Funding Your Case

Funding legal proceedings is a challenge, even where the parties are asset rich, because there tends to be a shortage of cash until the case is settled. There are a number of solutions, including litigation funding, which we will explore with you.

In divorce cases, the general rule is that each side must pay their own legal costs. In most cases, the wealthier party is under no obligation to pay for the other party’s on going legal costs, although they are taken into account in the final outcome. That can lead to an interim funding difficulty.

In some circumstances we may agree that you settle your outstanding account when your case is over and you have received your settlement. In that case, you would enter into an agreement with us which is known as a “Sears Tooth Agreement”.

Under this arrangement, we would fund your case and in exchange you would assign (agree to transfer) part of your financial settlement to us. At the end of your case, we would take payment of our outstanding fees from your financial settlement. Such an agreement involves an element of risk for us, and there is also a funding cost, so we will charge interest on the amount lent.

If you are considering entering into a Sears Tooth Agreement, you should consider:

• the complexity and likely duration of your case
• the value of the assets involved and your likely settlement
• whether any other sources of credit are available to you

Alternatives sources of funding include:

A Legal Services Payment Order: This is a court order where one party is ordered to pay to the other party a sum of money to enable them to obtain legal services. For example, a working husband could be ordered to pay his non-working wife a sum of money to enable her obtain legal representation from a solicitor that she could otherwise not afford. To obtain such an order you would have to satisfy the court that you are not reasonably able to secure a loan from other sources and that your solicitor is unwilling to enter into a Sears Tooth agreement.

Bank loans: Another option is a bank loan, but this is likely to depend on you credit rating and borrowing capacity.

Litigation Lenders: There are specialist lenders who are able to lend you the money to pay for your legal fees in exchange for repayment from your divorce settlement. These lenders have strict criteria, including being satisfied that you will receive a settlement which will be sufficient to repay the loan and meet your future needs.

Borrowing from family or friends: This is not generally recommended as the courts may view this as a “soft” loan and not take it into account when looking at the overall value of your assets.

Please contact Justin Moss for further information.