The effects of recent reforms such as the incorporation of de facto relationships into the ambit of the family law system are starting to surface, throwing up a number of new challenges for lawyers. Briana Everett reports

What the experts say

“Lawyers are understandably nervous about professional indemnity issues, issues of professional negligence and ensuring that proper advice is given to clients about the effect of those agreements"

Paul Fildes, partner, Taussig Cherrie Fildes

“[The reforms have] created a great deal more fairness and equity for unmarried spouses. Previously, de facto couples were essentially second class citizens [but] that discrimination has been removed. [The reforms] put unmarried spouses on the same footing as married spouses"

Damian Harriss, joint family law team leader, Mills Oakley

"In 2004 [the government] brought in some apparently mandatory requirements for pre-action procedures in family law, [but] unfortunately those pre-action procedures are more honoured in the breach than the observance"

Ian Shann, partner and national practice group leader, Slater & Gordon

Australia's family law system has been the subject of significant reform over recent years, including the new de facto property regime introduced in 2009, the recent reforms affecting binding financial agreements, the 2006 shared parenting reforms as well as the recently proposed changes to the Family Law Act in relation to family violence and child abuse.

Family lawyers must now grapple with a growing number of challenges surrounding the complexity of relationship breakdowns - the scope of which has increased thanks to the inclusion of de facto relationships in the family law jurisdiction and the increasing acceptance and popularity of financial agreements.

The de facto effect

The recent reforms which brought separating de facto couples within the family law regime have led to a new set of disputes - and more work for family lawyers.

Cases regarding the status of de facto relationships are emerging as parties dispute whether a de facto relationship does in fact exist and when a de facto relationship has come to an end, in order to attract division of property and spousal maintenance laws which came into effect on 1 March 2009. Family Court judges still have a broad discretion in making declarations of the existence of de facto relationships (and their conclusion), exacerbating the potential for further disputes between litigating parties.

"The reforms have spawned a whole host of disputes and have created a whole lot of work. Many litigants are getting caught up in disputes where it's being asserted, for example, that the [de facto] relationship came to an end before 1st of March 2009 and therefore it doesn't attract the jurisdiction of the Act," explains Mills Oakley partner and joint team leader Damian Harriss.

"But it still remains a terrific reform. It's created a great deal more fairness and equity for unmarried spouses. Previously, de facto couples were essentially second class citizens [but] that discrimination has been removed. [The reforms] put unmarried spouses on the same footing as married spouses."

While the new laws were introduced back in 2009, it's only now that the true effects of the reforms are being realised, as lawyers start to get a true sense of the changes as more de facto property division cases are heard.

"Now everybody in Australia is, in effect, covered by the Family Law Act in terms of property matters, so that property distribution is dealt with under federal legislation. It's a very, very significant change and one that probably quite a few people in the community have not caught onto yet," says Slater & Gordon partner and national practice group leader Ian Shann.

Planning for the future

As family lawyers receive more instructions in relation to de facto separations and the division of property, they're also beginning to see an increase in the number of financial agreements or 'pre-nups' being entered into by both married and unmarried spouses.

As a relatively new instrument - they came into effect in December 2000 - financial agreements are growing in popularity, particularly for people entering into their second marriage or serious relationship. However, while they're becoming more commonplace and to an extent more socially acceptable, there is still not a great deal of case law to guide family lawyers through what is becoming an increasingly complex area, creating a level of uncertainty amongst the profession.

Cases are now emerging where financial agreements are being challenged on a number of different technical bases, meaning lawyers must be more alert than ever with respect to the advice they give and the circumstances in which an agreement can be set aside.

In the 2008 decision of Black v Black, the Full Court of the Family Court stipulated that strict compliance was required in relation to the legislation governing financial agreements, resulting in many agreements being set aside for technicalities. In that case the court held that the financial agreement was not binding because it did not include a statement that the parties had received independent legal advice, as required by the Family Law Act as it was then.

As a result, in January 2010 amendments were made to the Family Law Act in an effort to address the difficulties resulting from Black v Black.

"In short, even if there hasn't been strict compliance with the legislative requirements of the kind demanded in Black v Black, a court can still declare that an agreement is binding if the court is satisfied that it would be unjust and inequitable if the agreement were held not to be binding," Harriss explains.

"This in turn has meant that it's no longer mandatory for the statement of legal advice to be included in the binding financial agreement."

This, according to Harriss, has created some consternation amongst family lawyers.

"It's posed some issues for the 'stickability' if you like of binding financial agreements," he says. "The cases are still finding their way through and there's not a lot of reported authority to guide us … It's very much a matter of watch this space to get some judicial guidance on what happens."

Another challenge faced by lawyers, according to Taussig Cherrie Fildes partner Paul Fildes, is the extent and scope of advice that lawyers provide clients in relation to either drafting financial agreements or advising clients on agreements where they have been drafted by a different lawyer.

"Lawyers are understandably nervous about professional indemnity issues, issues of professional negligence and ensuring that proper advice is given to clients about the effect of those agreements," Fildes says. "There are challenges about costs. There is the general public perception that it's a relatively simple exercise to consult a lawyer to either draft an agreement or advise on an agreement."

And of course, with the agreements only coming into effect in 2000, many relationships continue to exist with their relevant financial agreements filed away.

"It's only when the relationship comes to an end and the agreements are dusted off that people might have cause to revisit whether they're binding or not," Harriss says. "Despite these uncertainties however, they remain a very good tool for people to control their own destiny and protect their assets."

The move towards mediation

In addition to tackling new legislative reforms and the resulting uncertainty surrounding client disputes, family lawyers continue to work within a significantly under-resourced system.

Family lawyers are notably frustrated by the lack of investment in the Family Court system, as retiring judges fail to be replaced. However, according to Fildes, lawyers are learning to just deal with it.

"The family courts are under-resourced but we're used to it. In the end, we as practitioners are learning to deal with a scarce resource and are trying to negotiate in the shadow of litigation," he says.

The lack of judicial appointments to replace the gaps left by retirements has led to significant problems in terms of getting cases on foot and the subsequent delays.

"The Federal Magistrates Court is becoming overburdened so we're starting to experience significant delays in matters getting off to final hearing," says Fildes.

"We're seeing more and more people mediating. A lawyer's practice today, particularly in financial cases, is about mediating rather than pursuing the court system. More and more lawyers are encouraged, for a variety of reasons, to negotiate in the shadow of litigation."

Although the government has been moving towards a greater emphasis on primary dispute resolution, such as mediation, more needs to be done according to Shann.

"In 2004 [the government] brought in some apparently mandatory requirements for pre-action procedures in family law, [but] unfortunately those pre-action procedures are more honoured in the breach than the observance," Shann says.

"It's an area that if it was tightened up, many more matters would be resolved at an early stage … We already have the mechanism to require parties to properly address the issues before starting action but it's simply not adhered to - that's the problem. I would love to see the court enforce its own rules in that respect."

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