Funding & Paying Legal Fees During A Divorce

Financial remedy matters are dealt with alongside divorce proceedings. If your spouse is not willing to agree to provide full and frank financial disclosure or is not communicating in terms of finances arising from a divorce, then it may be necessary to apply for financial remedy proceedings through the Court.

Generally, financial remedy proceedings entail three hearings:

If matters are more complex, then there may also be additional hearings. For example, if someone else with interest in a property is required to join the proceedings, or an enforcement application is necessary because your spouse is not complying with the Court’s directions.

Legal fees can escalate substantially the longer the financial matters are ongoing, and this can be worrying if your money is tied in assets and/or your cash flow is tight.

How do I raise funds to pay my legal fees when going through a divorce?

There are many ways of funding your divorce case if you do not have the money available:

1. Loan

One common way in which people fund their legal fees is by taking a loan from a bank or using their credit cards. Each bank will have different interest rates so it is best to check with your bank how much you can borrow and what your monthly repayments will be.

This is a commercial loan and therefore, if there are sufficient funds in the ‘matrimonial pot’, then the Courts will try and provide both parties with a clean slate, thereby taking into consideration the outstanding loans when distributing the assets.

Your monthly repayments can also be considered an ‘income need’ if there is not sufficient capital available to pay the loan outright.

2. Borrowing from family and friends

If you are considering borrowing money from family and friends to help fund a legal case then ensure you have a written loan agreement with them confirming the amount of money they are lending you, and how they expect to be repaid, i.e. a monthly repayment or a lump sum following the resolution of financial matters.

The loan agreements can form part of your financial disclosure. These loans are, however, considered ‘soft loans’. This means that the Court may not consider these loans as seriously as a commercial loans, particularly if there are insufficient assets in the matrimonial pot. The general assumption of the Court is that your family or friends are unlikely to take you to Court for repayment.

3. Litigation funding

There are companies that specialise in providing loans for litigation. The advantage of a litigating funding company is they will look at the matrimonial assets as a whole (whether currently in your name or not) to see what you are likely to recover from your settlement. They could seek to put a charge against a property as security. Litigation loan providers can provide the loan in lump sums having considered your lawyer’s estimate of costs.

The disadvantage of a litigation loan company is that its interest rates are normally much higher than the bank’s. However, they do not usually require you to repay the loan (the capital and interest) until after the resolution of your financial case.

4. Legal Services Order

If you do not have sufficient income to cover your legal fees but your spouse does, then one option is to ask your spouse to pay your legal fees. The money is essentially being paid from the same ‘matrimonial pot’.

If your spouse refuses to pay your legal fees then you can make an application for a Legal Services Order at the Court. You need to have issued the financial remedy proceedings already in order to make this application. Also, you will need evidence that at least two commercial lenders have refused your loans to pay for your case. The Court will consider you and your spouse’s income and expenditure to determine whether your request is reasonable. If the Court is satisfied that your spouse can afford to pay your fees then such an order will be made.

It is important to seek the assistance of a specialist family lawyer to ensure you are fully aware of your legal position when going through a separation or divorce.