, very difficult and you do run the risk of unfairness if you are too prescriptive.”
But for many, the 50-year-old legislation needs an urgent overhaul. In a Lords debate last month Deech said: “Money that should go to the children is being spent on legal costs. Even judges have called this law apocalyptic — accessible only to the rich. When will the government reform this very bad law?”
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