Divorce funding

Inevitably a major concern for clients about to embark on divorce and related financial proceedings is how to fund their legal expenses.

 

For divorce lawyers this should always be at the forefront of our minds too – and not just because we want to get paid! Divorce proceedings can be stressful enough at the best of times but worries about costs do not help. The key is to try to keep the costs at as reasonable level as possible but also to ensure that the client is kept informed as to the costs they have incurred, the costs which are being incurred and the likely level of the final bill. The problem is that final estimates can be difficult to provide because disputes can follow so many different paths.

 

There are various funding arrangements available. Some clients have the funds or have assets that can be cashed to provide the necessary fighting fund. Occasionally family members or friends are prepared to loan money for this purpose but beware, as the court can sometimes be sceptical as to whether these loans are truly recoverable. For others loans can be obtained from banks or specialist litigation funders although it is important to avoid too high interest rates. In some cases the lawyer will be prepared to enter into a Sears Tooth Agreement which involves the lawyer deferring charges until the conclusion of the case but taking a charge over the eventual settlement to ensure repayment.

 

A further important option is that since April 2013 parties have been able to apply to court for a Legal Services Order. This enables the court to order a more financially secure spouse to make a payment or payments to the less well off spouse to fund their legal services. It is an important weapon in these post legal aid days to try to ensure that the parties are on a more level playing field so far as costs are concerned, but it is perhaps surprising that these orders are not slightly easier to obtain. A number of hurdles have to be overcome to include satisfying the court that appropriate legal services would not otherwise be available and that it is not possible for the applicant to obtain a loan or the benefit of a Sears Tooth agreement. If assets are available one would have thought that they would be better utilised in suitable cases rather than forcing a spouse to take out a loan with interest liability which will only further deplete the joint assets available for distribution. Additionally whilst the court continues to drown under the flood of litigants in person this must represent a simple way to reduce the problem.  

 

In any event for some parties a Legal Services Order is certainly an option to consider.