For new york divorce lawyer nancy chemtob the covid-19 pandemic has meant phone calls from a lot of unhappy couples. her clients among manhattans wealthy celebrities, entrepreneurs and professionals have found it just as hard to get along with their spouses under lockdown as many other people with much less money.
People come to me and tell me they have spent years married to someone who works round the clock as, say, a hedge fund manager or a lawyer, and now they are being forced to quarantine with that person day in, day out the cracks in their relationship are starting to show, says chemtob, speaking from her plush home in wealthy east hampton on long island, where she spent lockdown conducting online meetings with clients from her backyard.
Chemtob, founding partner of law firm chemtob moss forman & beyda, says that for some families lockdown has been a rare opportunity to spend time together, but for others the situation has become impossible. whereas before the pandemic married couples might have spent about two and a half hours a day together, she says, many now spend that amount of time apart, if they are lucky.
The pandemic has been a real wake-up call for my clients, some of whom have said it made them rethink their lives, she adds. they have realised they dont want to spend the rest of their days with someone they dont have anything in common with.
Lockdown measures and curbs on mobility have led to a sharp rise in divorce enquiries. since the start of the pandemic many wealthy people have split from their partners, including celebrities such as us singer kelly clarkson, fashion designer mary-kate olsen and irish boyband star shane lynch.
While no comprehensive data exists, the signs are clear: in the us, legal templates, an online legal document provider, noted a 34 per cent year-on-year rise in requests from its wealthiest clients after lockdown; in the uk, stowe, a specialist family law firm, reported a 41 per cent increase in divorce enquiries; and lawyers in italy have spoken of a 30 per cent rise in divorce cases.
Chemtob says divorce enquiries at her firm are up about 30 per cent. since establishing the firm in her late twenties in 1994, she has become one of the most successful of new yorks elite divorce lawyers, serving clients with a typical net worth of $15m. she worked through the 9/11 terrorist attacks of 2001 and during the 2008 financial crisis, which both imposed extraordinary pressures on couples. but the current crisis, she says, is different. the past few months have brought out the worst and best in people. all the illness and death has created a lot of self-reflection, she says.
Chemtobs views are echoed by lawyers around the world. speaking from hong kong, sharon ser, a partner in the local divorce and family law team for withers, says: this is an extraordinary year for many people. one of the biggest things impacting people living in hong kong has been the inability to travel.
She says people involved in long-term extramarital affairs cannot now use business trips to maintain these relationships. ive heard of people taking more and more risks to continue these affairs. and they are inevitably being caught out, says ser. just last week i had five new clients call me this is great for business, but a disaster for society.
While divorce almost always brings headaches, the distinguishing factor for wealthy people is that they are more likely to have complex financial arrangements and to be highly mobile, with ties to more than one country.
This gives the rich choice over where to divorce. someone who lives in hong kong but was born in the uk and operates a business in china could file for divorce in any of those jurisdictions, says ser.
The choice of jurisdiction can make a big difference as to how assets are split. notably, the courts in england and wales, compared with places such as continental europe, the us and china, have a reputation for being more generous to the financially weaker party often the wife of a high-earning husband.
In a divorce between russian billionaire farkhad akhmedov and his ex-wife tatiana akhmedova, the english courts awarded akhmedova a large share of akhmedovs fortune in 2016. when he failed to pay, the high court issued a global order freezing his assets, including the superyacht luna. but akhmedova has yet to secure her full award due to enforcement problems in other jurisdictions, including in dubai where the luna has been moored.
Lawyers, including chemtob, say some ultra-wealthy individuals who have been in unhappy marriages for a long time are taking advantage of a hit to their finances by divorcing now to reduce settlement payments to their spouses. im hearing from people who want to file for divorce quickly while their businesses are experiencing a large fall in profitability, says chemtob, who has had calls from property developers, restaurateurs and retailers. these people want to file for divorce quickly while asset values are low, because the assets are usually valued at the date when the divorce application is made. clients call me to say, my gross receipts are down and if i file now then my spouse will get less, says chemtob.
Such tactics are not limited to the us. lawyers elsewhere also report wranglingbetween couples over asset values and timing. property, prices of which are currently volatile, poses particular challenges, notably in the uk, where it is often a big chunk of the total assets. the problem is that property prices are fluctuating, particularly at the top end of the market in the uk, says william hogg, head of dispute resolution at laurus law. one divorce settlement i was dealing with recently included a property that had to be sold it was on the market for 28m for some time and went for 19m. that has had a big effect on the division of the assets.
Indeed, divorce processes are taking longer because specialists are unwilling to commit to valuations, not just for property but anything from pensions to jewellery. from [the pandemics] impact on asset values, property values, businesses and pensions, the fluctuations have for many been significant, says kate elliott, a lawyer with family law partners in the uk.
As many rich families see their overall wealth being squeezed, elliott adds that she is also witnessing relatives becoming more involved in divorces in an attempt to protect what might be viewed as family assets particularly in international cases, where laws can conflict. the added voice of a dominant parent or sibling can quickly unravel progress, particularly where they may be applying the experience they may have of the court system in their jurisdiction, which is often significantly different to the application of the law in england and wales, she says.
Ziva robertson, a partner at the london office of international law firm mcdermott will & emery, says it is not unusual for rich parents to buy expensive properties for their married adult children and grandchildren. they may see such gifts as family property, but in england and wales such assets, on divorce, are likely to be seen as matrimonial property of the divorcing spouse and be available for division.
Matters become more complicated when there are financial structures such as trusts involved. when couples get divorced you have to then unpick what has been done and it can be tricky, says richard handel, director at burges salmon, the uk law firm.
But at the end of the day, even the richest divorces involve the same human emotions as other separations. katharine landells is a divorce lawyer in the london office of withers and acted in a divorce case for the former wife of tim steiner, chief executive of online grocery business ocado. the more money there is to go around, the more commercial the divorce deal looks, she says. but there is still the same feeling of grief when a marriage breaks down, no matter how much money someonehas.
This article is part offt wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment.