DIVORCE – Where do the funds come from now?

With the demise of legal aid funding for family law cases, where is the funding going to come from now?

Divorce can be one of the most stressful and emotionally challenging life events that you may go through, so support is crucial particularly where finance is concerned.

divorce

The Remains of Legal Aid

Provided that you qualify with regard to the boundaries of capital and income, Legal Aid is still obtainable if:

  • You are a victim of domestic violence
  • If there is a child that is at risk of abuse from a partner
  • If mediation is agreed to by both you and your partner.

Funding Options

So what are the other options for funding if you are not entitled to Legal Aid?

  • Some unions provide legal funding assistance for their members.
  • Check your home insurance policy, you may be covered for legal assistance.
  • A litigation funding loan.  You will need some capital assets to pay off the loan at the end of the case.
  • An unsecured bank loan.
  • A credit card is ok for short term borrowing, but ensure you clear it with the settlement.
  • Raise capital by relinquishing existing investments.
  • Borrowing from family is common, but make sure there is a written loan agreement that your solicitor can use as part of the proceedings.
  • A Sear Tooth Agreement with your solicitor.  Here the solicitor will carry out the work and take their fees from the settlement figure.
  • Apply to the courts for your partners to pay the legal fees of the divorce.

Legal Developments

The Young v Young case, Britain’s longest running and most bitter divorce battle, has highlighted that third party litigation funding may be the only way for some clients to get access to justice.  This however was not your “ordinary” divorce case but one of the super-rich.  Michelle Young, the estranged wife was awarded £20 million but maintained throughout the whole case that her husband, Scot Young, was “squirreling” money into offshore accounts and was worth billions.

With the case running for some 7 years and running into £1.6 million in legal costs, third party litigation funding came into play in this case.  Although the judge described the cost of the proceeding as “truly eye-watering” he also stated:

‘I make it equally clear that I do not want to say anything that makes it even more difficult for litigants to obtain litigation funding in the future, particularly given that there is no legal aid available in this area any more.’

Although this particular case related to the super-rich it still illustrates how third party funding may be the only way that a divorcee has the possibility of access to justice, especially in cases where a former spouse takes actions to “starve” the other of funds and makes the division of matrimonial assets difficult.

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