The Economics of Harm: When Legal Process Becomes Industry
Introduction
Family justice in England and Wales is built on a clear and principled foundation: fairness, transparency, and the equitable distribution of resources. Statutory frameworks such as the Matrimonial Causes Act 1973, supported by the Family Procedure Rules 2010 and Practice Directions 9A and 3AA, impose strict duties of full and frank disclosure, ensuring that courts determine outcomes based on the true financial position of the parties.
Yet, in practice, a growing concern emerges—not from the absence of law, but from the way legal process operates within its economic environment.
When legal services are billed by time, and when complexity drives time, a structural question arises:
What happens when conflict generates income?
This article examines what may be termed the economics of harm—a dynamic in which legal process, particularly within financial remedy proceedings, risks functioning not solely as a mechanism of justice, but as an economic system capable of sustaining itself through complexity, delay, and fragmentation.
The Structural Incentive: Complexity and Cost
Under the Family Procedure Rules 2010, parties are generally responsible for their own legal costs, subject to the court’s discretion. In practice, legal costs are frequently calculated on a time-spent basis.
This creates a direct and unavoidable relationship between:
Complexity,
Duration, and
Cost.
Where cases involve genuinely intricate financial arrangements—multi-jurisdictional assets, trust structures, or layered corporate entities—extensive analysis is both necessary and proportionate.
However, difficulty arises where complexity is not inherent, but constructed.
In such cases, proceedings may be framed as involving:
Multiple corporate vehicles
Hidden or disputed assets
Offshore arrangements
Cryptocurrency holdings
Complex valuation exercises
—even where the underlying financial position is relatively straightforward.
Each additional layer requires:
Review
Challenge
Expert input
Court time
The result is an escalation of costs that is not merely incidental, but structurally embedded.
The “Broke in Court, Wealthy Elsewhere” Phenomenon
A recurring pattern within financial proceedings is the divergence between court disclosure and external financial records.
Parties may present themselves as financially limited within proceedings, while:
Companies registered at Companies House indicate significant activity or value
HMRC records reflect higher income or profitability
Property interests are held through corporate or third-party structures
Financial institutions reveal transactions or assets not disclosed in court
This divergence is not necessarily visible within the confines of a single system.
Each body holds a fragment:
Companies House: corporate structure and filings
HMRC: tax and income data
HM Land Registry: property ownership
Courts: disclosed evidence
Absent systematic reconciliation, the court is reliant on what is presented, rather than what exists.
This creates a condition of evidential discontinuity, where truth is fragmented across systems that do not automatically communicate.
Alter Ego Structures and Financial Opacity
Company law, under the Companies Act 2006, recognises the principle of separate legal personality. This principle is essential for commercial certainty and economic activity.
However, where corporate structures are used to obscure rather than organise financial reality, the distinction between legitimate structuring and concealment becomes critical.
In such circumstances, courts may consider:
Whether companies operate as alter egos of individuals
Whether there is genuine separation of control and benefit
Whether assets are being diverted, retained, or shielded within corporate entities
The use of:
Multiple interlinked companies
Director-controlled entities
Retained profits
Director loan accounts
Undisclosed beneficial interests
can create a separation between legal ownership and practical control.
Where this separation is artificial, it undermines the integrity of disclosure and the court’s ability to assess financial reality.
Shadow Ledgers and Non-Transparent Financial Records
Beyond formal filings, another challenge arises: the existence of informal or undisclosed financial records—often referred to as shadow ledgers.
These may include:
Undeclared transactions
Parallel accounting records
Informal agreements
Unrecorded asset transfers
Such practices sit in direct conflict with obligations under:
The Income Tax Act 2007
The Commissioners for Revenue and Customs Act 2005
The Proceeds of Crime Act 2002
The Criminal Finances Act 2017
The existence of dual financial narratives—one formal, one concealed—creates a fundamental distortion within proceedings.
Modern Asset Concealment: New Forms, New Challenges
Financial concealment has evolved alongside financial systems.
Courts now encounter assets held in forms that are:
Less visible
Less easily traceable
Less consistently disclosed
These include:
Cryptocurrencies and Digital Assets
Operating outside traditional banking structures, cryptocurrencies allow value to be held and transferred with limited transparency as to ownership.
Offshore Accounts and Jurisdictional Complexity
Assets held across jurisdictions may be subject to differing reporting obligations and varying levels of transparency, despite frameworks such as the Common Reporting Standard.
Intangible Assets
Intellectual property, licensing rights, and interests in other entities may hold significant value without being immediately identifiable within standard disclosure.
These developments increase both the genuine complexity of cases and the opportunity to present complexity where none exists.
The Intersection with Domestic Abuse and Coercive Control
Under the Domestic Abuse Act 2021, coercive control is recognised as a pattern of behaviour that significantly impacts autonomy and wellbeing.
Financial abuse is a central component of this pattern.
It may involve:
Restricting access to funds
Concealing financial resources
Creating dependency
Manipulating financial visibility
When such behaviour intersects with legal proceedings, it does not disappear—it adapts.
Control over:
Financial information
Corporate structures
Disclosure narratives
can become an extension of coercive control within the legal process itself.
This raises serious concerns regarding equality of arms, as required under Article 6 of the Human Rights Act 1998.
Professional Duties and Structural Tension
Legal professionals are bound by clear regulatory obligations:
Under the SRA Standards and Regulations, solicitors must:
Act in the client’s best interests
Provide a proper standard of service
Act with integrity
Similarly, the Bar Standards Board Code of Conduct requires barristers to act with independence and competence.
However, where remuneration is linked to time and complexity, a structural tension emerges.
This is not necessarily a question of individual misconduct.
It is a question of environment.
An environment in which:
Increased complexity generates increased work
Increased work generates increased fees
Extended proceedings sustain ongoing economic activity
creates conditions in which resolution and continuation may exist in tension.
Conclusion: When Process Becomes Product
The legal framework governing family proceedings is robust.
The principles are clear.
The duties are established.
The powers exist.
Yet the effectiveness of these mechanisms depends on how they operate within a broader structural context.
When:
Information remains fragmented
Complexity is untested
Disclosure is incomplete
And cost structures reward duration
the process risks shifting from resolution-focused to process-sustaining.
This is the essence of the economics of harm.
Not a failure of law.
But a failure of structural alignment.
Because when conflict generates income, delay becomes profitable.
And when delay becomes profitable, legal process must be examined—not only for its legal integrity, but for its economic reality.
© 2026 Samantha Avril-Andreassen. All rights reserved.