By Jamie Dobson
Business advisory firm Grant Thornton and the Law Society’s Family Law Section have released the report on their second survey of the trends and issues impacting on the practice of relationship property law.
An initial survey was conducted in 2017. The 2019 survey builds on some observations of that survey, recording trends in family law practice. Some key findings based on recent events such as the Supreme Court’s decision Scott v Williams [2017] NZSC 185, [2018] 1 NZLR 507 in terms of economic disparity and the Law Commission’s review of the Property (Relationships) Act 1976 broaden the survey’s scope.
Family lawyers were invited to participate and 253 completed the 2019 survey, spread across New Zealand. Of the respondents, 66% of were women, outnumbering men about two to one. Female participation is likely to increase, presenting a question to the profession as to how men might be encouraged to practise in family law.
Key findings of the survey show that relationship property continues to be some of the most significant legal work for New Zealanders when it comes to their assets. Family lawyers are now advising on even higher value relationship property pools across New Zealand.
Family lawyers’ clients
People in their 40s, who have been together for 10 to 19 years, and have a net worth of $500,000 to $1 million, remain the clients who family lawyers see the most, making this the ‘danger zone’ for relationships. This has not changed since 2017, with growing apart/falling out of love and extra-marital affairs still the main cause for separations. A total of 59% of family lawyers acted for people in their 40s, and two-thirds advise on relationships between 10 and 19 years.
A continued rise was noted in ‘silver splitters’ – 93% of lawyers provided advice to clients aged over 50. Furthermore, of the 85% of respondents who said they provided advice to this age group on section 21 contracting out (‘pre-nup’) agreements, nearly a third said there were other family members involved in seeking that advice, indicating the likelihood of adult children from previous relationships. A family member’s involvement in this type of advice is likely to add professional complexity for family lawyers, raising issues of independence, client obligations and undue pressure.
Across the board, family lawyers underestimated their workloads in providing relationship property advice in the last two years. In 2017, almost all respondents predicted their relationship property workload would decrease or stay the same. In 2019, 51% reported an increase in relationship property work over the past two years.
Despite this trend of an increase in work related to separation and relationship property, only a quarter of respondents regularly refer clients to counselling. These findings were surprising given the context in which advice is provided. Counselling can be helpful to those going through a stressful time and assists in resolving minor issues which may not require a lawyer. This finding may reflect that free counselling sessions are no longer available through the Family Court, making counselling a cost many people are reluctant to bear when they feel that their relationship is beyond repair.
Key issues facing providing legal advice in relationship property
The Supreme Court decision in Scott v Williams [2017] NZSC 185, [2018] 1 NZLR 507 was an important moment in New Zealand family law jurisprudence that highlighted the issue of economic disparity in relationship property cases.
The case relates to s 15 of the Property (Relationships) Act, which allows for one party to be compensated if the living standards of the other party are likely to be significantly higher due to the ‘division of functions’ within the relationship. A majority decision of the Supreme Court, including Elias CJ, held that where there has a been a relevant division of roles, any disparity will be assumed to have resulted from that division. Much of this was consistent with the initial decision by the Family Court in 2009.
Nearly two-thirds of family lawyers thought the majority decision in Scott v Williams had not made s 15 claims more workable in practice. Although 37% did not know if it had – suggesting they had not advised clients on a s 15 claim in the last two years.
While the decision indicates a materially different approach to previous s 15 decisions, around a third of respondents either agreed, disagreed or did not know if it had led to some change in the approach to how economic disparity is calculated. What is more certain, however, is the increase in claims, dollar amounts of awards, and (perhaps) resultant practitioner confidence in making a s 15 claim. Of those who made observations on claims and dollar amounts (excluding the “don’t knows”), notes of decrease were scarce compared to those who noted increases in s 15 claims in their work and awards being larger in value.
The finding that 40% of family lawyers are reportedly more confident in filing a s 15 claim on economic disparity might be expected, as the approach under Scott v Williams appears more likely to lead to a higher income differential than the approach under M v B [2006] 3 NZLR 660 (CA), and so a higher award. It will be encouraging to those who believe historic awards have been too low.
Section 15 matters were addressed in the Law Commission’s report on the Property Relationships Act 1976. Of the commission’s proposals, replacement of s 15 with family income sharing arrangements (FISAs) was recommended, which would require partners to share their combined income for a limited period after separation. FISAs would be subject to conditions such as the separating parties having children, and having been together for 10 years or more, or having built or sacrificed careers because of the relationship. A total of 59% of respondents were in favour of this arrangement.
Strongest support was shown by lawyers for the Law Commission’s proposal to enable the Family Court to have more power to deal with property held in a trust. Almost three-quarters of respondents either supported or strongly supported this proposed change. A possible reason for this support is that the change could address the concerns of 38% of practitioners who think uncertainty exists at the interface of trust law and relationship property law.
Changing treatment of the family home in separations from a 50/50 split was also supported. Rather than dividing the full value of the home down the middle, the Law Commission suggested that if one partner owned the home before the relationship, only the property’s increase in value during the relationship should be shared.
Drop in legal aid work
Lawyers reported doing less legal aid work in the area of relationship property. In the 2017 survey, 35% of lawyers undertook work funded by legal aid. This was down to 23% in 2019. Many respondents (44%) ceased legally aided relationship property work in the last two years. This may reflect the administrative complexity of legal aid, the low remuneration paid to legal aid providers, or increased work volumes in other areas. Further research is required in this area to better identify the causes for such a noticeable decline.
Most family lawyers think the allocation of court time has not improved, with 40% of respondents responding that the allocation of court time for relationship property cases has worsened, only 6% reporting an improvement and 34% thinking it had not changed.
Only 31% of respondents were involved in a long cause fixture during the last two years. This is despite 81% of lawyers saying they had used litigation, indicating most proceedings do not go the distance.
Family lawyers generally need to wait at least four months for a hearing date, and often at least seven months. Following the hearing, decisions were typically delivered in less than three months. This means the total time taken from hearing application to decision for long cause fixtures to be settled by the court is about a year.
Given the wide range of issues with providing relationship property advice, family lawyers offer high levels of experience in a complex area of the law. Many regularly discount their fees, enhancing the proposal of value when this is communicated to clients.
Many practitioners obtain legal opinions from senior counsel (30%), further enhancing the quality of advice they can provide to their clients. More than half of these lawyers seek a substantive brief from outside legal opinions.
A total of 96% of family lawyers have used other specialist professionals in relationship property matters in the last two years, including real estate, business and tangible asset valuers. With family homes being the most significant asset in relationship property separations, real estate valuers were the most instructed outside professionals which relationship property practitioners used.
Hourly rates and billing
The average standard hourly rate across New Zealand is $332 for relationship property advice. These services cost the most in Auckland ($371) and the least in the Central North Island ($279). Tracking costs and how family lawyers charge will indicate more visible trends in future surveys and will pick up on any innovations in billing from the profession.
The most common methods used to bill relationship property clients are time, cost and an application of a discount, and time and cost without cap. Most practitioners often provide flexible payment terms to clients, with 11% of respondents having conducted relationship property work on a pro-bono basis.
The 2017 relationship property survey established a snapshot of who family lawyers serve and how they serve them. This biennial survey and report tells us about the work of family lawyers in relationship property matters. Over time it will identify the key trends and factors affecting the provision of legal services in relationship property matters.