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Divorces: litigation vs. negotiation

27 November 2017

Marcela Kunova

Divorce is a topic that sets pulses racing and never fails to elicit comments for good or bad. Setting some families at war, it can also be dealt with calmly through mediation. But what is the cost to the outcome? Will you be richer or poorer? Marcela Kunova investigates a topic that increasingly hits the headlines and asks: to litigate or negotiate?

Divorce litigation negotiation dispute wealth court judge

Camilla Baldwin, senior partner at Camilla Baldwin Solicitors, who works with some of the worlds wealthiest couples says, depending on the case, she sometimes needs to deploy both methods. Citing an example, she says she worked for a wife whose husband had hidden a valuable pension asset during the divorce proceedings. Baldwin, who favours sensible negotiation, had raised queries about the husbands pension assets which she then had to pursue in court. “The outcome was that this method doubled the size of the wife’s ‘pension pot’ in the overall settlement,” says Baldwin. “She was very grateful that we litigated against the husband, because otherwise she would never have known about the extra pension pot.”

Baldwin explains that sometime people go to great lengths to place their assets in complicated legal structures to protect themselves in case of divorce. “If this is the case, the financially weaker party will have to have court assistance and powers to trace funds, make orders for disclosure and agree financial awards. Without litigation this simply is not possible if the opponent and trustees refuse to cooperate with full disclosure. However this route does come with emotional scars.”

Ayesha Vardag, a divorce lawyer with a global reputation for litigation, agrees but adds: “Where both parties are open about what they have and what they want, and work amicably together, litigation is counter-productive. If, however, one of the spouses is hiding assets or is unwilling to make a serious offer then litigation is the best investment you can make. It is costly and time-consuming, but we have seen fighting all the way make the difference between a £3million offer and a £60 million court ordered settlement,” says Vardag.

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While litigating may offer the satisfaction of punishment or revenge, it should be used with care. “Threats and blackmail never look good and will always put clients in a worse position when they end up in front of a judge,” continues Vardag. “Hard-hitting litigation is expensive and emotionally draining. So I counsel that clients really have to look at what difference it will make to their desired outcome. The financial remedies process is about their future life, not recriminations for what went wrong in the marriage, and reasonable engagement with the other party is often preferable to wars of attrition.”

Suzanne Kingston, partner in the divorce and family team at Withers law firm who favours negotiation adds her advice: “It is generally cheaper, faster and less stressful to negotiate. I use mediation, collaborative practice and arbitration and as well as this can sit down with the opposing lawyer and help the couple reach a facilitated settlement in a round table meeting. However, there are times when only court will do. The skill is being able to advise the client about the right way to deal with their particular case.”

 

Negotiation wins with children

Sandra Davis, partner and head of family at law firm Mishcon de Reya,  agrees with Kingston and makes an important point: “Litigation won’t always get you more money. If a negotiated settlement or alternative dispute resolution are possible it has many advantages. It can be quicker, less costly and more amicable when compared to protracted litigation. Facilitating a clean break as soon as possible and without the acrimony of litigation can be particularly important where children are concerned. It is important for parents to move on and focus on their children.”

With that said, these advantages have to be weighed against ensuring the client gets a fair deal. Davis says she would never shy away from litigation where necessary, as it can offer structure to a case and can incentivise the other spouse to co-operate. “As a result, a combination of litigation and negotiation is often the best way forward.”

Baldwin warns though that there are dangers in litigating aggressively. “If a spouse assumes there are hidden assets and it turns out not to be the case, it wastes substantial time and money searching for the ever elusive pot of gold at the end of the rainbow.”

 

Personalities dictate methods

Whether people divorce amicably or litigate often depends on personalities and the context of the marriage, explains Vardag. “Sometimes there is a dynamic where one spouse has been bullying and aggressive for years whilst the other has been passive, and that continues into litigation. Whilst other parties can be forced to be aggressive by lawyers and the litigation matches the lawyer’s own personality more than it fits the case.” 

Sandra Davis adds that for those who can afford the luxury of an expensive litigation that it does bring a certainty, as orders are enforceable and the court's timetable less movable. She adds as well that sometimes she is instructed to litigate because clients think that aggressive litigation is the way to preserve their wealth or increase the amount they can claim.

 

International divorce

Another factor that can determine the nature of divorce is the choice of jurisdiction, according to Charlotte Bradley, partner and head of family at Kingsley Napley. “In international cases it is often essential to secure jurisdiction of the court quickly to issue court proceedings straightaway and negotiate after. It is often better for the more financially vulnerable spouse to have an English divorce,” says Bradley.

Camilla Baldwin agrees and gives an example from America. “In the UK a pre-nuptial agreement has to be fair in order to be valid. Fairness is subjective but, generally speaking, you cannot leave anyone destitute and you will need to make proper financial provision for the financially weaker party in the pre-nuptial agreement. You will also need to provide full disclosure of the financial position so that the they fully understand what assets they are giving up and also the agreement needs to be signed at least twenty-eight days before the wedding to eliminate the possibility of pressure being exerted to sign the document. However, “continues Baldwin, “in the state of Florida the wealthier person is not required to provide full and frank disclosure so it is not clear what is being given up by signing the pre-nuptial agreement. Further, in some states, the pre-nuptial agreement can be signed the night before the wedding. That said, these situations would help break the contract if the pre-nuptial agreement was later contested,” concludes Baldwin.

 

Surviving divorce

As litigious divorce can be one of the most traumatic experiences in a person’s life, how do people survive and thrive through divorce proceedings? Our experts advise. “Couples need to fully understand and prepare for the time and cost involved,” says Davis. “Even when litigation can secure a better deal, it will take longer to achieve the outcome. And it is important to know when to stop. I have had experiences of clients who push for more, which can make the opposition either disappear or crank up the heat in retaliation. This makes the divorce expensive and leads to difficulty in the final hearing.

Ayesha Vardag says clients need stamina, determination and the best lawyer they can afford. “Everything else can be sorted. Litigation loans can provide the funds to fight and expertise to track down hidden assets. A crack team of solicitors and barristers can put a case to the judge for a good outcome. The client just needs to have the stomach for the fight and to respond to advice.”

Charlotte Bradley adds that she also provides support in terms of recommending other professionals to soften the impact of the divorce journey. These include divorce consultants, accountants, therapists and wealth managers.

 

Whine and wine

Camilla Baldwin adds a final thought: “It is universally an emotional and stressful time and also a significant period of change in the individual’s life which is generally unsettling. There will inevitably be good days and bad days. It is easier to accept this and rally the support of a good friend to share the stress with. Finally, if you drink, I recommend you order a few cases of wine. You are going to need it!”

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