The Blog

Risk of Recession Fuels Rise in 'HP Divorces'

There are few words in the English language which generate such a response as 'recession'.

There are few words in the English language which generate such a response as 'recession'.

The merest mention of it is calculated to cause market-hardened businessmen to quake in their shoes, Stock Exchanges to fluctuate wildly, politicians to glance nervously at their poll ratings and - lest we forget - workers to fear for their jobs, homes and families.

It is no surprise, therefore, to find the almost constant presence of the 'R-word' these days being cited as the trigger for much anxiety the world over.

Of course, financial discomfort is not necessarily the only source of whatever difficulties materialise. More usually, it exacerbates problems which may have already existed. As in business, so it is true in relationships.

Earlier this month, the Office of National Statistics (ONS) revealed that the number of divorces in 2010 was up 4.9% on the year before, the first rise since 2003.

As one of my colleagues, Fiona Wood, detailed in her considered response to the data's release, the figures illustrated the first sizeable tranche of marital woes as a result of the 2008 recession rather a more instantaneous rash of separations.

However, more than the volume of couples in England and Wales deciding that their marriages are so damaged that divorce is the only option, we have detected a new trend in the way that couples are breaking up and it's a pattern which has been influenced not by the toll from actual recession but the risk of what might be just around the corner if gloomy economists are proved to be correct.

From the broad range of divorce work handled by Pannone and other Family law solicitors and barristers across the country, it has become apparent that considerably more couples are agreeing to so-called 'HP divorces' rather than one-off 'clean breaks'.

By that, I mean those separations which end in maintenance or 'clean break' sums made in instalments rather than single payments.

The number of such cases is up 50% compared to when the last recession struck three years ago. The 2008 downturn followed a period of sustained economic prosperity when spouses having to pay for divorce settlements were more able to get their hands on sufficient money to make a single clean break payment, either from savings, by borrowing or relying on bonuses.

It has become clear to us, though, that many more people simply cannot afford to do that now. Increased difficulty in borrowing money to fund one-off divorce settlement payments coupled with growing job insecurity are all being cited as factors.

It's not as though such a development is common to every single case. There are individuals who are still wealthy enough to give a single lump sum to their ex-husband or wife but it seems that most are not so fortunate.

Whereas some might have interpreted husbands' attempts to suggest straitened financial circumstances several years ago as simply an attempt to reduce the sum they might ultimately end up paying, this time around it's far more likely to be true given the way that almost every business sector and every family have been touched by cutbacks.

Maintenance does offer the possibility of revision at a later date. That is only likely to happen, though, if there is a clear and very significant change of circumstances in the fortunes of those former spouses required to pay maintenance.

Whilst the new pattern we are reporting is already making itself felt on the manner or method of divorce settlements being made, any hope that plunging into the recessive abyss will undermine the 'wife-friendly' perception of courts in England and Wales in the future is likely to be disappointed.

Even though we may see a check on the number of large, headline-making clean break settlements, the case law established in previous big-money divorces is not going to be overturned or ignored by the courts because of the potential personal consequences of anxieties on the money markets translating into another full-blown recession.