How Does Litigation Funding Work in Divorce?

Lowri Walters
Author:
Lowri Walters
Family Law Solicitor
Date:
10/12/2021

Simply put, litigation funding lets you borrow money to cover your legal costs and then pay the money back from your financial settlement once you’ve both decided who gets what in your divorce.

As family litigation loans are becoming more and more popular, let’s look at what litigation funding might be available to you, as well as other ways you can pay for your divorce.

Litigation Loans

You can secure a litigation loan from a specialist family litigation funding provider to pay for your divorce, but it’s really important that you are cautious when doing this to make sure you:

  • Are borrowing from a reputable lender
  • Understand the terms of repayment
  • Are aware of the interest rates
  • Know whether security is needed

The loan will be considered a debt when sharing out your assets and debts in the matrimonial pot. This means the amount you borrow will be taken out of your share of the assets, but it’s important to remember a small cost now could see you financially protected in the future.

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Commercial Loans

Some people fund divorce proceedings by using their credit cards or taking out a commercial loan from a commercial lender or bank and repaying it with their final financial settlement.

You should consider the same things that you would with a litigation loan. This will be also be considered a debt in the asset schedule.

Private Borrowing

People often resort to asking mum and dad, family or friends to loan funds to pay legal costs in divorce, as it is more accessible. Even if the agreement is casual for you, you should still draw up a loan agreement and keep evidence of all the funds received and repayments made for reference later in Court proceedings.

Legal Services Order

Section 22ZA of the Matrimonial Causes Act 1973 (‘MCA 1973’) gives the Court the power to make on Order requiring your husband or wife to pay for your legal costs in divorce.

This is called a Legal Services Order and the Court will make this Order if it is satisfied that:

    1. You can’t meet your legal costs

    2. Your spouse can financially afford to pay your costs

    3. It would not be reasonable to enter into a loan with good terms or a Sears Tooth Agreement


Fixed Fees

Fixed Fees are a great way of keeping track of what you spend and keeping legal costs to a minimum. Even if you only pay a Fixed Fee for a part of your divorce and pay for your financial settlement separately, it can help you budget and know how much you will pay in advance.

At Simpson Millar, we offer a Fixed Fee Divorce for £600 (VAT included) and we also offer a Fixed Fee Consent Order.

No matter how you pay for your divorce, we can help you find the best option for you. Our Family Law Solicitors are always transparent about costs and we will be open and honest with you every step of the way.

To see even more options for paying for your divorce, visit How Do I pay for my Divorce and Financial Order?

For initial legal advice call our Family Law and Divorce Solicitors

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