Legal Service payment orders

This is a relatively new type of order, introduced in April 2013, that can be made by the Family Court whereby, following breakdown of a marriage (or Civil Partnership), they can order one spouse to pay the other a regular monthly payment or a one off payment specifically to allow that party to pay a Solicitor/other legal advisor to advise and act for them in ongoing matrimonial financial remedy proceedings.

Prior to April 2013 it was already possible for the spouse who had limited means to apply to the family court for an interim periodical payments order (Maintenance Pending Suit) to include an amount towards legal costs however this recent legislation goes much further. The new legislation gives the Family Court much wider powers to include requiring one spouse to make payments not just from their surplus income but also from any capital they have and can even order property to be sold to release capital to make such payments.

These orders seek to address the inequalities arising where one spouse may be ineligible for legal aid but have little income or capital to allow him/her to secure legal advice to pursue rights against the other spouse who, in contrast may be wealthy or have control of financial assets and able to afford legal advice. The danger in such cases is that the spouse who cannot obtain proper legal advice is in a vulnerable position and may accept a settlement that is less than a fair share of the matrimonial assets, pensions and income. Such inequality has become more evident since the withdrawal of legal aid for the majority of family proceedings last year resulting in a rising number of people being forced to represent themselves in their divorce and financial proceedings as they simply cannot afford legal advice.

In theory it should now be easier to obtain help to fund legal fees however obtaining such an order is not without obstacles. An application has to be made to the court supported by written evidence and the applicant will need to prove that without this payment they could not reasonably afford to obtain legal advice to assist them in the proceedings. This includes proving that the applicant could not reasonably secure a loan to pay for the services or take out a charge over existing assets. If the first hurdle is overcome the Court will then look at the circumstances of both parties including their income, earning capacity, property and financial resources. The Court will also consider other factors including the party’s financial needs, obligations and responsibilities before deciding whether to make an order and, if so, in what terms.

In view of the growth in lenders offering loans specifically to cover litigation it may be increasingly difficult to satisfy the court that alternative funding is not available. However, although each case is fact specific, in the recently reported Judgement in Rubin V Rubin [2014] EWHC 611 (Fam) Mostyn J set out some helpful guidance including:

‘If a litigation loan is offered at a very high rate of interest it would be unlikely to be reasonable to expect the applicant to take it unless the respondent offered an undertaking to meet that interest, if the court considered it just so to order.’

The fact that the Family Court has these additional powers may assist in persuading the spouse with the wealth to provide monies towards the others legal fees to avoid a court application.