When you need to take specialist legal advice following a separation, one of your concerns will most likely be how you will fund this. There are a number of options available to consider including checking your eligibility for public funding (legal aid) -although the availability of this is very limited indeed in terms of firms who offer this and the kind of case that is eligible.
Your solicitor should always talk to you openly about fees and will give you estimates of the likely costs and will discuss with you how you will fund your case. It is standard practice at most firms for you to be asked to pay an agreed sum at the outset and further sums on a monthly basis as the situation requires. You need to consider if you can fund this from your own resources, or, if this is not sustainable then there are other options to consider including as set out below:
Funding from Family/friends
Family/friends might offer to pay your fees or contribute to them if you are struggling. This is sometimes documented using a loan agreement. Before signing any legal document, you should take independent advice in relation to the agreement you are being invited to sign. Perhaps more commonly family support is supplied informally. In such cases, getting reimbursement from the marital resources further down the line to repay the money can be hard especially where money is tight because the support is seen as a ‘soft loan’ with insufficient funds to allow for repayment. If family or friends have offered to pay your fees or contribute to them please highlight this to your lawyer in advance so they can advise you.
A Legal Services Order
If your spouse is in a far superior financial position, you can consider applying to the court for funding towards your fees which is called a legal services application and order. Once obtained it can provide instalment lump sum payments from your spouse to you to pay your legal fees. When making an application like this, the Court will consider a number of criteria such as needs, resources, obligations and responsibilities, as well as any steps taken to avoid legal proceedings such as mediation. The court will also look at the need for proportionality and saving unnecessary expense in an attempt to assist the parties both having access to justice on an equal footing under Section 22Z(b) of the Matrimonial Causes Act 1973.
A Specialist Litigation Loan
There has been recent coverage in the press and legal services sector about some clients being found to have been inappropriately forced to take out 18% interest Novitas loans for their family legal fees. You should never take out such an arrangement without understanding all your options and checking the terms very carefully indeed to ensure they are the best option for you.
However, in some cases, these loans can be very helpful indeed and there are many providers of them on the market. When such a loan is the preferred option, be sure to check exactly how the loan will work and its terms and to take independent legal advice before signing up to anything. You may be able to obtain a personal loan from a bank or other institution with lower rates than a litigation loan.
What should be considered when taking out a litigation loan?
- How much do you need to borrow? Your legal adviser will give you an estimate of what costs could be incurred.
- Is there an affordable mechanism for repayment?
- Any loan documentation will need to be understood so make sure you have the documents explained by an independent legal adviser (not your family lawyer).
- Certain loans can be offered without security, but others will require security. Those with security can offer lower interest rates. If a loan is secured against your home, then the property may be at risk if you cannot repay the lending.
Your legal team cannot recommend a lender to you so you need to do your own market research. Such organisations as the Level Group, and Iceberg have established litigation fund products and so too do some private banks.
In summary, working out how you will fund your legal fees is an important part of the process and there are options available to you which you should discuss with your lawyer at an early stage in detail.
If you would like to know anything more about the subject covered in this article please do not hesitate to contact a member of the family law team for further advice.