Email Article Print Article

Trouble And Strife English Style

By John Dietz - Email Editor

Date: Sep 26, 2006

I am writing today from Hong Kong. More specifically, from a small desk overlooking the magnificent Victoria Harbor. It's a little overcast today, but what a view. I will be attending the Asian Offshore Conference and visiting with our trust companies and fiduciaries in Asia. This bustling city of almost 7 million people is unbelievably clean and safe. Between cabs, rail, and subway systems, this city whisks you to anywhere you want to go in minutes. This part of the world is full of fascination and contradictions; I'll save that article for another day.

On to business...

The contingent fee legal system for the most part is a U.S. event. Most countries around the world don't have legal guns-for-hire, and litigation is generally not a consideration within their business model. In past years, litigation in the U.S. was executed by Fortune 500 level companies with their host of attorneys who were always in a courtroom somewhere defending the good name of their respective employer, or, as I like to refer to it, defending their job security.

As most of you know by now, the lawsuit lottery is part of our everyday business. Whether you're a small or large business is insignificant. No move on your business chessboard should be completed without careful thought-out lawsuit planning. I think it is fair to mention that defense litigation planning should be a standard operating procedure, and money should be set aside for the event. Scroll down on your chart of accounts, and you will find the legal section somewhere around professional fees. It's easy to find; most of us have used it before.

Due to the fact that I am in a former British colony, I think it is only appropriate that I deal with some British skullduggery. England, whose law does not provide for contingent fee litigation, and has always felt somewhat protected from U.S. types of frivolous lawsuits, is in the throws of divorce settlement hell. Lawyers say that they are finding it harder and harder to reach out-of-court settlements and have, of late, been forced to take more cases to court.

The typical highbrow firms called out to handle settlements of the wealthy are in a conundrum. The so-called "magic circle of law firms" as they have been coined are quite disgusted with the lack of uniformity regarding divorce outcomes.

A recent article in the "Guardian" quotes solicitor Levison of the firm Levison, Meltzer, and Pigott as saying the current law is "thoroughly hostile to marriage," and that "wealthy men are spurning wedlock because they cannot protect their assets by prenuptial agreements, which are not binding in England and Wales." He goes on to say, "I have personal experience now of wealthy people who have decided in the middle of negotiating a prenup that the risk is too great, and they're not getting married."

After a recent high profile court decision awarded an aggrieved spouse 5 million pound sterling after three years of marriage, here is Mr. Levison's advice on marriage:

1. Don't marry.
2. If you do, make sure your other half is as wealthy as you are.
3. Do a prenuptial agreement and keep your fingers crossed.

He goes on to say, "It's just a complete lottery. The only thing everyone seemed to agree on is that my poor client had to pay a lot of money."

There are currently 20 high court judges in the family division for England and Wales. According to inside sources, all courts disagree on what precedent should be set in divorce cases. Another London based firm's lawyer was quoted as saying, "It's bitterly disappointing that the House of Lords weren't able to come up with one agreed judgment, and as a result of that, there will be enormous further litigation."

We may see some interesting decisions soon. I have a feeling Sir Paul McCartney's 800 million pound sterling divorce case may end up at the House of Lords with all the ceremonial splendor in which Paul was knighted with. After reviewing several high net worth divorce cases in the U.K., I am convinced the British are well on their way to becoming Americanized.

So what's to glean from all of this, and why should you care? First, the U.K. lawyer above sounds incredibly tainted with his top three list, but is he? Secondly, U.S. law in regard to prenuptial agreements is different than the U.K., but it doesn't matter; relying on a pre-nup alone is nothing more than fool's gold.

So what is the answer? That's easy: Implementing a complete Asset Protection Plan that may include, but is not limited to, a pre-nup, a trust, an estate plan, a will, and so on. Sitting down with your future spouse and extended family and sorting out the financial details is the only course of action. It's not sexy, and it may be horrible, but sticking your head in the sand seems to reward the other side lots of loot in divorce proceedings.

Until next time,

John

RELATED ARTICLES:

• Protect the equity in your home
• Asset Protection Plans
• C.A.L.M. Introduction
• Get educated on Asset Protection