Bad Lawyers and BFA’s - The Hidden Risks of Binding Financial Agreements
In Australia’s family law landscape, there has been an explosion in demand for Binding Financial Agreements (BFAs).
When drafted correctly, they provide certainty, asset protection, and peace of mind. But when they're poorly prepared—especially by limited lawyers relying on outdated, generic, or cheap precedents—they can collapse spectacularly. The consequences? Costly litigation, unenforceable agreements, and unanticipated outcomes that can turn a client's life upside down.
Having reviewed 1000’s of BFA’s, from the cheapest to the most expensive solicitors in Australia, one theme is certain – Some solicitors should simply not be drafting or advising on Binding Financial Agreements
The Allure of “Cheap and Easy” BFAs
It’s no secret that the legal market is competitive. Many clients are drawn to low-cost fixed-fee BFAs (even just the lowest cost), often advertised by lawyers or firms promising a “quick and simple” solution.
Behind the scenes, many of these lawyers rely on off-the-shelf cheap precedent templates—barebones documents that aren’t tailored to individual circumstances. These expose clients to enormous legal risks.
1. Binding Doesn’t Always Mean Enforceable
Just because a BFA is signed and labelled “binding” doesn’t mean a court will uphold it. Courts have set aside countless BFAs due to issues such as:
Overlook critical protective provisions
Use ambiguous or unenforceable terms
Unconscionable conduct
Undue influence
Poor drafting or lack of clarity
Non-compliance with strict legislative requirements (e.g., failing to provide adequate independent legal advice as required under the Family Law Act)
Failing to address power imbalances, financial pressure, language barriers, etc
2. Failure to Tailor to Specific Asset Classes or Circumstances
No two relationships or asset pools are the same. A good BFA will carefully:
Identify specific assets (including trusts, companies, inheritances, superannuation)
Anticipate future events like births, inheritances, or business growth
Account for changes in contributions, earning capacity, or the care of children
Cheap precedent-based BFAs often use generic clauses that ignore these details. When separation occurs, the agreement might not even cover the very thing it was meant to protect.
3. Anyone can add names to a $50 precedent.
Perhaps the greatest risk of all is when lawyers treat BFA preparation as a form-filling exercise rather than a serious legal service. Good BFA drafting involves:
Stress Testing
Proper advice tailored to the client’s goals, vulnerabilities, and long-term interests
Understanding of tax, unequal interests, future contributions, etc
Drafting to address case law, risks and the potential for change
How to Protect Yourself - Ask Questions/Research
Closely check the firm’s reviews. Is there a theme with this type of work?
How long have you been operating in Family Law?
Will this agreement be prepared by a junior lawyer or paralegal?
Was it prepared from a standard precedent?
How does it apply to my specific situation?
If it is protecting ‘what I have now’, what happens if I convert those assets into other future individual and/or joint assets?
What if children are born? How does the agreement impact on rights that I otherwise would have had with children and no agreement? What if my partner misses a portion of employment for the birth and care of children? What if I do?
How is it affected by cross collarasition and capital contributions to joint and individual assets?
What effect does death have on the agreement?
How is it impacted by foreign residents, foreign assets or temporary visas?
How does the agreement address CGT and other taxation implications for current or future joint assets?
Conclusion
Binding Financial Agreements offer vital protection, but only when done properly. Relying on cheap precedents and unskilled drafting is a false economy that can unravel everything you’re trying to safeguard. In family law, the most expensive mistake is often thinking you’ve saved money.
Choose your lawyer wisely— A poorly drafted BFA isn’t just a bad investment; it’s a liability waiting to detonate.
