Once upon a time, family law was considered a minor legal discipline – simple, straightforward, largely bureaucratic – perhaps a little bit ‘high street’. That has changed substantially in a relatively short space of time. While it was never traditionally considered a City discipline at all, the rise of England and particularly London as a global centre of commerce has quite literally put paid to all that.
As Vardags president and founder Ayesha Vardag told the Wall Street Journal in late 2014 in the wake of the Cooper-Hohn divorce: “London is a hotbed of economic interest and, for those domiciled elsewhere, an onshore tax haven. This means the capital is bursting with a huge proportion of the world’s moneyed individuals who have made their homes here. When they divorce, the numbers are big.”
In addition to London being a financial epicentre, England is also famous for its family courts being generous to economically weaker parties on divorce. In practice of course, that usually means the wife. While this leaves some parties open to accusations of forum shopping, it’s actually a strong reflection of English family law’s ability to deal efficiently with financial complexity in divorce matters.
When we say that England and Wales, as a jurisdiction, is generous to economically weaker spouses, we mean that asset division on divorce starts from a position of a 50/50 equal share between the spouses. This was established in the 2001 case of White and White, which not only cemented the sharing principle in law, but also determined a sense of equality in terms of contribution. In other words, it doesn’t matter whether a party to a marriage has been a breadwinner, homemaker, or combination of both; they should share equally in the fruits of the marriage.
With this come obvious concerns for some. For successful professionals, entrepreneurs and business owners, the idea of divvying up the fruits of a professional life that represents the hard work and talent of an individual, asset division on divorce can seem unduly draconian. The flipside is that if the economically weaker spouse has sacrificed a career in order to raise the couple’s children, she – or he, but it’s still usually a she – will be in need of support on divorce, at least until she can reach a point where she can stand on her own feet.
There are thus opposing concerns, especially in cases where the assets are substantial. The economically stronger parties to a marriage can then find themselves in a position where they want to protect their assets against a claim on divorce. Being highly financially literate, these spouses will often arrange their finances in a way that, although not necessarily illegal, makes it considerably more difficult for lawyers to identify and value them.
This is where strong financial knowledge comes into play. Taking into account the rise in numbers of high net worth individuals and the attendant legal and financial complexities, Vardags has chosen to specialise, and focus its practice on the point at which family law and finance meet, marrying matrimonial law with City savvy. In its legal practice, Vardags combines full-blooded family lawyers with City lawyers who have decided to crossover and retrain, bringing with them a wealth of knowhow in things like trust structures, pensions and company remuneration schemes so that they are able to trace hidden assets.
As a direct result, Vardags Family Law News will offer commentary on the financial aspects of family law, particularly divorce, its complexities and possible solutions for both sides.