Apps and algorithms: the future of divorce

At their most basic, financial remedy proceedings simply require an assessment of what the assets are (quantification), followed by an analysis how they should be divided (distribution). Much is written and discussed in family law circles about the second part of that process, whether in the context of alternative dispute resolution or in the analysis of reported decisions.

Much less thought is given, however, to the first stage (quantification) and, in particular, how to make use of developed and emerging legal technology to speed up and make this more efficient and accurate. There is a feeling that commercial lawyers and civil litigators are some way ahead of family lawyers in their adoption of such tools.

Family law risks being left behind to the detriment of their clients and the lawyers who must grapple with new asset classes and increasingly more complex structures.

The purpose of this article, therefore, is to highlight (without endorsement) a small number of the tools that are currently available and consider what tools might be developed in future that could aid family lawyers in taking a more efficient and rigorous approach to the quantification stage of financial remedy cases.

MLTPL

It is not uncommon to be quoted fees of tens or even hundreds of thousands of pounds and time estimates of many months for a company valuation report. Parties are, for obvious reasons, rarely willing to commission their own reports (rather than on a Single Joint Expert basis) and so, often, no meaningful negotiations or discussions can take place until the SJE report has been received, by which time many months have elapsed.

MLTPL is an AI based tool which cuts through this and asserts it can provide an accurate company valuation within minutes and for a fraction of the cost of a traditional valuation.

Whilst it may be said that this is no replacement for the traditional SJE who is able to meet the company owners, ask questions of both parties, and leave no metaphorical stone unturned, the potential upside in parties having a good understanding of the company valuation from a much earlier stage in the proceedings, and start negotiating, are huge. Later down the line it could also offer a valuable “cross-check” to parties when considering a jointly commissioned report, either adding another data point confirming an estimate or informing questions of why the expert valuer’s view differs.

Capitalise

Most family lawyers still have the latest At a Glance sitting on their shelf and will turn to the Duxbury Tables contained therein when advising on and negotiating potential capitalised maintenance awards.

Whilst a good starting point, it often appears to be the case that these tables are also taken as the final word on the matter, despite the "blunt" way in which they work. The columns are split into 12-month segments, there is no ability to build in "step downs" or increases in maintenance or to take into account anticipated receipts of capital in the future when, for example, the recipient is to downsize.

Capitalise offers the ability to do all of this and as a result can produce much more bespoke calculations suited to the particular circumstances of the parties. It is easy to produce multiple different variations, so a range of options can be considered and presented to a client when advising on potential terms of a settlement.

Open banking

It is not uncommon for the bank statements exhibited to a Form E to run to over 300 pages across multiple different accounts. Even in the post-pandemic age of e-bundles, these are usually provided as scanned hard copies and anyone seeking to analyse such statements must simply scroll through page after page and hope to spot patterns and discrepancies. If a more "analytical" approach is required, it is not unheard of for junior solicitors or barristers to be paid to, in effect, copy-type the transactions from these statements into Excel so that they can be more easily analysed.
Suggestions are often made that it would be helpful to be able to "scan in" the hard-copy or PDF statements using character recognition software so that the transactions can then be analysed. In the age of Open Banking, this simply isn’t necessary. It is akin to asking for an extra-long extension lead on a land-line telephone instead of making use of a mobile phone.
Open Banking provides an opportunity to quickly (in as little as five mouse-clicks) and securely access in one place the raw transaction data from all of a client’s bank accounts across all their banks. That data can then be exported to Excel and, once there, the transactions can be easily categorised and analysed so as to produce a budget that the lawyer can be confident actually reflects the reality of the client’s historic spending. Most clients know, and lawyers can assist with, the cost of their mortgage, utility bills and travel. They may not realise, until it is presented to them in a simple format, quite how much they spend each year on their morning coffee or on Amazon. Open Banking allows this sort of recurrent spending to be easily identified and dealt with.

There is little reason why an opposing party should not also be obliged to use Open Banking to provide their own transaction data in Excel format to the other party – it is exactly the same data they are obliged to provide with their Form E, just in a different format. Once received, it becomes much easier and quicker to spot patterns and discrepancies and avoid the painstaking bank account analysis required to analyse another party’s budget.

Whilst in the future, tools could be developed to automate the collation of this information for Form E purposes1, in the meantime, similar (albeit less efficient) results can be achieved by asking the client (or potentially the other side) to download the transactions from each of their accounts online banking in CSV format before compiling them into one master Excel spreadsheet.

As can be seen above, family law focused technology is still at the stage of "making existing processes better".
There is, in future, clear scope for tools to be developed to assist parties in resolving aspects of many financial remedy claims without the need of so much involvement of lawyers or the courts. One only needs to look to other common law jurisdictions where they employ algorithmic processes for areas where English law still relies on discretion, such as spousal maintenance, eg California.

In the meantime, family lawyers should be looking to make use of already existing tools that will improve the accuracy of the quantification and analysis stage of their advice. It is no longer enough to rely on blunt tools in text-books and "instinct".

If you require further information about anything covered in this briefing, please contact Edward Floyd, Alex Woolley or your usual contact at the firm on +44 (0)20 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

This article was first published in ThoughtLeaders4 HNW Divorce Magazine, Issue 10.

© Farrer & Co LLP, October 2022