How to pay for legal advice on your divorce when your partner controls the cash
The funding of legal costs during a divorce can be extremely difficult and stressful, particularly where one person in the marriage has control of the finances or has a much higher income.
As a family and divorce solicitor, I am seeing that this issue has become all the more prevalent as a result of the cost of living crisis. Sometimes, the wealthy spouse will have always managed the families’ finances and clients have little access to cash or assets. Clients can be very worried about how they will fund their divorce and we can help them come up with plan to ensure that they can cover their legal fees.
The starting point when a couple decide to separate or divorce is that each person will be responsible for their own legal costs. However, if you are have no funds available to pay for your legal fees, then there are options available to help ensure that you have the funds to cover the legal costs incurred throughout your divorce. Let’s look at some of them.
Legal services payments orders
A legal services payments order is an order applied for during the course of a divorce which will enable you to obtain funding from your wealthy spouse, for your legal costs.
The court is able to take a flexible approach to these orders and they can grant the order by way of a lump sum or as monthly instalments. They can be granted to support you up to a certain stage in the proceedings (such as the financial dispute resolution appointment) but further orders can be granted during the proceedings if this is deemed necessary.
In order to be successful in an application for a legal services payments order, the court would need to be satisfied that you have attempted to seek funding for legal costs from other sources. As such, the you would need to prove the following points:
- You do not hold assets which could be used to pay legal fees.
- You cannot borrow money in the form of a commercial loan, litigation loan, or from friends or family.
- You have not been able to agree an arrangement with their solicitor that the payment of legal fees is deferred until a settlement has been reached and monies have been paid out. A letter from a senior partner at the law firm you are using confirming that they are not willing to defer payment of their fees is likely to be sufficient for these purposes.
Before granting an order, the court will need to assess the financial circumstances of both you and your spouse and consider the effect on both of you if the order is not made. For example, would an order cause financial hardship to your spouse or prevent them from paying their own legal fees?
The court will make an order based on an estimation of the legal fees that will be incurred. If the full amount is not incurred, the court can order the surplus to be returned to the payer. Alternatively, the amount advanced can be taken into account when reaching a final agreement on the division of matrimonial assets.
It is important that the parties attempt to reach an agreement outside of court because if it is proved that that no negotiations have taken place, the court can reduce the amount of financial provision ordered. Furthermore, it is a requirement of a legal service payments order that the applicant has investigated whether they would be entitled to a litigation loan, see below.
Litigation loans
There are lenders who specialise in funding litigation in family and divorce cases. As you would expect, the lenders typically work on the basis that the loan is provided to you on the basis that it will fund your legal fees (including barristers and other experts you may need to use). The amount borrowed will be repaid from your settlement monies before the balance is paid to you when your divorce is finalised.
These types of lenders will not grant a loan in circumstances where the applicant holds insufficient assets for security for the loan. As such, if you have little or no assets in your name, a litigation lender will not provide the loan.
Costs orders
Costs orders are when the court decides that your spouse should contribute towards all or some of your legal fees at the end of the proceedings, but such orders in divorce cases are rare. The court will only grant a costs order where it considered that your spouse’s conduct in relation to the divorce proceedings has been poor. Poor conduct could include a failure to comply with deadlines set by the court or when your spouse has not been transparent about their finances.
However, the court has greater flexibility to grant a costs order in your favour during an application for a legal services payments order. This means that you may be able to recover some of your costs for that application.
Funding monthly outgoings
It is important to know that a legal services payments order is just an order for the payment of legal services. If you are also struggling to pay your bills and other basic outgoings, you can apply for maintenance to be paid whilst the divorce is ongoing. This is an application for Maintenance Pending Suit.
As we have seen there are options available to anyone who is worried about how they will cover their legal costs on divorce. A good solicitor will be able to discuss your options and help you to move forward.
Jenny Carter is a solicitor in the family and divorce team at Debenhams Ottaway. Jenny can be reached at jac@debenhamsottaway.co.uk or on 01727 738255.
