The cost of living crisis is beginning to shape divorce settlements with index-linked maintenance settlements returning, according to divorce lawyers Bishop & Sewell. In addition, the firm says, a backlog in the courts is seeing separating couples turn to private financial dispute resolution.
Philip Rutter, partner and joint head of the Family and Divorce team at the law firm comments.
“The full effect of the cost-of-living crisis has yet to be felt in terms of family and divorce cases, but the early and worrying signs are there.
“Many older maintenance agreements are index-linked to inflation and that is causing concern. With payers facing maintenance payments increasing by upwards of 9%, we are beginning to see the renegotiation of those agreements. While renegotiation will undoubtedly be opposed by the receiving party, the recipients need to have a degree of sympathy as salaries are not keeping in line with inflation.
“Index-linked maintenance payments have fallen out of favour in recent years, but given the uncertainty that surrounds the economy today we are expecting them to return.
“Financially weaker parties will argue that these agreements must reflect their outgoings against the economic landscape. Whether they are successful or not in getting an index-linked order will largely depend on the financial picture of both parties.
“A real challenge facing divorcing couples is the chronic backlog in the courts. It is difficult to get a date for a court hearing and if you do have a date they are often cancelled at the last moment.
“We are seeing a greater appetite for private financial dispute resolution, where parties reach agreement in front of a private judge. While the costs of a private judge can appear high – in the region of £2,000 to £10,000 for a day’s hearing – they speed up the process and can save divorcing couples money in the longer term.”
