Monday, June 02, 2008

Divorce to soar as economy plummets

LAWYERS are reporting a "massive upsurge" in the number of couples seeking advice on separation and divorce since the beginning of the year, a development which may be linked to the current economic crisis.

Some family law solicitors are anticipating that even greater numbers of wealthy people will break up, as the reality of the economic downturn sinks in over the next six to 10 months.

Conversely, less well-off couples who want to separate or divorce, are finding they are unable to do so because of the extra expense involved in maintaining separate lives.

While the reasons for marriage breakdown inevitably vary, several solicitors working in this area have confirmed to the Sunday Independent that the current economic situation is impinging, in various ways, on couples who have decided to split.

As the economy worsens over the months and years ahead, there will almost certainly be significant long-term social repercussions.

Taoiseach Brian Cowen has placed an undefined vision of society and community at the heart of his administration, seemingly giving it primacy over a healthy economy.

Most recent statistics -- from 2006 -- show that there are currently 60,000 people divorced in Ireland, with many more legally separated.

However, the apparent beginning of a trend towards a greater rate of marriage breakdown shows that issues relating to society are linked to a healthy economy. In general terms, money acts as a glue to keep many couples together: when the cash becomes less available, it places many marriages under strain.

As London law firm Mishcon de Reya somewhat cynically put it last week: "When money looks like flying out of the window, love walks out of the door."

It was reported in Britain last week that divorce lawyers say they are being "besieged" by wives wanting to secure good financial settlements before their husbands are made redundant.

Conversely, many of the thousands of men who have already lost their jobs are seeking quick divorces so that alimony payments will be based on their unemployed status before they find new ones.

While divorce laws in Britain and Ireland significantly differ, the economic downturn seems to be leading many couples in both countries to rethink their priorities.

Ann O'Neill, a solicitor practising in family law with McKeever Rowan solicitors in Dublin, says there is a "massive upsurge" in the numbers of people seeking separation and divorce.

Ms O'Neill is a member of the Dublin Solicitor's Bar Association Family Law Committee, which held a meeting last week. Ms O'Neill says all of her colleagues are reporting a similar increase which, she says, is clearly evident over the past 18 months -- and even more so since the beginning of the year.

She said: "At our meeting last week, many of my colleagues who work exclusively in this area were saying they are unable to leave the office until nine or ten at night these days, so busy are they."

While she agrees the noticeable increase mirrors the economic downturn Ireland, she says it is too early at this stage to definitively state that it is "recession related." But she says she is "swamped" with inquiries.

"I have had a huge surge in business. I cannot say at this stage if it is all related to a change in the economic climate, but I can say that a lot of high net-worth individuals are finding their marriages going down the tubes," she says.

"I can certainly say that when the extent of the downturn in the economy filters through -- and the Davy report last week was an eye-opener -- I expect it will alert women who want to get out of their marriage to secure the family home when assets are unencumbered."

Ms O'Neill's assessment appears to be supported by Karen Hickey-Dwyer, a partner with Ivor Fitzpatrick solicitors. She said: "A factor in marriage breakdown is, certainly, that people are not as liquid as they used to be. Issues related to this, for example, are that bonuses are no longer being paid, and, I suppose, that house prices are falling. But that brings its own difficulties to couples intent on separating.

"Women are concerned about securing their futures, securing their lifestyles as they have developed over the boom times. I imagine there will be a lot of movement on this over the next six to ten months. We will see a lot more of it. I expect we could be inundated towards the end of the year."

Muriel Walls, a partner in McCann FitzGerald solicitors, points out that the economic downturn is in some ways preventing couples from separating. "The house is worth less, the job is at risk, they are asking -- even if they want to -- is this the time to separate?"

She stresses that the "system" in the UK is very different from Ireland. "In the English system, they look at the cake and divide it. Here, it is different. Maintenance is usually ongoing, for example."

Hugh Hannigan, a partner at Simon McAleese solicitors says an impact of the meltdown of the economy on family disputes means divorce and separation proceedings will be more bitterly fought and more difficult to settle. This is primarily due to the fact that there is "less money in the family pot".

"This will be particularly so for married couples with young children who require substantial and regular income. It will also mean a reduced standard of living for separated couples," he says.

He also adds that recent high-profile "Hollywood-style" divorces may have led to a "false security" for some Irish couples embarking on separation and divorce. "The financial gain for some spouses who separate and divorce is no longer guaranteed," he warns.

All solicitors acting in this area agree that the economic downturn is having a significant impact on existing cases.

John Costello of Eugene F Collins solicitors, says: "The downturn is putting a lot of pressure on couples in the throes on separation to prove the correct value of their assets -- be that their home or company, which by now could have a minus value. There is a huge element of discovery, to try to prove how valuable a company is, particularly a property company.

"The other big issue is that the family home is proving impossible to sell -- and if it must be sold, it's being sold under value. It's probably better not to sell at all."

Ms Walls concurred: "Because of the good times, people's expectations have become great. Some women never really had to budget. They spent, maybe, €10,000 a month in BTs or on three shopping trips a year to New York with the girls. But that's just not there anymore.

"The other thing is that some children have expectations of an allowance of several hundred euro a month, a car, their insurance paid...

"They don't seem to think anymore, like we had to when we were their age, that maybe they should get a job."
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