Recent UK newspaper reports have suggested that restaurateur Marco Pierre White is about to divorce, leading to speculation as to how he will fare at the hands of the lawyers. A number of high profile divorces recently have emphasised how difficult it is to anticipate what the final settlement will be.

Recent UK newspaper reports have suggested that restaurateur Marco Pierre White is about to divorce, leading to speculation as to how he will fare at the hands of the lawyers. A number of high profile divorces recently have emphasised how difficult it is to anticipate what the final settlement will be. Because of the uncertainty of the outcome, which is by no means always 50/50, speculation is fuelled, and there is a danger that legal fees can rise like a soufflé. Since the claims of Melissa Miller and Julia McFarlane were heard in the House of Lords last May, divorce lawyers have been struggling to come to terms with somewhat contradictory judgements. The new emphasis is on categorising the assets which any family has, into those which were built up during the marriage through the joint efforts of the couple – what are called “matrimonial assets” – and those which have been brought into the marriage, “the non-matrimonial assets”. One of the difficulties with this new approach is working out which category a business falls into. Is it a matrimonial asset, which is the fruit of their marriage partnership? If so, then the value of it perhaps could be shared equally. Or is it something that has been brought into the marriage – perhaps a business started long before the couple got together? It could also be argued that such a business was the product of the very particular talent and hard work of the individual running it, which would again put it into the non-matrimonial category. If so, the percentage division could be much lower, provided always the reasonable housing and income needs of a wife and children are catered for. Collaborative Law – A New Recipe Fortunately for those couples now separating and facing divorce, there is a new approach to sorting out the problems. This avoids the worst aspects of the courts, with its pressure cooker approach to the emotional temperature and the legal expenses. The backbone of the collaborative law process is a series of four-way meetings, involving both parties and their legal representatives. There is less correspondence, and no preparation for court. An integral part of the process is that the clients sign a participation agreement at the outset, confirming that they will not go to court to contest either the divorce or the finances. If either party uses the courts, apart from dealing with matters on an agreed basis, then both solicitors are sacked. There is therefore a transparency of mutual interests which keeps the parties and their advisors at the negotiating table. It is particularly helpful in complex cases, especially those involving businesses. The difficult areas, such as valuing the business, can be discussed face to face. The accountant valuing the business can be involved in the discussions, and can explain to both parties and their advisors how the figures are built up. It is precisely these findings which are so often at the core of financial disputes. Being able to discuss this face to face can often enable misunderstandings to be avoided and pre-empt much of the sterile (and expensive) debate in court. For the new breed of entrepreneurs, who are used to juggling family and business interests, the collaborative process seems a natural way forward. For them, it provides the best aspects of the professional services available, without the time consuming and expensive downside. Given the limitations as to what the court can order – couples can only apply for a transfer of assets of shares, or for a business to be sold – the four-way meetings provide a forum for much more flexible options to be explored: setting up lifetime interests, putting shares in trust, discussing shareholder’s agreements and considering the involvement of the next generation of a business are more easily addressed. The settlement can reflect more subtly the requirements of that particular family. Most important is not so much the financial side of the agreement reached, as the personal side. Avoiding the court battles often means that the couple are better able to talk in the future about their children. This is fundamentally important to the wellbeing of the family moving forward. Anybody who has had contact with an acrimonious divorce will know how this can sour relations for years afterwards. Collaborative law is not to everybody’s taste and it is certainly not any easy option on marriage breakdown. However it enables the couple to focus on the issues which they find important, rather than what a judge is going to require by way of evidence. Much of the wastage of preparing for court can be avoided. The legal spend may therefore be lower, although not necessarily so since couples may wish to widen the scope of discussions if they think that would be helpful. As a recipe therefore, it is certainly not for everyone. However, the momentum behind collaborative law is growing by the month. While not yet completely mainstream, it is certainly very much now on the menu of what family law firms offer. The Collaborative Process Set out below is what happened in a business case, involving commercial and private assets. In between four-way meetings there was an immense amount of work between solicitors and with clients. Each stage was carefully planned in advance, with the solicitors discussing each stage with the client, and setting the agenda carefully for the next four-way meeting. The couple instructed solicitors in June 2005. The first four-way meeting took place at the end of July 2005, at which the valuation process was planned. Valuations were taken of commercial and domestic properties during August, and the family’s accountant calculated the notional CGT (courts always look at the net figures of assets after deducting tax and other expenses). A net figure for the overall estate was arrived at by the middle of September. At the second four-way meeting, the financial disclosure was discussed. The commercial property valuer was asked to clarify certain issues (on a conference line) and certain tax points were also clarified subsequently with the accountant. At the third and fourth four-way meetings in October and November, the terms of the settlement were agreed. These were subsequently implemented in the early part of 2006, following detailed pension advice which the couple obtained jointly. The adult children were passed shares and their future involvement was mapped out. The Court Route Had this couple used the traditional means of the court process, the following would have been the likely timetable. Divorce and financial proceedings would have been issued in July 2005. The exchange of financial information would have take place at best in September or October 2005, together with the preparation of the first appointment documents – the statement of issues, the chronology and a questionnaire in which a schedule of enquiries would have been made of the other spouse’s financial statement. These are the traditional court documents required before the first of three court appointments. Discussions would then take place as to the choice of valuer and the terms of the joint letter of instruction prior to the first appointment in court. Counsel would be instructed. At the first appointment, a District Judge would consider which enquiries in the respective questionnaires are appropriate and would set a timetable for the valuation process, i.e. the commercial properties and domestic properties would be valued separately, and an accountant would be asked to assess the liquidity, to value the business and to work out what the CGT consequences might be were shares to be sold or transferred. The valuation process would be carried out over the next three months, before the second court appointment – the financial dispute resolution hearing. This would probably not have taken place until something like May 2006. The parties would answer the questionnaires and in correspondence would make without prejudice proposals. Both parties would be represented at the second hearing, the FDR hearing, and a District Judge would assess the respective negotiating positions, commenting accordingly and encouraging them to try to settle matters. In the absence of a settlement, the case would have been listed for, say, four days probably in early 2007. After an examination of the valuation evidence, an order may have been made for the business owner to pay a substantial lump sum based on an appropriate percentage of the net value of the estate, in the expectation that the husband would borrow substantially or sell off part of his holdings.