Family law’s commercial and legal landscape is changing dramatically with the legal aid reforms, the continuing impact of the recession, competition from ABSs and potential legislative changes affecting everyone from the richest to the poorest.
‘I hate the phrase,’ says Andrew Newbury, head of Pannone’s family law division, ‘but it is all creating a "perfect storm" for family lawyers.’
There are certainly turbulent times ahead. Plans for a new single family court should get under way amid huge concern about the backlog of cases being exacerbated by the increase in litigants in person (LIPs). Firms are reviewing their business plans as legal aid changes take much of private family law out of scope. Child maintenance is being reformed. The Law Commission is proposing scaling back lifetime divorce settlements which will affect big-money cases.
And it all comes against a backdrop of a potential culture change at the Ministry of Justice following the recent reshuffle which saw Ken Clarke replaced by the right-winger Chris Grayling, the first non-lawyer to hold the post of lord chancellor.
David Emmerson, co-chair of Resolution’s legal aid committee, says those doing legal aid are ‘filled with dread at this appointment as he doesn’t seem to be someone who understands the justice system or has any sympathy for those who work in it. Resolution will be lobbying hard to make sure the new team at the MoJ understands that it is absolutely key for separating couples to have the best possible access to proper advice which makes early settlement much more likely’.
The Law Society, which launched a new family section in June offering free webinars, networking events and training programmes, is starting a series of roadshows around the country on the legal aid reforms.
Richard Miller, the Society’s head of legal aid, will be talking about the impact the reforms will have on the four types of firm doing publicly funded work: the traditionalists, legal aid specialists, altruists and innovators.
When it comes to dividing assets in a divorce or civil partnership dissolution, the Law Commission says there is an ‘acknowledgement that there is no longer a right to be kept at the marital standard for life’. Its report will build on its consultation on pre- and post-nuptial agreements, and the two will lead to a draft bill next year.
The consultation is welcome, says Laura Brown, a solicitor with London firm Forsters. ‘It is undeniable that certainty and clarity would benefit parties and their children, and minimise money spent on legal costs and time litigating. But it is essential that it doesn’t come at the expense of the courts’ ability to "tailor-make" financial settlements for families, as one size does not fit all.’
The commission is looking at a ‘fundamental and principled’ reform of the law of needs, says William Massey, head of family law at Farrer & Co, which will be supported by the wealthier spouse.
The suggestion that maintenance should be paid over a shorter time is a more European-type approach, he says, while adding: ‘The difference is that "needs" in England and Wales continue to trump the division of property according to marital property principles.’
Responses are also being sought to the recently published draft legislation flowing from the Family Justice Review. This includes making mediation information and assessment meetings (MIAMs) a statutory requirement before someone can go to court and replace residence and contact orders with a new order – the child arrangements order – to lessen the perception of ‘winners and losers’ in court cases.
There continues to be huge disappointment among practitioners that MIAMs are still not working as they should, says Resolution vice-chair Joanne Edwards, a partner with London law firm Manches.
‘While it is welcome news that attendance is to be made compulsory, the devil will be in the detail,’ she says. ‘It will be a missed dispute resolution opportunity if the compulsory element is limited to mediation, rather than requiring discussion about collaborative law and arbitration too. It is also important to incentivise respondents to attend the MIAM as that is likely to achieve higher conversion rates away from court.’
Further draft clauses, including promoting shared parenting and strengthening enforcement sanctions, will be published later this autumn.
Mark Paulson, the Law Society’s head of family and social justice, says ministers appear to be responding to special interest groups rather than considering the weight of evidence and experience against creating a statutory presumption of shared parenting. ‘The consequences could be highly damaging, and might take years to play out,’ he warns.
On the child maintenance front, around 5,000 past and current CSA cases remain over £50,000 in arrears.
Maria Miller MP, until the reshuffle a minister in the DWP, set out reform proposals in the department’s command paper Supporting separated families; securing children’s futures (tinyurl.com/9ot2lqm). Plans are proceeding to make parents pay an application fee and collection charge if they use the new Child Maintenance Service (CMS), despite criticism from lawyers, while the widely resented CSA rule which requires some parents to pay maintenance even though they share the care of their children on a 50/50 basis is also being reviewed.
A new website is being launched next month to signpost parents with regard to where to go for support, while £14m has been put in an Innovation Fund to encourage new ideas on easing the pain of separation.
However, Resolution warns there is no substitute for tailored professional advice. ‘With the legal aid cuts, fewer people will be able to access this,’ a spokesman says. ‘We are concerned that the government is focusing on providing general advice which won’t necessarily meet the specific needs of separating parents.’
At the heart of much of the current debate is the modernisation of the family justice system. Mr Justice Ryder’s report in August recommended a single family court, a private law pathway for children’s issues, as well as a strategy for judicial continuity, improved listing and more robust case management, particularly in relation to LIPs.
However, practitioners are sceptical that there will be sufficient resources to make his recommendations work. As family barrister Rachel Langdale QC, of 7 Bedford Row, asks: ‘Will a single family court improve effective case management across the board? Maybe. It should improve the prospect of judicial continuity. But in the end, effective case management lies in the hands of individual judges. The single family court is a perfectly sensible proposal. But whether it works in practice will depend entirely upon the resources applied to it.’
‘If you were starting from scratch’, says Emmerson, a partner at TV Edwards, ‘you would create a single family court. But whether, in practical or logistical terms, it is a sensible way forward is open to doubt. I am not sure it is worthwhile spending resources on this when the money could be spent on having more judges and better access to legal advice.’
What is vital, all practitioners agree, is that resources are put in to improving the court service and enabling it to cope with the influx of LIPs.
‘Savvy lawyers are leaving city centre courts in droves and starting to issue in more provincial courts where the backlog is nowhere near as bad,’ says Newbury. ‘We issue in satellite courts such as Altringham and Bolton which can turn things round in 24 hours – though as this catches on, they will also get clogged up.’
He would like to see phone or video hearings similar to those used in civil proceedings. ‘Instead of everyone turning up to court, the lawyers and judge would thrash ideas out on a conference call so they get to grips with the issues at an early stage,’ he says.
Deborah Jeff, head of London firm Seddons’ family team, says the courts will become a ‘circus’ if they do not have more staff and information for LIPs. ‘It is already getting beyond a joke,’ she says. ‘It takes so long trying to get through to the court it has become like a tax on your client. We now absorb the costs of extra phone calls, chasing files and orders. I have said to clients to phone them and experience first-hand what it is like because it sounds farcical and we want to reassure them it is not down to us.’
She is relieved to have the Ryder report: ‘But we would like some reassurance about how these good intentions will be put into effect. Also, tell us how the private law pathway is going to work – we might then get a bit more sleep at night.’
Family specialist Liz Francis, managing partner of south-west London firm Hanne & Co, says the courts are ‘becoming like the third world. The Principal Registry is diabolical. You have to chase orders but no one picks up the phone and when they do calls are lost’.
She adds: ‘It makes sense to have a combined family court and for judges to be involved in managing cases, and there are welcome proposals to help LIPs, but who is going to fund all of this?’
Clare Thornton, partner with niche family practice Thornton Jones in Wakefield, says judges are stepping in procedurally to help LIPs. ‘Judges sometimes allow them to break rules which they wouldn’t allow a solicitor to do, so your client feels unfairly treated. You get to the point of saying to clients "represent yourself and you can say what you want, write what you want and just plead you don’t know what you are doing".’
Thornton is working with family lawyers in Wakefield on a duty solicitor scheme so representatives from two practices are present each family day advising LIPs for free. ‘Hopefully the firms will get some work out of it but, ultimately, it is to help the court and the community,’ she says.
Family lawyers are hugely concerned about cuts in staffing at HMCTS – down 2,500 over the last year – and about the changes in counter services which are being piloted at county courts around the country over the next six months. Counters will open between 10am and 2pm for ‘urgent and unavoidable work only’.
An HMCTS spokesman says: ‘County court counters will not process routine work if a face-to-face service is unnecessary. Reliable alternative service channels, such as online, telephone and email, are already available to deal with the majority of work conducted at public counters.’
He says extra funding has been provided for third sector agencies to help LIPs. MoJ figures show half of private law children cases involve one or more LIP, with the proportion rising in divorce cases. But the spokesman claims ‘the evidence does not show that cases involving LIPs necessarily take longer’, adding that the forecast of 10,000 extra cases of mediation will help offset any impacts on the courts.
The staffing cuts, he says, involved the removal of duplicate functions and a reduction in management posts, and focused on protecting frontline staff.
With six months to go before the legal aid reforms come in, family teams are reviewing their business plans.
Hanne & Co’s Francis feels ‘completely disillusioned and let down’ by the Legal Services Commission and government over the changes. ‘Legal aid fees have been so low we have already had to push the work on to junior fee-earners, but just because there is no money in a case doesn’t mean it is any easier to handle. When more goes out of scope, our aim is for no one to lose a job, but it is too early to tell,’ she says.
‘We are all chasing the private work and lots of firms are reducing rates to try to get that corner of the market. There will be more fixed-fee work but that is difficult to get right. It is also difficult to run cases when clients dip in and out or go off on frolics of their own. You will have to be very careful to come on and off the record at the right time.’
Family law departments have traditionally been the last bastions of the standard hourly rates, says Newbury. However, he stresses: ‘If clients want the benefit of fee certainty, they have to understand the downside is we can’t be there at their beck and call. There is the danger of negligence claims if solicitors aren’t extremely careful in drafting their terms of business letters so they set out not only what they will do but also specifically what they won’t do.’
He predicts that while some firms will grow, other family departments will shrink. ‘What is important is getting the internal processes and precedents right, and structuring staffing with possibly more paralegals than solicitors and experienced secretaries taking on a quasi-legal role with their work charged out.’
It may be that firms used to doing publicly funded cases will be better placed to run work on low fixed fees than bigger firms, he says, because they are used to running cases on legal aid budgets. ‘Ironically, the bar is also better than us at pricing work,’ he adds. Steve Kirwan, managing director of Stoke-on-Trent firm Nowell Meller, says firms will have to investigate how they can add value. ‘Many people can’t afford for us to act as postman. Most of our clients are legally aided. We are designing some package solutions for them so they can buy a chunk of time for a fixed fee and they will do the rest themselves. But it needs to be carefully policed and explained.’
The firm has lost some senior members of the department, taken lower-level legal aid work from qualified solicitors and converted some secretaries into paralegals.
‘I do almost no legal aid work myself now except for some advocacy and supervision,’ he says. ‘With my private clients, my assistant does all the work on the files unless either she can’t or the client wants me to do it. It is quite liberating.’
However, everyone in family law is nervous, he says, because it is difficult to plan ahead. ‘We do a lot of child care work and a lot of domestic violence cases, both of which will continue. The big question mark is can we fill the remaining gap with privately paying work? Most clients can come up with £100 to cover a bit of work. Given that basic publicly funded legal help only pays £86 plus VAT, we might actually be better off as you do away with all the bureaucracy, audits and other rubbish that comes with the LSC.’
On the plus side, mediation is proving a big growth area. The firm is one of the largest solicitor-based mediation providers in the country. Privately paid mediation accounted for £1,000/£2,000 a month a year ago and now accounts for over £10,000 a month, with legal aid mediations providing a further £25,000 a month.
Resolution figures show that mediation increased by 51% year on year between 2010 and 2011. Publicly funded mediations are at their highest ever level with 15,319 started in 2011/2012, up 8% on the previous year. The LSC’s first invitation to tender for contracts to deliver family mediation opens in October, the second in January.
The Law Society’s Paulson says there has been a good deal of interest from law firms but not all have appreciated that it takes much more than completing a foundation course to be able to carry out publicly funded mediation. ‘Firms have got to think in terms of a lead-in time of over a year to gain the experience to become accredited through the Law Society or another Family Mediation Council member organisation,’ he says.
Earlier this summer, Thornton Jones’s Clare Thornton created the Lawyer Mediators Group so solicitors, barristers and legal executives who act as family mediators can work together to promote the benefits of lawyer mediators over non-lawyer competitors. The group will act as an online directory of mediators for the public as well as providing members with a support network, training and professional practice consultancy. Membership costs £500 a year, although the first 50 lawyers to sign up pay half-price.
‘I was frustrated non-lawyer mediators could undercut us in price,’ Thornton says. ‘Clients want the expertise we can give as lawyer mediators. If we get good numbers we can have some real power to advertise and keep mediation within the profession.’
The development of a new form of ‘collaborative-lite’ law is causing a ‘schism’ in the family law arena, according to Pannone’s Andrew Newbury.
He says some clients do not want to sign the participation agreement, which means their solicitors will stand down if the collaborative process breaks down.
‘There are those practitioners who take a very purist view and others who are more pragmatic about this,’ he says. ‘It is good if people choose to sign a participation agreement because it binds them into the process, but they shouldn’t be compelled to – this is a process designed by lawyers but it should be driven by clients.’
The participation agreement is the glue which holds the process together, says Farrer’s William Massey. ‘But, at the same time, it puts some clients off because they want to keep their lawyers. Some collaborative lawyers won’t do a "lite" version. I would, though I am not quite sure what the distinction is between that and a roundtable meeting.’
He highlights some ‘shortcomings’, in particular, the difficulties in advising clients where that advice might be contrary to the negotiations that are going on. ‘Anecdotally, there are also issues as to negligence with clients turning around after everything has been agreed and the court order has been made saying they don’t think it is enough and they don’t feel they were properly advised,’ he says.
‘However, it is an important additional process and it is here to stay.’
Interest in collaborative law is certainly growing with nearly 1,500 Resolution members now trained to offer it.
Clare Thornton, of Thornton Jones, is a ‘stalwart’ of the original process and would not do a ‘lite’ version, ‘otherwise it is just a roundtable meeting. What is important is that you trust your opposite number. I have only had one which broke down and that was because the other lawyer was advising behind the scenes, causing things to kick off’.
Newbury has done around a dozen cases collaboratively. ‘The whole point of collaborative law is people shouldn’t be polarised in their position, but they need to make an informed decision. What I do is give that advice but give it in front of the other spouse in agreement with the other solicitor,’ he says.
‘It can be a very raw process dealing with emotional issues at the same time as practical ones, but it is also very enriching. It is also an expensive process which is "crying out" for fixed fees.’
Earlier this year, a group of 15 law firms in Yorkshire and the north-east teamed up with a specialist divorce coach and independent financial adviser to create Dovetail Divorce Solutions offering, what they say, is the first fixed-fee collaborative divorce service.
With growing pressure on fees, practitioners have been looking at funding options available for clients. Some private banks have historically only lent if there were significant assets they could manage after the settlement or they required solicitors to underwrite the loan. Some funders, such as Hampshire Trust, have pulled out of the market.
However, private funder Novitas, which initially targeted big-money cases when it set up 18 months ago, is rolling out a second offering aimed at smaller asset cases. Chief executive Jason Reeve says Novitas will be offering a faster, more automated service for loans between £3,000 and £30,000. Under £3,000 the margins are too small to be attractive.
The firms do not have to underwrite the loans. The money is put in the firm’s client account and the solicitor can only take it out against a bill approved by the client. But Reeve stresses the scope of legal aid will never be replaced by private funding because it is ‘impossible to make a commercial business out of the way legal aid operates, taking a charge on a house and waiting maybe 15 years until a child reaches maturity before there is any chance of getting your money back’.
Another area of concern is over the use of experts. The Law Society has released a new practice direction for consultation following the Ryder report, and has developed standard terms and conditions to accompany letters of instruction to experts in family proceedings.
‘People may cut costs by representing themselves but they can’t replace the expert, for instance in valuing a company or splitting a pension,’ says Francis. ‘But who is going to pay for them and who is going to write the letter of instruction? The courts may end up having to do without reports and people could end up with rough justice.’
Graham Tracey, a chartered financial planner with Carpenter Rees, says clients are very worried about costs so he will attend a first meeting for free to explain the value they can bring. ‘Pension splitting isn’t straightforward,’ he says. ‘Solicitors could risk a negligence claim if they just do a simple 50/50 split. That is rarely right and the wider the age gap between the parties the more inaccurate it can be.’
What will be crucial for firms is how their family teams source new work. ‘We spend a huge amount of time on marketing,’ says Newbury. ‘About a third of our work comes via the internet and I am surprised how many firms underutilise their websites. Another potentially huge untapped area is social media – Twitter, Facebook, LinkedIn – but the question is how you can harness it to bring work in.’
Grania Langdon-Down is a freelance journalist
Responding to change
Two niche family practices in Yorkshire have chosen contrasting routes to respond to the changing market in private family law.
Jarvis Family Law is a contentious law practice. ‘We are fighters,’ says managing partner Jackie Nicholson, who took over a former sole family practice in Harrogate with her twin sister Angela Moores. Two years on, they have grown threefold in terms of turnover, profit and staffing.
The two had always wanted to work together, and taking over the practice brought together Nicholson’s skills in business development and practice management and Moores’ skills as a family solicitor for 25 years.
They rebranded, moved premises, upgraded the IT and wrote a three-year business plan. The practice now has three other solicitors and eight support staff. Nicholson, a fellow with the Chartered Institute of Legal Executives, says it was a ‘conscious decision to have more secretaries than fee-earners as there is no point having the work if you can’t process it’.
They attract high-net-worth clients, she says, because Moores is one of the few practitioners in the north of England who has the Resolution Stage 11 accreditation in financial provision. But they also offer a ‘pay-as-you-go’ option so clients can set a monthly budget as well as fixed fees for specific pieces of work.
‘But we won’t do a divorce for £95 – that is not our market,’ says Nicholson. ‘If you pay for a good divorce lawyer they will pay for themselves from the settlement. It is a false economy to go for a cheap option, and end up on bread and water for the rest of your life.’
She spent 10 years with Countrywide Plc so has a clear idea how new entrants will use economies of scale to win market share. But she says: ‘No two divorces are ever the same so it is very hard to fit them into a computerised process. They are also very emotional so it is very hard to train inexperienced legal staff to handle them. I am sure it will happen, but experienced solicitors who provide a personal service which is good value for money will always be in demand.’
It takes that experience, she says, to find creative settlements. ‘We hold roundtable meetings but we made a conscious decision not to offer mediation or collaborative law. We are here to negotiate a settlement and get the best deal for our clients.’
For Wakefield two-partner firm Thornton Jones, mediation and collaborative law are at the heart of their practice.
‘Mediation is on the up as a fee-producer for us,’ says partner Clare Thornton. ‘It will never be as well-paid as legal work. We accept we will never earn the money we used to, or certainly not as easily, but we will adapt.’
They do both private and legal aid mediations. A few rival firms have ‘muttered’ about offering mediation, she says, as it is the one area where the Legal Services Commission has increased its budget. ‘But it rightly involves a rigorous accreditation process and you need to be 100% committed to it.’
She is concerned about the lack of accreditation required for privately funded cases. ‘When I trained, there were people who were useless mediators but they all passed.’ However, she adds: ‘I think the market will self-regulate because you will only get work if you have a good reputation.’
Overall, she says they are a young team and like the challenge of thinking outside the box. They are about to launch a ‘pay-as-you-go’ scheme so people are who representing themselves can dip in for help from a structured menu of services.
‘Big firms worry me,’ she says, ‘because of the power they have in terms of money and scale. But we can move a lot quicker. The key for us is to use our reputation and internet presence to show potential clients why we should be their first point of call.’