Perhaps it’s unfortunate timing, given that Valentine’s Day has just passed, but I thought I would offer an update on divorce and collaborative law. Collaborative law (or alternative dispute resolution) is still a new way of getting divorced amicably. It is a concept that originated in the US and under this method, separating couples, together with their respective solicitors, meet to discuss the issues surrounding children, as well as the financial settlement. Other parties such as mediators and counsellors may become involved as well and so it is not necessarily cheaper but is designed to be quicker overall.
The aim is very much to put the children first, not to go to court and to make the whole divorce run as smoothly as possible. If the relationship between all parties breaks down, then the divorcing couple must start again with new solicitors. Clearly, this is not a route for antagonists and is not appropriate for everyone.
This is an ideal scenario for IFAs to assist solicitors in the more technical aspects of financial planning, particularly pensions and divorce.
Resolution (the Family Law Society) has recognised that IFAs can add value to the collaborative process but expects those who participate to be qualified to a particular standard.
Unusually, there are two IFAs involved in the collaborative scenario. The first takes on a “neutral” role, works on purely a fee basis and sits down with the divorcing couple and their solicitors to discuss their financial options with them. Advice is not generally offered and when a generic plan of action is finalised, the neutral IFA hands the clients over to the second IFA, the “implementer”, for specific advice and the long-term client relationship.
The implementer cannot work for the same firm as the neutral or be related in any way. The neutral must make it clear to the clients at outset that there will be a second IFA involved. This is the Resolution rule that flummoxed me and was the source of much discussion on the first Resolution course for IFAs last November. Did Resolution not trust our judgement? Were we likely (if we took on both roles) to recommend something for our own benefit rather than for that of the client?
Unfortunately, IFAs seem to still have a poor reputation with solicitors and it is a continual battle to prove that we are a trustworthy profession. In collaborative cases, we understandably have to be seen as being whiter than white to all parties but how is that really different to giving any other piece of advice?
To become Resolution accredited and, more importantly, listed on its register, there is a technical two-day course to attend run by Clive Weir and Karen Ritchie of CS Pension Consultants Ltd (there are several planned around the country), plus an exam with a 90 per cent pass mark to beat.
OK, the exam may well be open book but it still took me 10 hours to complete and when we showed the exam paper to solicitor friends of ours, they were staggered at the difficulty of it.
On a very positive note, it means that there is a need for an inter-referral framework of like-minded and qualified IFAs within regions and in East Anglia (where Collaborative Law has really taken off) we are lucky to have that. It is likely that between us we will have enough work to take on both neutral and implementer roles without any of us missing out. We are not in competition with each other and, more importantly, we can add volume and weight to our local solicitors’ training meetings, which can only help to cement relationships.
There is still a lot of work to be done, however. Setting up procedures that are acceptable to everyone takes a lot of time and effort while still trying to earn a living.
We may well have to jump through hoops to prove to Resolution that we are worthy of merit but ultimately, of course, it is the clients who must come first.
Fiona Sharp is senior adviser at Finance4women