18 October 2012
Lorraine Harvey on how the recession has affected divorce
Law firms have had to adapt the way in which they deal with divorce cases since the onset of the global economic downturn.
Lorraine Harvey, a principal lawyer (partner) here at RJW Slater and Gordon, has revealed that the financial slump has had a significant impact on the way in which legal separations are handled.
How has the economic situation influenced divorce?
According to Lorraine, people have become more reluctant to pay large legal fees over the course of the last four or five years in order to get divorced as issues such as wage cuts and redundancies continue to affect many households.
With this in mind, she explained that many companies - including RJW Slater and Gordon - have realised the need to assess how they charge for their services in order to meet the needs of clients.
"What we have done here is to introduce fixed-fee products, divorces online and try to be more competitive. Because people can't afford to pay out like they used to for divorces, they are much savvier and will look for the best product online initially," Lorraine added.
Our expert went on to say that settlements have evolved in recent years as the economic climate has not only affected divorce rates, but also the type of agreement claimants are going to get, primarily because there simply is not as much money for separated people to fight over these days.
"A lot of clients are unfortunately in negative equity, so we are not arguing about who is going to get what out of the house, we are arguing about who is going to look after, or take on the responsibility of, the debts that are left in the marriage breakdown," she noted.
Are financial problems a common cause for people to file for divorce?
Lorraine believes the simple answer to this question is 'yes', as the strain exerted on a relationship when one party loses their job is huge and can cause cracks sooner rather than later.
"The risk of losing your home because it is in negative equity is again a massive stress and unfortunately does result in pressures in the relationship and ultimately a marriage breakdown," she stated.
Lorraine went on to say that in the past this whole process may have been somewhat easier, as when economic conditions were brighter, one person was able to leave the marital home and live in rented accommodation.
However, these days, such a step is becoming increasingly rare as individuals can simply not afford to pay both their mortgage and rent on another property.
"The job security is not there, so it is a big risk to move out of your home if you're not getting on and sign up to a tenancy agreement when you are also obliged to pay a mortgage," Lorraine noted.
Have other separation options become more common due to the recession?
Being as the financial pressure people are under at the moment makes straightforward divorce a difficult option, many Britons are subsequently looking into the possibility of agreeing alternative arrangements.
For instance, Lorraine said cohabitation agreements are "quite hot at the moment", as these involve a couple coming up with plans such as one party being responsible for paying the mortgage and the other meeting the cost of household bills.
Then, if the pair do split up, they can divide up belongings at a later date.
Lorraine stated that it is also a myth that only wealthy people are interested in drawing up pre-nuptial agreements, as those on lower incomes are also "very cautious about how they're going to hold interest in properties and how they are going to invest".
"People are so much more cautious and prenuptial agreements and cohabitation agreements are certainly on the rise," she concluded.
What are the UK's divorce rates and trends going to look like over the next few years?
Lorraine feels that Britons will become savvier still in the near future as they continue to keep an eye on how much they are spending with their solicitor, meaning they will shop around to make sure they get the best price.
"I think a lot more people will be doing divorces online and that is why a lot of the big companies are doing a very good, competitive package online - because that is what the client wants," she added.