If you have separated and are in the process of agreeing arrangements regarding your finances or children, funding your legal case is a key consideration. Legal proceedings, whether related to divorce, financial remedy applications, or child arrangements, can involve significant costs. There are a range of options available which your lawyer will discuss with you in the initial meeting. After your initial meeting, you will be provided with a scope of work and fee estimate for the work likely to be involved in your case.
In addition to solicitor fees, other costs may arise depending on your case. For example, you might need to engage a barrister to represent you at court hearings, or obtain an expert valuation report for a business or property, engage a pensions expert, or instruct an independent social worker to report on children’s welfare. These additional expenses, known as disbursement fees, can add up quickly and often need to be paid upfront..
To help you plan ahead, we’ve outlined the main funding options available to individuals to cover their legal costs:
Most individuals choose to pay their legal fees privately, using savings or investments or personal credit cards. We invoice our fees monthly, providing a clear breakdown of the work completed so you can manage costs on a pay-as-you-go basis. Legal fees can quickly add up especially in complex or urgent cases. If your funds are tied up in property or illiquid investments or you have been excluded from the family finances, accessing cash may be difficult.
If you are using savings to meet your legal costs, you should consider taking financial advice on whether it is better financially to use savings which could be incurring interest or to explore your borrowing options.
If you have family or friends willing to help out with legal fees this can be a flexible and interest free way to fund your case. However, you should make sure to formalise these agreements in writing to avoid misunderstandings about repayment terms and whether the funds were a loan or a gift.
Having a formal loan agreement in place may help show that the loans are a genuine liability that need to be repaid. This may prevent them frombeing written off as ‘soft loans’ or gifts that will not be paid back. However, there is no guarantee the court will accept such loans as liabilities.
Some lenders offer litigation loans to help with legal fees. The loans are often secured against the financial settlement you expect to receive and are repaid once your cases concludes, but drawn down on each month to pay your legal costs as the bills arise. While litigation loans can provide necessary funding, they often carry high interest rates which could result in repaying significantly more than you initially borrowed. It is important to review the terms of a litigation loan carefully before committing to it and the lender will ensure you take independent advice before proceeding.
Litigation lenders will in some cases loan funds for pre-issue negotiation, arbitration or contested financial proceedings. We have a number of lenders that we can speak to, on a no-names basis, to discuss whether they may be able to help in your individual circumstances.
In some cases, we can ask for a contribution from your spouse or partner to help fund your legal costs. If they will not agree, we may be able to apply for an LSPO on your behalf. An LSPO is an order made by the court requiring your spouse or partner to contribute towards your legal costs. If you don’t have access to funds but your partner does, you may be able to apply for an LSPO to assist with fees until a settlement is reached or final order is made either by way of monthly payments or a lump sum.
In deciding whether to grant an LSPO, the court will consider whether you can reasonably meet your legal costs by way of other means and so it is important to consider all of the above options first and be prepared to explain why they are not feasible. The court will want to see evidence that you have tried to obtain funding elsewhere e.g. by applying for a litigation loan or financial institution. While an LSPO is different from a loan as it is ordered by the court, you still might have to repay the LSPO in full or in part from your financial settlement depending on your circumstances.
The best funding option for you will depend on your individual circumstances and financial situation. Some factors to consider are:
If you’ve taken out a litigation loan and your settlement falls short, the loan will still need to be repaid in full plus interest. It is therefore crucial that you review the loan terms before agreeing to them as you may have to repay the loan using other assets or income to cover the shortfall. Litigation lenders will only typically lend in cases where they are satisfied that there are enough assets to repay the loan and to meet your own settlement.
You may combine various funding methods, depending on which options you choose. For example, you could use a mix of personal savings and loans from family or friends and if this runs out, you could later pursue other options. However, it is important you have a plan in place for covering your fees at the outset of engaging your solicitor – we will discuss this with you.
Yes, your funding choice can impact your financial settlement. Debts and liabilities are considered by the court when dividing assets. If your funding option is recognised as a genuine liability, then it could reduce the net assets available to you to meet your needs. Depending on the total asset pool to be divided, if you do not have sufficient assets in your name to meet your needs, you could be awarded a higher percentage of the joint assets to cover your liabilities.
In private family law matters, there are very rarely clear ‘winners’ or ‘losers’. In both child arrangements and financial remedy proceedings, the starting point is that each party pays their own legal costs regardless of the outcome. The court does have the power to make costs orders in exceptional cases, such as when one party has been unreasonable, purposefully misleading or caused significant delay or where there are some other interim applications.
Costs orders are becoming more common in financial remedy proceedings where an individual is not complying or being obstructive but they are not guaranteed and should not be relied upon as a way of funding your case.
Legal aid availability is extremely limited in family law proceedings. In private family law matters you must provide evidence of domestic abuse against you or child abuse to qualify for legal aid. There are also financial eligibility criteria for which income and capital assets are taken into account. Ashfords LLP do not take on legal aid cases and so would direct your enquiry to another firm who can assist.
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