What’s love got to do with it?

Once bitten, twice prenup….

Sound advice for any one contemplating marriage. You may want to protect existing assets in the event of a marriage breakdown, or simply want to ensure that the other person is not marrying you for your money. If you just want to “live in sin” (!), you should have a cohabitation agreement.

Sensible? Absolutely! Does everyone do it? Absolutely not! Why not? Because it is not “romantic” to discuss money when you are in love darling!

That is tosh! This is when love has got a lot to do with it!  There is no better time to discuss “what ifs” when you are still in love, reasonable discussion can be a tad difficult when the marriage has broken down & you can’t stand the sight of each other… over 40% of marriages end in divorce, the rate for cohabitation breakdowns is higher.

The “look before you jump & what if” mentality is now particularly important as the government plans to limit the availability of legal aid in divorce cases (unless domestic violence is also involved at the same time). A prenup will cost you a few hundred pounds, but to argue/fight over the assets during a divorce could cost you many thousands of pounds, that is likely to be the case whether you involve the courts or two “collaborative” lawyers out of court. Of course you should always try mediation, when it works, it works beautifully.

As interesting as prenups are, I want to focus on the possible changes of culture & public/private funding balance when the government cuts back the legal aid budget.

I would argue as a matter of principle that the government should encourage a culture change – people should seek advice before the event, anticipate problems and work out possible solutions, take financial responsibility for their actions, learn that the State and courts cannot resolve many of life’s problems, see the courts as the last resort, not first port of call and help each other when problems arise.  It will save a great deal of problems down the line and I know for certain prevention is better and cheaper than cure.

What about public/private funding balance?  Government attempts to control the legal aid budget in the last decade or so means there is effectively a two tier system. Many practitioners see legal aid clients as the poor relations of privately paying clients, primarily because legal aid rates of remuneration are much less than what “the private market can bear” (in some family cases its £60 vs £220 per hour).  It does not necessarily mean a legal aid client would not be given the same care and attention as a privately paying client, but it certainly mean firms are more likely to turn down legal aid work when privately paying work is available. It is the nature of business.

I am sure there are other factors involved but the remuneration rate differential has resulted in areas in the country where there are no legal aid lawyers! There is no doubt that access to justice has thus been restricted already.  What’s the solution? The easy answer is increase legal aid rates so they are not too far behind private client rates.  Will the government do that?  Ask another silly question.

Even if the legal aid budget is not cut by the government, the current two tier system simply will not go away.  Rather than bash on regardless with an unsatisfactory system where access to justice is already compromised for many people, is it not time to reform it and to a certain extent, let market forces do what is necessary and ask the private sector to take the strain in certain types of work? I believe it is.

As the legal aid budget is cut, I expect the volume of family work would initially shrink. Lay mediation work is likely to increase. Simple supply/demand economics mean legal fees may fall a little or remain static as some firms compete in a smaller market.  Some will fail.  But lawyers will be more pro-active in advising alternative ways of funding a family law case.

For example, “Sears Tooth” agreements should become more common (under these, the lawyer is paid from a client’s divorce settlement at the end of the case). It may even benefit some firms if, instead of being paid legal aid rates at between £60 to £115 an hour, they could charge a more commercial rate but on the basis that they will not be paid until the end of the case.  Also, commercial lenders offer litigation loans and they will be more popular if the interest rate is low.

Most clients would understand the principle of a Sears Tooth agreement, as it works in a similar way to the existing family law legal aid’s “pay at the end” principle. And this is an important point – in many cases, the government would be reimbursed from the financial settlement of a legally aided client, sometimes spread over a few years. Put simply, legal aid helps that particular client’s cash flow by giving a “loan”.

Therefore I would argue as matter of principle that it is right and timely for the State to step back and change the public/private funding balance, it does not need to provide “cash flow” to people if the private sector can do it.

I should make clear I have not studied the nitty-gritty of the Green Paper on legal aid reforms, I am simply arguing from basic principles in light of the state of our economy.

Oh one last thing Twice bitten?   Do give up, you are obviously NOT marriage material.

About Art Li

Briefly, I am a lawyer, keen amateur photographer, dog lover and politics junkie but not a member of any party. Full details on Biography page. Follow me on Twitter @Art_Li.
This entry was posted in Coalition Government, CSR, Law, Politics, Public Spending Cuts. Bookmark the permalink.

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