By Victoria Batstone, senior associate at Stevens & Bolton LLP
Online divorce services often sell clients the dream of a quick, easy, and affordable end to their marriages and civil partnerships. It’s like promising a fairy tale ending with a wave of the magic wand. However, the reality is many clients are being misled and end up with subpar services that fail to protect them financially. Instead of the smooth process and fair outcomes they expect, clients frequently encounter hidden fees, inadequate legal advice, and unresolved financial matters that can lead to significant long-term consequences.
Supporting clients who have opted to use an online divorce provider can be challenging for family lawyers, but they can offer valuable assistance to protect their clients’ interests. Educating clients about the limitations and risks of online divorce services is essential, especially to avoid pitfalls like those in Vince v Wyatt [2015] UKSC 14.
Surprise costs and losses
‘Drip pricing’, prohibited by the Competition & Markets Authority, is where a low initial price is advertised, but additional fees are introduced later. Clients are often lured in by online divorce providers by their low initial fees, only to discover later that they must pay an additional £593 court fee to complete the application. Once the initial cost is incurred, refunds are typically not offered, compelling individuals to proceed with the service despite the unforeseen expenses.
Clients should be encouraged by their family lawyers to thoroughly research online divorce providers and read reviews to identify any patterns of hidden fees or poor service. It is crucial for clients to carefully read the terms and conditions to understand all potential costs before committing. Lawyers should also ensure that clients are aware of the provider’s refund policy, especially if refunds are not offered after the initial payment.
Problems caused by unregulated online divorce providers may not become apparent until years later. Clients who use these unregulated businesses for legal services often lack access to the same complaints processes and redress mechanisms available to those using regulated providers. Many of these providers do not have Professional Indemnity Insurance (PII), leaving clients without recourse if they receive poor advice or if errors occur in their divorce and financial documents.
To ensure their interests are protected, clients must verify the level of protection offered by their chosen service. They should ask whether the provider has PII in place, what their complaint handling process is, and what options are available if things go wrong. Additionally, clients should check for any unfair limitations on compensation or damages the provider might impose if they make a mistake. Asking these simple questions upfront can help clients avoid services that leave them without adequate protection by limiting their options for redress to claims against the provider for misconduct or breaches of consumer protection law.
Timing matters
Using online divorce providers can be risky, particularly when it comes to finalising a divorce before settling financial matters. This can lead to serious consequences, such as the loss of death benefits or the failure to address financial issues altogether.
A spouse may lose their entitlement to a share of the other spouse’s pension or death benefits if the other spouse dies after the final divorce order but before the financial settlement is agreed. To protect against this, clients should ensure that financial matters are resolved, and a financial order is in place before applying for the final divorce order. It is advisable for the applicant spouse (or both spouses in a joint application) to provide an undertaking not to apply for the final divorce order until a financial order is secured.
Financial orders are essential to ensure such claims are dealt with at the time of the divorce. This crucial aspect of the divorce process is often overlooked by online providers because they focus on the dissolution of the marriage rather than the comprehensive settlement of financial matters. Think of it as buying a car without checking if it has an engine – it may look good, but it won’t get clients very far.
Consider the case of Vince v Wyatt. Dale Vince and Kathleen Wyatt divorced in 1992 without a financial order after a brief marriage that produced two children. At the time, they had no financial assets and lived a New Age traveller lifestyle, surviving mainly on welfare benefits. Just three years later, Vince founded the green energy company Ecotricity, which was then worth at least £57 million. Despite their divorce being finalised, the absence of a financial order left Vince vulnerable to future financial claims. Over 20 years later, Wyatt applied for a financial order and succeeded. Despite the delay, Wyatt, who was in poor health and financially struggling, was awarded £300,000 to purchase a home and a contribution of approximately £325,000 towards her legal costs. While this was far off the £1.9 million she claimed, (the discretionary award being based on her needs), in addition to the sums payable to Wyatt, Vince was reputed to have to meet his own legal fees of over £1 million.
Although perhaps a controversial decision, it captures the dangers of not addressing financial claims at the time of divorce. A financial order will outline the fair division of assets and responsibilities, it is the only way to share pensions on divorce and, crucially, to dismiss each spouse’s capital and income claims. Without properly addressing the dismissal of these claims, the door remains open to unwanted future claims and, as Vince put it, “cash in a very old lottery ticket.”
If clients have opted to use an online service, double-check that they have properly addressed the financial aspects. If they haven’t, advise them to do so as soon as possible – nobody wants to find out they’ve left a financial skeleton in the closet!
No legal guidance
Having a financial order is like having a sturdy umbrella in a storm – it’s crucial for protecting clients’ financial interests. But remember, an umbrella is only useful if it covers clients’ properly. Online divorce services might offer help with financial orders at a bargain price, but beware – clients often get what they pay for. These services rarely provide legal advice or facilitate the exchange of full and frank financial disclosure. They’re more like a vending machine than a gourmet chef – purely administrative and lacking the personal touch. This can lead clients to agree to settlements that are not in their best interests, especially if they are unaware of their legal rights and entitlements. Without proper legal advice and full disclosure, individuals might agree to unfair settlements, leaving one spouse with insufficient resources and overlooking important assets, such as pensions and taxation issues.
Family lawyers can still play a vital role in facilitating and reviewing full and frank disclosure, even if clients use online services. They can review proposed agreements to ensure they are fair, clarify clients’ rights and entitlements, and highlight potential issues. When reviewing an order drafted by an online provider, lawyers should consider the scope of their engagement to avoid liability if the order is later found defective. Limiting the engagement to reviewing the drafting but excluding advice on the fairness of the order, for example, is necessary. Otherwise, aggrieved clients might seek redress from the law firm’s PII instead of the provider who made the mistake.
The overlooked treasure chest
Online divorce services typically do not offer pension advice or comprehensive financial planning, meaning these critical aspects are either ignored or require additional costs to address. The neglect of pensions, which disproportionately affects women, can result in a significant financial imbalance. Pensions can be complex, and their value might not be immediately obvious compared to more tangible assets like the family home. Legal advice is essential to understand pension values and their implications, particularly if there are defined benefit schemes. Women especially should be encouraged by their family lawyer to consider financial planning advice to ensure they are adequately prepared for their financial future post-divorce. Immediate financial needs, such as housing, can often take precedence in a client’s mind over longer-term financial considerations, making it crucial to address pension entitlements properly. Online divorce services can handle the basics, but they often miss the mark on more complex financial issues. Clients must be fully informed to avoid later discovering they’ve left a financial treasure chest buried and forgotten.
Assessing vulnerable clients
Vulnerability comes in all shapes and sizes, and it can sometimes be difficult to spot. For family lawyers, assessing cases for signs for vulnerability is a critical role. Unfortunately, online divorce services often lack the personal interaction and detailed case assessment that a solicitor provides. Without this thorough evaluation, there is a significant risk that vulnerable or coerced spouses end up with unfavourable agreements. For example, a spouse might be pressured to accept a settlement that is not in their best interests, or they might be unaware of or misunderstand their legal rights and entitlements. By not properly triaging cases for these issues, online services can inadvertently facilitate these problems.
Lawyers who are approached by clients who have used an online service should be particularly vigilant for these issues in case they have been overlooked. A thorough evaluation is essential to ensure that any agreements are made voluntarily, fairly, and with full understanding. This is especially important for vulnerable clients who may be at risk of coercion or undue influence. There may also be language and cultural barriers to consider. Ensuring that these clients receive the necessary support and protection is paramount in achieving a fair and just outcome.
In conclusion
While online divorce services offer convenience and affordability, they can be a double-edged sword – handy but potentially dangerous. Family lawyers play an indispensable role in guiding clients through the complexities of divorce, offering the independent, tailored legal advice necessary to protect their interests. Quick and easy solutions such as those offered by online divorce providers fall short of addressing the nuanced and critical aspects of divorce proceedings. The expertise and guidance of a family lawyer are invaluable in navigating the sometimes tumultuous waters of divorce, ensuring that clients receive fair and considered outcomes.
