Wednesday, 23 January 2013

Things are not always what they seem… in Family

Family is my first seat and I have always been interested in the subject. However, when I was contemplating what working in a family law practice would be like, I thought the focus would be on soft skills such as empathy when liaising with clients and confident negotiation when trying to reach a settlement on behalf of our client.  Certainly this is the case, but I have been particularly struck by the financial skills required, including an in depth understanding of business accounts.

As most people know, one of the important tenets of English family law is establishing what all the assets are worth – only then can the effect of any proposed financial settlement be truly understood. In situations where one, or both, of the parties have their own business it will usually be necessary to ascertain the value of that business.  Through a number of cases I have assisted on during my seat, I have gained quite a good understanding of the options in these circumstances. This has been a fascinating and somewhat unexpected aspect of my work.

For example, a balance sheet valuation is the most straightforward and involves an assessment of the tangible assets less any money owed on those assets. This is most appropriate for a business that is merely a sum of its parts – perhaps a string of investment properties held in a formal company structure for tax reasons. If the business is a service provider the balance sheet valuation is not necessarily the most appropriate way to determine the value. 

In such a case it is more likely that a forensic accountant would be involved and the exercise becomes much bigger and more expensive.  The accountant reviews the company accounts for the past few years to understand the nature of the business against the backdrop of the economic climate specific to the business.  The profit a business is making will be crucial to its value as any potential purchaser would use this as a guide to what return they could expect to see on their investment. Where possible, a single joint expert forensic accountant will be appointed by the parties.  How to divide the business, if there are not sufficient assets outside the company to achieve a fair division between husband and wife, is another complex area on which the forensic accountant can provide advice. 

Seeing all of this at first hand has really opened my eyes to how different areas of law interact with one another. It has certainly made me more open-minded about the seats I choose as, even if I do not think I am likely to specialise in a particular area, I can now fully understand how useful it is to have a good grounding in a cross-section of practice groups. It also makes me appreciate working at a full service law firm, like B P Collins, where colleagues with a range of expertise are available at a phone call. 

Posted by Tina Jeffery, trainee in the family practice group.

Tina Jeffery -

Tina Jeffery started her training contract with B P Collins in August 2012 following a long career in the RAF. She holds a BSc and an LLB from the Open University and completed her Legal Practice Course at City Law School.

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