Divorce: Uncertainty over impact of no-fault reform
The family law market grew by 4.1% in 2021 and the rate of growth should increase in the coming years, but the number of law firms in the field is falling, a new report has found.
IRN Research said the arrival of no-fault divorces also added some uncertainty to the market.
“Will this lead to more DIY divorces or will it enable more advisors to develop services that can deal with both parties together?” it asked.
“Even if the divorce process becomes easier, it is still likely that there will be a demand for advice on financial settlements and child arrangements. International family law cases are also on the increase.”
The arrival of no-fault divorces should also boost the online sector, such as the development of online solutions and apps where the two parties in an amicable divorce can share information and communicate.
The UK Family Law Market Trends Report 2022 said the estimated rise in revenue was driven primarily by a strong increase in financial remedy matters needing legal advice and growth in advice for high net-worth individuals, plus international cases.
“Court backlogs were a problem pre-Covid and were exacerbated during the pandemic but these backlogs began to be addressed in 2021 and this led to an increase in family court cases completed in 2021 compared to 2020. However, new cases started declined.
“One of the possible benefits of the court backlogs could be a move to more disputes settled by mediation and arbitration without the need for a court appearance.
“The number of professional mediators has been increasing in recent years [to more than 1,000] and a new public funding initiative using vouchers to encourage more mediation was launched in 2021.”
IRN said it expected the market – which it valued at £1.6bn in 2017 and £1.9bn in 2021 – to grow 4.5% this year and 5% next.
The family law sector is particularly fragmented – there are no consolidators at work, unlike in conveyancing and personal injury, for example, although we revealed recently that Stowe Family Law was planning more acquisitions after making its first.
IRN estimated that the number of law firms offering family law services has fallen over the past five years from around 5,700 to 5,000 amid a growth in specialist practices.
The report predicted growth in advice for cohabitating couples and the use of arbitration and mediation.
The latter would be driven by a number of factors, such as continued court backlogs and the possibility of more transparency in some court proceedings.
Also, up until recently there were only limited grounds for challenging findings from arbitration but this changed with the 2020 case of Haley v Haley.
“This decision by the Court of Appeal aligned the basis for appealing an arbitral award with the requirements for appealing a court decision. This case was an important step forward for promoting family arbitration as a genuine alternative form of dispute resolution.”
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