Pre-Nuptial Agreement Drafting: Is the Profession Earning ‘an Honest Shilling’?
Published: 05/12/2022 08:24
In the same year when the Law Commission published its report Matrimonial Property, Needs and Agreements and recommended that there be ‘statutory confirmation of the contractual validity of marital agreements’ (1.32), Coleridge J, in his address at the 2014 Family Law Conference stated:
‘I am convinced that the judges, at whatever level, cannot sensibly take the matter any further without making matters worse and more uncertain. Government simply has to grasp the nettle and get on with it. In the end we are of course doing the classic British thing of reform by inertia, stealth, common sense and the laws of cricket. That may in the end not be too disturbing in fact and from the point of view of the family lawyer trying to earn an honest shilling, endlessly fascinating and rewarding, in more ways than one. But it is not the way to run a railway or a modern family justice system.’
Now over eight years later, whilst, subsequently, both domestic politics, international events and a global pandemic may have provided some just cause, for the ‘inertia’ of legislative reform since in this area – the fact is that His Lordship’s complaint that ‘it is not the way to run a railway or a modern family justice system’ remains entirely apposite.
Parliament has to date simply failed to ‘grasp the nettle’, despite the successive introduction by both Baroness Deech and Baroness Shackleton of Private Members Bills, which appear to continue to languish, almost, it seems, in perpetuity in the committee stage of the Parliamentary legislative process in circumstances where the Government has given a negative indication to its further support of such measures in the absence of more time for contemplation of the content of reform required. Meanwhile, progressive High Court decisions involving pre-nuptial factors, over the last few years, continue to find reasons ‘to tinker’ with the parties’ expressed pre-nuptial intentions on financial distribution or even to ignore the signed agreement altogether based upon the court’s subjective assessment of the ‘needs’ of one of the parties.
For those who advocated the core importance of the parties’ autonomy to determine their own post breakdown future by the marital agreement route, these signs are far from encouraging. At the same time, divorce costs relentlessly continue to rise.
Indeed, the position on financial remedy costs is far worse than the usual end of case judgment rant on costs, which has become commonplace from the district judge upwards, would suggest. This is because experience teaches that in most cases before the court the true impact of costs is not the comparison which the judge usually comments upon of the legal costs incurred against the parties’ combined net asset value involved, but instead, it is to be reflected more by highlighting the value still remaining in dispute at such a hearing against which the level of costs incurred can then be seen invariably as hideously disproportionate.
This impasse of reform on the statutory validation of marital agreements shows no sign of imminent movement forward. However, that is not to say that the same absolves the legal profession from addressing its own costs inertia on reform in this area.
Pre-nuptial agreements costs
Part of the Law Commission’s five-year review (2009–2014) of marital agreements, which also involved public consultation (>2012), revealed wildly varied charging rates by barristers and solicitors in the advising and preparation of pre-nuptial agreements in particular. Differences in some cases of tens of thousands. Indeed, if this area was reviewed again, then currently it is likely such variations will have only increased.
Any web visit today for fixed costs for pre-nuptial drafting by a legal professional will reveal solicitors’ firms’ fixed costs fees advertised generally between £1,000 and £3,000. To these figures there is then frequently alongside a rider, which may not be fully appreciated by the lay public that the circumstances presented on instruction may mean the eventual fee could be higher. At the other end of the spectrum, various external companies and businesses also advertise a pre-nuptial draft web service where the individual progressively fills in their details on screen, which finally appear at the end of the process along with what to the lay client must appear, by comparison to those professionally on offer, as an extremely modest fee for an agreement copy – in some cases as low as £25. The obvious difference being to the much more expensive lawyer generated product, the lack of specific advice in this cheaper version as to the likely impact and enforceability of the terms of agreement produced.
There is no current published data from the Bar Council that the author is aware of which has addressed the range of fees charged by the Bar specifically for marital agreement drafting and advice. For a member of the public, it would be necessary to visit each Chambers website to discover this information and even then the enquirer is likely only to gain from most a broad indication of a range of fees for such a service. Indeed, to be frank, many Chambers were brought by the Bar Standards Board almost kicking and screaming into such transparency only a few years ago and it is likely any potential client will still need to have a more detailed discussion with the individual barrister directly or through their solicitor to tie down the eventual cost of such work likely to be incurred.
Counsel’s cost factors
There are a number of reasons for this apparent reluctance by a barrister to present an overall fixed fee position for such work. The most obvious one is that whilst the amount of work needed for agreement drafting and advice is commonplace professional fee prediction territory, there is invariably a need following their first draft for counsel’s continued input, sometimes extensively so, to thereafter review various multiple further drafts produced, invariably to save further costs, without counsel’s personal input, during the parties’ negotiations towards a final signed agreement form. In addition, this is usually against what from the outset will have been an unrealistically short time frame for such discussions before the intended wedding ceremony itself.
There is yet, at least, one other significant reason.
In the absence of any one approved precedent, every matrimonial lawyer involved in this area of work will work off different agreement draft precedents. Some are entirely unique in wording to the lawyer involved and some taken off the various professional websites or out of the legal text books dealing with this subject or over time the product of the cut and paste exercise from all three sources. If frequently instructed in such work, there can be professionally an inbuilt reluctance to work off a different template. Where counsel is instructed by a solicitor for a client, there is often an erroneous belief also that it will save costs for the lay client if the solicitor produces the first draft for counsel then to review. Experienced counsel will then be faced with not using a tried and trusted precedent of their own, but by due diligence having to examine line by line the one placed before them and to make amendments where the detail appears in their opinion to be lacking.
Such an exercise is invariably tedious, time consuming and ultimately over costly to the hapless client. This is especially as the growing popularity of, for example, pre-nuptial agreement instruction has resulted over time in ever more detailed agreement forms running frequently to tens of pages of terms – most of them intended only to set out perceived standard provisions. Indeed, those specific provisions which are likely to be the focus of most of the pre-nuptial agreement negotiations, such as the amount and term of recovery of capital and spousal maintenance in the individual relationship should a breakdown occur, will frequently occupy little more than say one or two pages of what may be 20 or 30 or even more pages of a final agreement form.
More than once the author has experienced observations made by overseas lawyers at the remarkable complexity of our pre-nuptial agreements and their increasing commercial as opposed to matrimonial appearance. It is to be observed in this regard that none of the reported judgments in this area have ever determined the impact and weight to be afforded to the prenuptial agreement under consideration by reference, for example, to its terms as to confidentiality or whether its copies are to be read as one… etc etc.
This is not to say the author is advocating a one page fits all pre-nuptial agreement with a one to two page schedule annex dealing with the real capital and spousal maintenance recovery agreed upon. On the contrary, it is important that there should be due definition of the terms to be used in the agreement and some appropriate recorded detail of the parties’ intentions of inclusion and exclusion of their existing and anticipated asset and resource holdings. This must be particularly so where, in the case of a pre-nuptial agreement, the document is likely to be read years ahead when memories are dimmed and the parties’ relationship towards each other on a distinctly different footing. There is, however, a balance to be struck between both positions.
It cannot be right that the Professions have not yet devised an authorised precedent template which, akin to the standardised Mostyn Committee Court order forms now in use universally in financial remedy work, can be used as the common document for first and subsequent drafts towards the final agreement reached in such a drafting process. This would enable both sets of lawyers engaged from the outset to use tracked changes to the authorised template and so obviate the due diligence line by line check necessitated currently of the standard parts of the agreement form of any draft produced before getting to the heart of the core terms being negotiated for capital and income provision. It would also assist all parties and the Court eventually at any hearing, where the provisions of a marital agreement have to be considered, to be aware that the document in question is based upon a standardised version.
This simple change of working practice would enable there to be a notable reduction in the professional fee costs referable to such work and would better ensure the lawyers engaged earned ‘an honest shilling’ with their time being more focused on the content of those core paragraphs bespoke to the capital and income provision intentions of the parties.Ashley Murray