Funding legal proceedings can be a struggle, particularly when matrimonial assets are tied up and awaiting division as part of a financial settlement. Fortunately, the court is able to assist and can make an order for one party to make payments to the other to enable them to meet their legal fees.
Funding legal proceedings can be a struggle, particularly when matrimonial assets are tied up and awaiting division as part of a financial settlement. Fortunately, the court is able to assist and can make an order for one party to make payments to the other to enable them to meet their legal fees.
If you have a family law issue and you require legal advice to understand your options, contact specialist family law solicitor Naheed Taj. Naheed is a highly acclaimed family solicitor with a successful track record in dealing with complex and challenging family law, divorce, and child cases.
Since 2013, under ss22ZA and 22ZB of the Matrimonial Causes Act 1973 (MCA), the court has been able to make orders requiring one party to a marriage to pay the other an amount of money for the purpose of enabling them to obtain legal services in relation to the proceedings. These orders are known as Legal Services Payments Orders (LSPO).
What sort of payments can be made under an LSPO?
Under an LSPO, the court can order the following types of payment:
- Payment in instalments
- One off payment
- Payments for a defined period of time. This may cover the entire proceedings or up to a particular stage
- Deferred payments
What is the process for obtaining an LSPO?
The application for an LSPO in Form D11 must be supported by written evidence and also include a detailed estimate of the costs already accrued and those yet to be incurred. The court needs to be satisfied that the applicant has attempted to seek alternative means of funding from other sources. The applicant will need to prove the following:
- They do not have any assets that could reasonably be used to pay off the legal fees
- They cannot borrow money in the form of a loan, whether this is a soft loan from a family member or friend or from a traditional lending organisation. Written evidence of the refusals should be appended to the application
- They have not been able to agree an arrangement with their solicitor. A letter from the solicitor confirming this should be attached to the application
Even if the application is successful and the court orders an LSPO, the parties can, and will, be penalised if they refuse to negotiate. In a 2021 case, although the wife successfully obtained an LSPO, she failed to negotiate openly and reasonably. The judge subsequently penalised her by reducing the costs order made in her favour by 50 per cent.
What does the court consider before making an LSPO?
The court cannot make an LSPO unless it is satisfied that, without the payment, the applicant would not reasonably be able to obtain appropriate legal representation for the proceedings. The applicant must also show they are unable to secure a loan to pay for the services, evidence of refusal by at least two commercial lenders must be supplied to the court.
In deciding whether an applicant can reasonably obtain alternative source funding, the court would be unlikely to expect them to sell or charge their home or deplete a modest amount of savings. Solicitors acting for the applicant will also need to provide a statement that the firm itself is not willing to enter into a Sears Tooth arrangement. This type of arrangement assigns the client’s financial settlement, or part of it, to the solicitors in order to meet their costs at the end of the case. The applicant’s solicitors should ensure that there is sufficient evidence placed before the court to confirm they have reached their costs tolerances.
As stated above, the court will not make an LSPO unless it is satisfied that, without the payment, the applicant would not be able to obtain legal services. Essentially, the court looks to the future, and an LSPO will only be awarded to cover historic unpaid costs if, without such a payment, the applicant could not secure legal services going forward. However, this does not necessarily mean the whole of the historic costs will be met by the LSPO, which will be judged on the facts and circumstances of the case at hand.
The court must have regard to the following under section 22ZB (1-3) MCA 1973:
- The income, earning capacity, property, and other financial resources which each of the applicant and the paying party has or is likely to have in the foreseeable future
- The financial needs, obligations, and responsibilities which each of the applicant and the paying part has or is likely to have in the foreseeable future
- The subject matter of the proceedings, including the matters in issue within them
- Whether the paying party is legally represented in the proceedings
- Any steps taken by the applicant to avoid all or part of the proceedings, whether by proposing or considering mediation or otherwise
The court will also consider the effect upon the other party if they are ordered to pay, such as whether an LSPO will cause them undue hardship or prevent them from being able to pay their own legal costs. If their financial circumstances are not clear, the court will make “robust assumptions” about their ability to pay.
Will I have to repay the LSPO back to my spouse?
At the time of making the order, the court may not have the full picture of the paying party’s financial position, and worked on an estimate of legal costs when making the LSPO. This means that at the end of the case, the court may require the receiving party to repay part of the sum they received once the legal costs for the entire case are known.
What alternatives are there to an LSPO?
If an LSPO application has been unsuccessful, there are many alternatives that can be explored that will help fund legal expenses. If borrowing from friends and family is not an option, and lending money from your ex is also off the table, other options worth examining include:
- Utilising funds from a credit card
- Personal loans
- Obtaining a loan from a credit union
- Legal expenses insurance. This may already be in place with your home or car insurance policy
Obtaining funds from an alternative source would enable the court to consider the loan when dividing the matrimonial assets, and make adjustments to the settlement accordingly, if deemed appropriate.
Find The Best Divorce & Family Lawyers Near You
We independently review and list the top divorce lawyers and family solicitors in the towns and cities near you. 100% free.
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.
