New Zealand Law Society - Long Tail of Covid Impacts Relationships: Family Law Section, NZ Law Society

Long Tail of Covid Impacts Relationships: Family Law Section, NZ Law Society

Covid-19 lockdowns brought both positive and negative to New Zealand relationships and relationship property, according to a recent survey.

The New Zealand Relationship Property Survey 2021 is undertaken by Grant Thornton and is the third biennial survey since 2017.  The survey was in conjunction with lawyers from the Family Law Section of the New Zealand Law Society, a specialist group of 1,100 lawyers who advise couples on relationship splits and other family law matters.  A total of 275 lawyers completed the survey, meaning the findings are highly representative.

The survey shows Covid-19 has ushered in some unexpected shifts in separation trends.

The survey confirmed 20% of couples who started the separation process decided to continue their relationships because of Covid-19

“This is contrary to predictions of the effects of Covid,” says Chair of the Family Law Section Caroline Hickman.  “Surprisingly, while Covid made some people separate, it made others stay together.”

Ms Hickman says that family lawyers do play a role in making people think about separation, and if the client is wanting to separate, “Lawyers  have an obligation under law to promote conciliation,”  she says.  “Not reconciliation, but a duty to try and  promote parties to working together co-operatively to achieve resolution of property is”..  One reason couples may have decided to stay together is that people may have reviewed their relationships, and had time during lockdowns, for instance, to address their problems.”

The survey also speculates that lockdowns may have forced couples to stay together because the logistics of moving made it difficult to separate, or because of the rise in house prices which may have made it difficult to afford to leave.

Domestic abuse was cited by 28% of respondents as a reason for separation. This is up from 22% in the previous survey. Family strains increased from 19% to 28%;  and stress or mental health increased from 9% to 17%.

“These statistics paint a picture of relationships under very significant pressure during the time of lockdowns and covid,”  she says.  “They underscore how deep the trauma of covid has been to families in New Zealand.  As lawyers, we’ve seen that.  There’s been an unexpected and unpredicted increase in work for family lawyers.”

Ms Hickman says that two years ago, at the start of covid, Family Lawyers had expected a decline in work (61%).  The opposite happened:  59% of family law practitioners saw an increase in demand for relationship property advice.

“That brought with it more stress on family lawyers themselves,” she says, “with 56% saying stress had increased.”

Despite the increase in demand, most relationship property lawyers saw greater financial issues amongst their clients, meaning they had to discount their fees.

“A greater proportion of family lawyers in this survey offered a fixed fee arrangement to their clients to provide more flexibility and discounts in a cash-impacted environment,” she said.

Family lawyers are typically advising on relationship property worth $500,000 to $2.5 million.  This represents a shift upwards in the value of relationship property pools.   There were also 31% of survey respondents providing advice for relationship property worth over $10 million, up from 18% in 2019:  and 45% providing advice for relationship property worth $5 million to $10 million.

“This is not unexpected,” says Ms Hickman.  “We’ve seen large increases in asset prices across New Zealand over the past two years. The high value of the family home which is usually the largest asset of a partnership underscores the importance of getting early advice when you’re separating, before you agree to any division of assets.”

A valid separation agreement, she says, has specific legal requirements, and any such agreement reached needs to be in writing, witnessed by an independent lawyer, and for that lawyer to certify that they have explained the law to their clients.

“These are robust protections under the law,”  says Ms Hickman.  “Each party must have independent legal advice, and the lawyer must be very certain they have understood the extent of the property pool, of any debt, and that they’ve categorised the division of property and type of property they’re looking at.”

“People often declare they’ve had the discussion on what they want to happen.  But that may not be enough if people do not know what they are each entitled to under the law.”

The increased value of relationship property in total is also a signal that those splitting up should obtain independent valuations and engage forensic accountants to identify all property in some cases, she says.

“Property and business valuations might seem unnecessary,” she says, “but they ensure the client is fully protected.  The use of forensic accountants, is now more common especially when complex financial analysis is required to determine the extent of property, to quantify any economic disparity, or undertake business and share valuations.”

Nearly half of the lawyers surveyed had instructed a forensic accountant in the survey period (46%) compared with 42% in 2017, and most family lawyers (61%) felt that a jointly appointed forensic accountant for both parties was the best option.

As to the future, Ms Hickman says the impact of covid continues.

“The pandemic has made just about everything too difficult to predict,” she says. “Family lawyers are in demand, but there is a shortage of us which is unlikely to be satisfied any time soon.  It’s a less remunerated area of law for lawyers;  but a very rewarding area of work.”