How Does Litigation Funding Work for Divorce?

When your loan has been agreed in principle, you must then seek independent legal advice (from another firm) before you sign your contract. At this point your litigation funding is in place. You will also get a seven day ‘cooling-off’ period.

Note that loans and charges for finance vary from lender to lender. It’s important that you compare the various options before you make a decision. For example, some lenders will charge you interest on the total amount of lending, whether you use it or not. Others will only charge interest on the money your solicitor draws.

What should I look for in a litigation funding lender?

When comparing lenders you should look for:

  • Transparency
  • Personal service
  • The speed of a decision
  • Efficiency in processing and administration

Do you need family law solicitors to help with your divorce funding?

If you are in need of legal advice for the cost of your divorce, Wiselaw researches and lists family solicitors from across the UK, from Liverpool, to Newcastle, Sheffield, Manchester, Birmingham, Leicester, Bristol, Southampton, London, and many more. Wiselaw has the right family lawyer for your needs.

How much will I pay for litigation funding?

Charging structures vary from lender to lender. You have to compare:

  • The headline interest rate (for example, 1.5% per month)
  • Whether interest is charged on the total facility or just the amount you use
  • Whether there is a ‘redemption’ fee
  • Whether the loan is offered on a no win/no fee basis (i.e. if the settlement does not cover the loan, the full loan will not be payable)
  • What administration charges apply

How is litigation funding paid?

The litigation funding is generally released in stages, directly to your solicitor. Often, money is drawn in three ‘tranches’:

  • The first appointment
  • Financial Dispute Resolution
  • The final hearing

By drawing the money in stages it means that, if your divorce is settled earlier your solicitor won’t have to draw all of the funds, saving you interest costs.

Is litigation funding a safe option?

In recent years the standards of litigation lenders has improved, and there is now a clear and transparent process in place. Underwriting is detailed, and so it’s more like obtaining a mortgage than it is getting a payday loan.

Your solicitor may have a recommendation as to which reputable lenders to consider, and a good divorce lawyer will know how best to apply and draw down the funds.


Do you need help with your divorce?

Get in touch now with one of our panel of specialist local family solicitors.

If relevant, please include below the name of the other party (so the solicitor can check they have not already provided advice to your partner):

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The information on this website is to be considered a guide and is therefore not legal advice. You use this information with the understanding that Wiselaw does not accept liability for any direct or indirect losses as a result of anyone relying on or acting upon the information on this website. Whilst we endeavour to provide accurate information, Wiselaw does not accept liability for any errors or omissions on this website.