Divorce Reforms May Make Breakups Easier for London’s Bankers
(Bloomberg) -- London courts have long been home to some of the world’s most expensive and acrimonious divorces. Celebrities and scores of wealthy bankers have been caught up in ugly courtroom battles that have -- at least in part -- been triggered by archaic rules that forced one spouse to blame the other for the breakup.
But the days when Heather Mills poured a jug of water over the head of Paul McCartney’s lawyer during their divorce may soon be over. A proposed change to U.K. laws may make splitting up more attractive, and less painful, for London’s wealthy.
A government proposal earlier this month will end the requirement that a spouse needs to blame their partner. Without the need to assign fault, wealthy individuals may file for divorce earlier and end up with a less emotional process.
“This moves it away from the blame game,” said Pauline Fowler, whose law firm Hughes Fowler Carruthers represented private-equity executive Randy Work and other financiers. “People won’t waste money on an argument that has no bearing on anything other than why the marriage broke down.”
The proposals introduced last week by Justice Secretary David Gauke replace the previous grounds for divorce with a simple requirement that a person says their marriage has irretrievably broken down. It creates the possibility of a joint application and removes the ability of a party to contest a split.
Most major changes to U.K. family law have previously come from court rulings, frequently involving London bankers.
The breakup of German heiress Katrin Radmacher and former JPMorgan Chase & Co. investment banker Nicolas Granatino led to the acceptance of pre-nuptial agreements. A case involving another JPMorgan banker set standards for the dissolution of assets in civil partnerships.
The U.K.’s latest shakeup won’t make it any easier for the high-earning spouse to keep more of the assets, but it will help speed the process along.
The new no-fault rules may “help the rich banker because it makes it easier for him to get a divorce,” said Diana Parker, a partner who specializes in family law at Withers in London. “It’s always in the interest of the rich earner to get divorced as soon as possible.’’
Under the current system, unless a couple is already separated for at least two years, the petitioner has to cite adultery, unreasonable behavior or desertion as grounds for divorce. With a less burdensome process, spouses will be able to file without specifying such a specific reason.
End Finger Pointing
The end of the finger pointing -- and the lengthy separation requirement -- will likely cut down on costs, which are generally borne by the wealthy spouse. It may also end the incentive to drag out the process while the better-paid spouse picks up paychecks or other financial perks.
“It’s like playing Monopoly, every time you pass go you collect 200 pounds,” Parker said. “If it’s a bonus worth 10 million, it’s worth refusing to cooperate.”
The new rules, if adopted by lawmakers, could lead to an immediate change in tone, lawyers said. The current accusatory system often gets the proceedings off on an acrimonious note.
“The law encourages conflict,” said Sarah Higgins, a lawyer at Charles Russell Speechlys. “When people read in black and white text the things that they are said to have done, it doesn’t get things off to a good start.”
Regardless of a couple’s wealth, it could make it easier to talk about splitting finances if they don’t need to start out with the details of their personal misdeeds. That may help couples have more reasonable conversations.
“If there is a case where there isn’t extreme behavior, then not inflaming things when dealing with the divorce itself can only be a good thing, especially for children,” Higgins said.
“At the end of the day, divorce is a financial transaction that can be negotiated in a sensible, commercial way,” said Ayesha Vardag, a lawyer who specializes in divorces for multimillionaires at the firm she founded, Vardags. “If you can take the emotion out of that, you can reach a far better, amicable settlement.”
Despite overwhelming support for Gauke’s proposals, they might take a while to implement. The reforms won’t be voted on until a gap in the parliamentary schedule -- which is currently dominated by another breakup: Brexit.
©2019 Bloomberg L.P.