Funding options in the absence of legal aid for family law

The forecast is dark clouds but it may become clearer

Funding options in the absence of legal aid for family law will be one of the more common concerns in my virtual postbag.  Legal Aid has largely disappeared for those wanting help from solicitors, legal executives or barristers who specialise in family law.  I consider the removal of legal aid for family law to be a terrible mistake.  The costs savings that will be trumpeted about by various ministers will be offset by the increased costs of other government departments such as the Ministry of Justice who will see further increases in Litigants in Person (LIPS).  A number of judges are now sounding the alarm bells about the delays (which means costs) in the court case lists attributed to LIPS turning up unprepared or unable to progress the case.

My purpose here is to list what limited provision remains for legal aid for family law matters and the funding options or alternatives there may be out there.

Legal Aid (remains of the day)

You can still obtain legal aid (provided you qualify on capital and income) in the following scenarios:

1. If you are a victim of domestic violence.  You must be able to produce evidence of the domestic violence to your solicitor.
2. If you have a child who is at risk of abuse from a partner.  Again, you must be able to give your solicitor evidence of the abuse.  Guidance has been published on the type of evidence at the Ministry of Justice website.
3. If you and your partner agree to go to mediation.  You can also get some limited help from a solicitor outside the mediation process such as the drawing up of a consent order if the mediation is successful.  Unfortunately, mediation is not going to work for everyone.

Funding options in the absence of legal aid for family law

So what if you can’t get legal aid for family law?  What are the options?  In no particular order:

1. Are you a member of a union?  Funding assistance may be available for members.
2. Are you covered for legal assistance under your domestic household insurance?  Check the policy terms.
3. Litigation loan funding.  There are specialist providers and your family lawyer should have the contacts to assess whether you can use such a facility.  However, you will pay interest on the loan and, ultimately, you will need some capital assets (such as property) in order to pay off the loan at the end of the case.
4. Commercial lending from banks.  Unsecured loans generally available on the high street or online.
5. Credit cards.  Another source of legal fees funding if all other commercial avenues are exhausted.  Fine in the short-term if the borrowing can be cleared in the settlement.
6. Cashing in any existing investments.  There may be some savings accounts or ISA’s that could be utilised but do discuss with a lawyer first or an independent financial adviser.  Works if you have control over your own assets but not as good if the assets are joint and your partner wants to control your ability to get advice.
7. Borrowing off family and friends.  More common than you might think. But ensure it is a ‘hard loan’ – one that must be paid back and is evidenced in writing.  If the loan is seen as ‘soft’ by your partner’s lawyers, they may argue it is not to be paid back and therefore you cannot count it in as a liability when deciding finances.
8. A ‘Sear Tooth’ agreement.  This is a form of deed with your solicitors.  They will carry out the work for you if they believe that your settlement will be a reasonable one but the deed secures the costs of the legal fees against the settlement.  The usual scenario is that if a house is sold your lawyers recover their costs from the sale plus interest.  But the reality is that firms will only carry a handful of such arrangements at any one time.  They are risky for the lawyers because the settlement or court order may not be what was expected.   And there can be huge delays before the solicitors get paid even though they have no choice but to pay significant overheads each month such as staff wages and rent.
9. A voluntary payment from your spouse or partner towards your legal fees.  Not as daft or improbable as it may sound.  Your lawyer picks up the ‘phone to your partner’s lawyer and says: “let’s be sensible, we don’t want to fight in court, give us some money to cover fees so we can explore a quick resolution.  We will give you a credit for it in the settlement”.  If the lawyers are sensible on both sides this can be quick and cost-effective.
10. In the case of divorce or civil partnership financial orders: applying to the court for an order that your spouse or civil partner pays your legal fees. This used to be called an A v A application.  If you are married or a civil partner you can apply for interim financial help towards your outgoings called maintenance pending suit.  Part of this application could be for a ‘costs allowance’ to help you with your legal fees.  Various tests have to be satisfied (such as your inability to get commercial funding, legal aid or a Sear Tooth agreement with your solicitors).  A recent law change (which is not yet in force but which is imminent) will abolish the ‘cost allowance’ aspect and replace it with something called a Legal Services Order which will also go to meeting your legal fees.  Additionally, the court can provide an interim order for sale of real or personal property to provide the funds, if necessary, to meet the Legal Services Order.  (For years, matrimonial lawyers have argued that spouses should be able to apply for interim lump sum orders and interim orders for sale instead of having to wait until the end of a case. The power appears to have arrived at last, but strictly defined to only provide assistance with legal fees under the Legal Services Order).
11. In the case of financial claims against your unmarried ex-partner on behalf of children under Schedule 1 of the Children Act 1989.  It is possible to seek interim lump sums on account of legal costs but certain tests have to be satisfied.

And a word about fixed fees.

I think that about wraps it up.  Remember that you must still ensure that you have a full discussion with your lawyer about how you can fund your case.  Make sure you ask for a written estimate of costs – or bands of costs depending upon likely outcomes.  Ask for fixed fee quotes which may be appropriate in some proceedings.  I keep reading various surveys that tell me the public demands fixed fees for all types of family work.

The public should be careful what it wishes for.  Fixed fees can be a good solution for some clients.  But guess what?  Sticking to an hourly rate with a carefully agreed plan of the work the solicitor will do and the work the client will carry out, can be cheaper. This is fashionably called unbundling nowadays. It is all about having a proper discussion at the start of the case.  I talk through budgeting plans and division of responsibility and work out whether a fixed fee or hourly rate is better for my client in every single case I take on. I fully explore all funding options.  And I put it in writing to them.

I think when people talk about fixed fees they want certainty about cost.  I absolutely understand that.  But I also think that some commentators are talking about fixed fees when they are actually meaning cheap fees.  And I suspect there will be a drive from some of the new entrants to family law – like Co-operative Legal Services – to offer lower fixed fees (like loss leaders) to bring in business.  That approach will only ever work on a commoditised basis.  This means the work may be dealt with by less qualified and less experienced staff.   Like my grandmother (and yours) always said: you get what you pay for.  That’s always been true.  So if you want to fly with Fixed Fee Family Airways, be my guest.  It may be fine for you but only make that decision after weighing up all the options.