How to fund your family law case

Solicitor Matthew Taylor advises how to deal with financing legal proceedings following a high profile divorce case last month..

With already incurred legal costs of £403,000, estimated future legal costs of £420,000 and a monthly budget for the wife of £43,350 (down from the £100,000 monthly spend during the marriage) it is not immediately easy to see how the recent mega money case of LKH v TQA AL Z [2018] EWHC 1214 (Fam) has any relevance to the vast majority of family law cases.

However, this case, like many others, deals with the thorny issue of the funding of legal costs for financial remedy and children matters. Although the sums may be astronomical, the principle of the financially weaker party being unable to fund legal advice to compete with a wealthier spouse or ex-partner is a common one.

Nevertheless, there are still several options available to help pay for legal advice:

Use savings or investments
If you have savings to utilise or investments that you can cash in, this is the most straightforward option.

Legal Aid
Since April 2013, legal aid in family law cases has been restricted to cases involving domestic abuse, care proceedings and for child abduction cases. Strict eligibility tests apply and this means that for the majority of people legal aid is no longer an option.

Borrowing from friends or family
Whether from the bank of mum and dad or a very generous friend, many people borrow monies from friends or family to fund their case. In financial proceedings, the court can take into account the need to repay a loan to a third party. Anyone entering into an arrangement to borrow money for legal fees should enter into a contemporaneous loan agreement to avoid the court taking the view that it is a ‘soft loan’ which will not be repaid.

Personal loans and credit cards
If you have a sufficiently good credit rating, you may be able to use a personal loan or credit card. Be warned however, these will attract interest rates – sometimes extremely high ones – so shop around to ensure that you get the best rate.

Litigation loan
Where there is a lack of cash but there is a property that will be sold or retained and which can be remortgaged at the end of the case, specialist providers can offer litigation loans (although not for children disputes). These are usually secured with a charge over a property and therefore often require the consent of the spouse where, for example, the family home is in joint names.

Have the other side pay
As the wife in LKH v TQA AL Z did, it is possible to ask the court to make an order that your spouse or ex-partner should meet your costs (a legal services order).

The general principles for a successful application were summarised by Mr Justice Mostyn in the case of Rubin v Rubin [2014] EWHC 611 (Fam) as follows:

1. An order can only be made where the court is satisfied that without it the applicant would not be able to obtain appropriate legal services.
2. The court must consider all the circumstances of the case, including:
a. the parties’ incomes and financial resources,
b. their financial needs and obligations,
c. whether the paying party is legally represented; and
d. whether an order would cause the paying party undue hardship or prevent them from paying for their own legal representation.
3. If the paying party has historically relied on the financial support of a wealthy third party (e.g. money from parents or a trust), the court can assume that support will continue.
4. An award should be for future costs and will only be made to cover historic unpaid costs where the legal representative will not continue to act without payment of those costs.
5. The applicant must not be able to secure a loan at a reasonable rate of interest.

Costs orders
The standard rule in family proceedings is that each party pays their own costs. The court is able to make a costs order when it is justified by the litigation misconduct of one of the parties, but this is very much the exception and not the rule.

And the result in LKH v TQA AL Z? The husband was ordered to pay to the wife interim maintenance of £26,000 per month (and the yet-to-be-determined costs of a chauffeur) along with £240,000 for her future legal fees.

Get expert advice
To discuss your separation, divorce, financial or children issues, and the estimated costs of coming to a resolution, contact the Weightmans family team for a 30 minute consultation without charge.

Matthew Taylor is a Solicitor in the Family Law team at national law firm Weightmans LLP

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