One of the big stumbling blocks since legal aid cuts and with less people eligible for financial assistance with their legal fees, is how to fund a divorce, particularly if income is tight or you have no savings.
Too often, I see cases where one party has been the breadwinner and the other the homemaker, and the breadwinner leaving the family home, leaves the homemaker financially vulnerable. People can feel overwhelmed and distressed about legal fees, particularly when dealing with divorce, finances and children.
There are a number of funding options which are available to you. I have outlined these below.
This is the norm. You and your spouse both pay your own legal fees. It is usual to be asked to make a payment when you first instruct your solicitor and for you to be billed monthly for time spent on your matter. For the divorce, fixed fees may be available. Any additional costs, such as, Court fees or third-party expert fees may also need to be paid for in advance.
Costs Orders to recover legal costs from your spouse in divorce are possible if you have claimed an Order and the Petition cites adultery or unreasonable behaviour. You can, and should, discuss this with your solicitor as costs are often negotiated with your spouse’s solicitor.
As with all private funding, I encourage you to look at your income and expenditure and adjust if possible. Maximise your hours at work, consider the use of savings, and ensure you are claiming all state benefits that you are entitled to. I always recommend an appointment with an advisor at the Citizens Advice Bureau who can help you with this.
Loans from Friends or Family
You may have a family member or friend willing to help you with your legal costs. A gift or loan from this source has its benefits, including either no, or reduced, interest rates. However, loans from family or friends can be treated differently by the Court and therefore both you and the lending party should always take independent legal advice before committing to anything.
Since 2013, there has been a dramatic reduction in legal aid availability and eligibility. Current eligibility is very limited and is largely preserved for victims of domestic abuse and Public Law children care cases. Applicants are subject to gateway criteria and a means testing assessment.
Commercial Loans or Remortgaging
You should obtain independent financial advice from an Independent Financial Advisor (IFA) when considering these options. Interest rates, length of term, repayment amounts, and affordability should be considered and compared for the best option. With a remortgage, if the property is in joint names with your spouse then their consent would be required. A remortgage is also dependent on your mortgage provider’s willingness to accommodate your request, and this will depend on the existing loan to value in the property, as well as many other risk and stress test criteria they utilise.
Litigation loans are different to commercial loans and are offered by specialist providers. Providers make an assessment of your assets and any potential settlement you may receive from the Court. Payment is not made directly to you but to your instructed solicitor who will draw down on the funds in tranches to pay your invoices as they are raised. Your solicitor would need to be in agreement to enter into the litigation loan with the provider. These litigation loans attract substantially higher interest rates and so again, it is imperative that advice is taken from an IFA before taking out any such loan.
Legal Expenses Insurance
Legal expenses insurance is typically a bolt-on to your car and/or home insurance policies. I recommend you check any such insurance you may have for your cover levels. Sometimes it can cover family law, however there may be limitations on choice of solicitor and levels of assistance.
Legal Services Order (LSO) and Maintenance Pending Suit (MPS)
Both of these involve applications to the Court. A Legal Services Order (LSO) involves an application requesting your spouse pay towards your legal costs in connection with your divorce and financial proceedings. Strict criteria applies and legal advice should always be taken from your solicitor before initiating this option. An application should only be made if you can prove you have exhausted any and all other funding options.
A Maintenance Pending Suit (MPS) application can be applied for as well as, or instead of an LSO but it is for all your other reasonable financial expenses, not your legal fees. It orders your spouse to pay towards your interim needs if there is a deficit between your income and your outgoings. A statement of means and a sworn statement needs to be filed with the Court. If successful, these payments will remain in place until the end of the main divorce suit.
Please contact a member of the Family & Relationships team to arrange a free initial consultation where we can talk through your options with you.