Legal Services Payment Orders: Equal footing for the divorcing couple?

This article was first published in Today's Family Lawyer on 10 December 2020

11 December 2020

As practitioners, we know that clients are often surprised to learn that, when it comes to dividing up the family assets upon divorce, not only does it not matter in whose name the assets are, but also the court can order them to pay their spouse’s legal fees during the legal proceedings.
 

These are known as legal services payment orders and are a different beast from costs orders made at the determination of a case. With legal services payment orders there is no suggestion that one party is being ordered to pay the other party’s costs as a form of penalty; the aim is to put the parties on an equal footing so that they can obtain legal advice and representation.

The court has wide reaching powers in this area, as demonstrated in the recent case of MT v VA (Second Application: Legal Services Provision order) [2020] EWHC 3087 (Fam).  In that case, neither the husband nor his wife owned assets of any significant value, although the wife came from a family that had previously been very wealthy.

She was also involved in litigation in Washington in which she and her fellow claimants were claiming a very substantial sum. However, so far the litigation had been unsuccessful. The husband sought an order that his wife pay his legal fees of £95,000: £58,000 to clear arrears owed to his solicitors and £37,000 for further advice and assistance from them.

In this case Mrs Justice Roberts was satisfied that the husband did not have the means to procure legal advice from his own resources, that he was unable to borrow from a commercial litigation funder, that his solicitor was not in a position to enter into any form of Sears Tooth arrangement in the particular circumstances of this case, and that legal advice could assist the parties to reach a settlement.  She then had to consider whether or not the wife was in a position to satisfy a court order in the amount that her husband was seeking.

After considering the principles in Rubin v Rubin [2014] EWHC 611 (Fam), Mrs Justice Roberts was satisfied that the wife would be able to obtain the funding to meet a legal services payment order and that this would not cause her undue hardship or prevent her from obtaining her own legal advice.  She ordered the wife to pay her husband’s solicitors £95,000. Mrs Justice Roberts explained that she had not made this order simply because the wife came from “a family which has enjoyed stratospheric wealth in the past and thus her pockets are considered to be deeper than H’s.“  She made it clear that she was taking a robust approach based on “the clear conclusion that the financial largesse she has enjoyed to date is likely to continue from whatever source or sources it has historically come.”

The person in the street might be even more surprised to learn that one unmarried parent can be ordered to pay the legal fees of the other, effectively funding a claim against themselves (albeit for the benefit of the child) for financial provision pursuant to Schedule1 of the Children Act 1989 and in respect of the arrangements for the child pursuant to section 8 of the Children Act 1989.

The legal services payment order provisions do not extend to proceedings under Schedule 1 of the Children Act 1989: applications for costs funding are still made as an interim application.  The recent case of Z (Schedule 1: Legal Costs Funding Order; Interim Financial Provision) [2020] EWFC 80 concerned a three week old girl, known as Zoe.  Zoe’s mother applied for an order that Zoe’s father pay, amongst other amounts: her legal fees already incurred with her solicitors; her future legal costs for her application under Schedule 1 of the Children Act; and her future legal costs in respect of the arrangements for Zoe’s time with her father pursuant to section 8 of the Children Act 1989.  Mr Justice Cobb ordered that Zoe’s father should pay £60,504 in respect of legal costs that the mother had already incurred, £65,000 for future legal costs of her claim for financial provision from Zoe’s father, and £25,000 for her legal costs of the section 8 proceedings.

The judge commented that the firm currently instructed by the mother “is not a charity, nor it is a credit agent”, saying that  “it is neither fair nor reasonable to expect the firm, and chosen counsel, to offer unsecured interest-free credit in order to undertake their work. In this respect, I am concerned that the mother and Hunters should not become bound or ‘beholden’ to each other by the existing debt.”

The mother was not so successful in respect of the debt owed to her former solicitors.  Despite the argument that the argument that it would be unfair to leave the mother with such a substantial debt, Mr Justice Cobb declined to make an order for payment of more than £70,000 in legal fees owed to her previous solicitors, on the basis that this was not necessary to enable her to obtain legal representation, in accordance with the principles in Rubin.

This article was originally published in Today's Family Lawyer on 10 December 2020.

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About the author

Rachel Freeman is a partner in Kingsley Napley’s family and divorce team. She specialises in dealing with financial settlements and the arrangements for children arising upon the breakdown of a relationship.

Rachel’s areas of practice include all aspects of private family work, with particular expertise in complex financial proceedings, often with international aspects and for high net worth individuals, and arrangements for children.

 

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