Legal aid changes next year threaten unworkable divorce costs

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Changes to legislation due in 2013, which will remove almost all family law advice from legal aid, will leave poorer spouses struggling to afford fair representation in court.

Divorce Law

The most senior family judge in England and Wales, Sir Nicholas Wall, said that many more people will have to face family courts without lawyers or any proper advice as a result of proposals included in the Legal Aid, Punishment and Sentencing of Offenders Bill.

Set to enter the statute books in April 2013, the legislation will remove whole areas of law from public funding, including nearly all family advice. The move is expected to shave £350m from the £2.2bn legal aid scheme.

Where disparity in wealth exists between divorcing partners, state-funded legal advice currently provides equality by securing access to a lawyer. However, the new Bill will limit public funds for legal advice at the end of a relationship only to cases where there is domestic abuse.

Sir Nicholas said that especially worrying are the smaller cases where there is no representation and "there is a serious imbalance between an impoverished wife and a better-off husband".

Speaking at the annual conference of the family lawyers' group, Resolution, Sir Nicholas added: "The difficulty is compounded if neither side receives sensible advice."

Specialist family law solicitors, many of whom have given up legal aid work due to its restrictive bureaucracy, are concerned about the impact of the new legislation.

"It is neither child-focused nor family-focused," said one. "Practitioners are pulling their hair out about what they're going to do. The whole bill flies in the face of an 'access to justice' ethos."

On what to do when legal aid is finally scrapped, some family law experts have suggested that other ways of funding could encompass interim lump sum payments. "So where you have a husband with cash in the bank, that can be used to pay legal fees," said another specialist.

Lawyers could also offer a 'Sears Tooth' agreement: a deed that assigns the client's settlement to the solicitor. This enables lawyers to cover the full costs they incurred in acting for the client before the money reaches the client.

If after full legal advice such an agreement is signed by the client and witnessed by an independent solicitor, it will be upheld by a court if any dispute about it arises in the future. A lump sum settlement awarded in a divorce can be legally assigned in this way.

Another method of funding could be through the bank, which may be willing to supply a loan with 'rolled up' interest, payable out of the settlement. This would probably have to be set up by a solicitor.

There is also a growing litigation-funding industry, in which lenders back legal action as an investment opportunity. "However, these schemes are very business-oriented, with lenders there primarily to make a profit," said Emma Pearmaine, head of family law at Simpson Millar LLP.

"Security would be important, and such lenders would be expecting overall assets to be substantial enough to address repayment of the loan. For these reasons the cases would have to be fairly big and not run-of-the-mill."

As well as moves by law firms away from hourly rates to fixed fees, there might be other ways of reducing the legal costs of divorce. Although the Department of Justice is cutting back on legal aid, there are plans to increase funding for mediation services by around 66%.

Another option is collaborative law, where couples and their respective lawyers negotiate agreements on key issues. This can take between 3 and 6 meetings, with both sides agreeing to sidestep the courts unless negotiations break down.

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