Over the weekend, Rhys Taylor (highly respected Family Barrister with incredible knowledge of pensions and divorce) opined on twitter (@RhysTaylor32), that “Am really hoping that Buehrlen v Buehrlen (employment consultant not necessary in financial remedy proceedings) will not be transposed as reason to not to allow Pension SJEs http://www.familylawweek.co.uk/site.aspx?i=ed188242”
So too am I, otherwise Mrs. Mathieson will have to forego her Christmas present this year! However, there is a very serious point here.
Pensions are some of the most complex assets to be dealt with in Divorce proceedings. If they were not so complex, why are many lawyers being sued for professional negligence when dealing with pensions on divorce? Why, when the experts who deal with this subject day in day out have such long delivery times (in terms of producing expert witness reports) are not more people providing such reports? It is because the subject is so complex, and requires skills in a number of distinct disciplines:
- It requires an almost obsessive knowledge of pensions and pensions law, which very few possess.
- It requires a knowledge of how matrimonial law and law on Pensions and Divorce interacts with pension schemes and pension law.
- It requires very good mathematical skills.
- It requires knowledge of how scheme actuaries value pensions and understanding of the effect subtle changes in actuarial assumptions may have on CEVs, and the ability to use the Public Sector actuarial tables.
- It requires an appetite for problem solving and lateral thinking.
- It requires the ability to explain all of the above in clear English, so that the end user can understand what the expert is saying.
- I recall David Lockett from Actuaries For Lawyers telling me once how long he studied the subject of Pensions and Divorce, and how many cases he looked at first, before he was prepared to sign out any reports.
I would suggest that in a lot of cases, what the pensions expert does in divorce proceedings, is an awful lot more complicated than what say an expert in company valuations does. Usually, the accountant only has to value one business. A pension’s expert will often have a number of different pensions, with different legal structures and attributes, and he needs not only to value each one, but then place comparative values on each one, so that the value of one pension can be compared with the value of another pension. The person valuing a business also, usually just has to value the business. The pension’s expert, having valued on a comparative and consistent basis a plethora of pensions, then has to provide suggestions as to how they could be divided, which ones are better to share, and how the sharing of a pension may manifest itself.
If the services of a pension’s expert are dispensed with, I take it the Courts would also be willing to accept the valuation H (£0 in the majority of cases) will place on his business for divorce proceedings!
So is it really feasible for satisfactory settlements to be reached in matrimonial proceedings without the involvement of a pension’s expert?
Well in certain cases, yes, and these will typically be cases where we are only dealing with defined contribution schemes, or pensions, in the overall context of the case are of proportionately small value. The Pensions Advisory Group (PAG) is wrestling with guidance for lawyers as to when it may not be necessary to instruct a pension’s expert.
But in the overwhelming majority of cases, it is felt by the members of PAG (please note that the majority of PAG members are not pensions experts [who could be said to be self-serving], but are solicitors, barristers, judges, and academics) that a pensions expert is required. Experts are currently used in the minority of cases. But survey after survey shows how frequently pensions are either ignored or their true value taken into account. And it’s not just the big money cases.
With the majority of negligence claims we see (we only act for the defendant solicitors, their solicitors and PI insurers, not for the claimant), there is a common theme. The following would be a very typical scenario:
- Offsetting, not pension sharing.
- W wishes to retain the matrimonial home, H wishes to retain his pension.
- H in Armed Forces pension, CEV c. £100,000
- W’s solicitors say she needs a Pensions Expert, to make sure the pension is valued properly.
- W tells solicitors that she does not want to waste time / cost for an Expert’s report, as H has told her that if she does not accept offer, it will be withdrawn.
- Case settles.
- Five years later, W thinks she should make a claim against solicitors, for not quantifying just how much the pension was undervalued by.
It is my opinion that it is a very brave solicitor, who confronted by an array of pensions, does not insist that their client agrees to the instructing of an expert, and seeks such directions from the Court. If the client resists, then the Solicitor will presumably have to rely upon waivers, but the waivers should somehow give some indication that potentially the pension is being massively undervalued. If the Court resists the instructing of an expert, which is where this article started, with Rhys Taylor’s concerns about Buehrlen v Buehrlen being transposed, I do not know what the answer is. It was suggested at a conference I spoke at recently, that solicitors who are sued for professional negligence, when the Court does not allow an Expert to be instructed, should co-join the Judge. I am not a lawyer, but I am not sure that will work!
As a salutary reminder of the market for suing lawyers for negligence in Pensions and Divorce, just “Google” pensions divorce negligence and see what you get. As Rhys Taylor points out in another Tweet this weekend (and I thought I should get a life!) following an article by Gordon Exall, Barrister at Zenith Chambers, Leeds, & Hardwicke, London Chamber, http://www.civillitigationbrief.com/2018/02/25/summary-judgment-for-defendant-in-a-negligence-action-against-solicitors “And note background: active sniffing around for alleged negligence with treatment of pension sharing on divorce years ago.”
Anyone who thinks pensions are straight forward, does not understand pensions.
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