Courts can order legal costs funding in ongoing cases

Family Law|July 25th 2016

What does a person involved in court proceedings do if they can’t afford legal representation, but their opponent has seemingly endless funds to pay for the best representation? How do they gain ‘equality of arms’, particularly in these post-legal aid days? The answer is that they can apply to the court for an order requiring the other party to pay their legal costs.

It has long been established that the court can make such orders under common law and, when it abolished legal aid for most private law family matters in April 2013, the Government specifically brought in legal services orders, empowering the court to make similar orders in matrimonial and civil partnership proceedings. Legal services orders are intended specifically “for the purpose of enabling the applicant to obtain legal services for the purposes of the proceedings”. This suggests that the orders are in relation to costs that the applicant is to incur in the future, but what if they have already incurred costs? Can the respondent be ordered to pay for those?

This was the point that arose in the recent High Court case BC v DE. It concerned a claim by a mother for financial provision for her son under Schedule 1 of the Children Act 1989. The mother had no financial resources or income of her own, but the father was ‘extraordinarily wealthy’, with capital measured in hundreds of millions of pounds, and annual income measured in millions.

I don’t need to go into the details of the mother’s claim for the purposes of this post. Suffice to say that she asked the court to make a legal costs funding order in the sum of £141,269.18 for costs that she had already incurred and in the sum of £154,245 in respect of her further costs up to the final hearing of the case. (Why the mother did not seek a costs funding order earlier, before she had incurred such costs, is not explained in the judgment.) The father opposed the application for the costs that had already been incurred in principle, but did offer the sum of £163,000 towards the mother’s legal costs funding claim -for her to apportion between outstanding and prospective costs as she wished.

The mother’s application went before Mr Justice Cobb. Counsel for the father argued that an order could only be made in respect of historic costs (i.e. costs that had already been incurred) where the court is satisfied that without such a payment the applicant will not reasonably be able to obtain in the future appropriate legal services for the proceedings. In support of this claim, counsel cited Mr Justice Mostyn’s judgment in the case Rubin v Rubin, in which a claim in respect of historic costs had been rejected. However, Mr Justice Cobb distinguished that case from the present one, as in Rubin the proceedings had been concluded. Here, the proceedings were still ongoing.

As to the need to pay outstanding costs Mr Justice Cobb said that such costs may impact upon the professional relationship between solicitor and client, and may affect what steps the solicitor feels they are able to take on behalf of the client in the proceedings. They may also influence the client’s stance on possible settlement, and the solicitor’s advice in relation to the same – a client may be more inclined to accept a settlement that is less than fair simply because of the concerns about litigation debt. This, he said, would not be in the interests of any child in Schedule 1 proceedings. He went on:

“A level playing field may not be achieved where, on the one side, the solicitor and client are ‘beholden’ to each other by significant debt, whereas on the other there is an abundance of litigation funding. Though there is an increasingly familiar and commendable practice of lawyers acting pro bono in cases before the family courts, particularly where public funding provision previously available has been withdrawn, legal service providers, including solicitors and barristers, are not charities, nor are they credit-agents. It is neither fair nor reasonable to expect solicitors and the bar to offer unsecured interest-free credit in order to undertake their work; there is indeed a solid reason for lawyers not to have a financial interest in the outcome of family law litigation.”

Mr Justice Cobb concluded:

“This is a case in which the applicant mother has a proper case to put before the court; it is a case in which her legal costs, I am satisfied, are broadly on a par with those of the father. He self-evidently, has the means to pay, though I recognise that he may well not be able to recoup the costs allowance awarded. I am satisfied that the mother cannot reasonably obtain legal costs funding elsewhere; it would not, in my judgment, be fair or reasonable for the mother and her solicitors to be labouring (literally) under the disadvantage of financial pressure in the preparation of this important case in the lead up to the final hearing.”

In the circumstances Mr Justice Cobb ordered that the mother was entitled to an award of legal costs funding, to include her historic costs. He assessed the award in the sum of £212,438.78, of which the sum of £111,930.53 was for historic costs.

The full report of BC v DE can be found here.

Image by houstondwiPhotos mp via Flickr under a Creative Commons licence

The blog team at Stowe is a group of writers who share their advice on the wellbeing and emotional aspects of divorce or separation from personal experience. Guest contributors also regularly contribute to share their knowledge.

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Comments(8)

  1. Andrew says:

    I remain of the view that this is a throwback to the days of every husband-petitioner having to find security for the wife’s costs, but I know that I am spitting (euphemism) into the wind.
    .
    As I understand it an order like this is in the nature of an advance on the amount which the husband/father (usually) will in the end be ordered to pay. One fine day there will be a case where that amount is less than the costs paid as an advance – perhaps a case where the judge decides that the wife’s conduct has been so bad that it would be inequitable not to take it into account.
    .
    When that happens obviously the wife must pay back the difference. But will the solicitors also be liable so that if the wife has dissipated it they must stand to the loss?
    .
    If they will, then solicitors are taking a degree of risk relying on these orders.
    .
    If not, and the husband has to lose the money, that will be iniquitous beyond belief.
    .
    John, Marilyn, any views about the answer?

  2. John says:

    What happens when the wife who applies for the Legal Services Order is the beneficiary of a discretionary trust who are not wiling to help her financially?

    Thanks.

    • Marilyn Stowe says:

      Dear John
      Matter for the Judge. You can’t compel trustees but take a look at the pattern of distributions. Might help.
      Regards
      Marilyn

  3. Sarah says:

    How does one obtain a clean break and remove herself from an investment mortgage where Mostyn j ordered it should happen in 2013? Ex keeps applying for experte orders and obtains extensions whilst I can’t get my own housing because of the liability plus I’m not working and he refuses to pay child maintenance

  4. stitchesup says:

    Get a job and help clear the liability perhaps??

    • Sarah says:

      And why would I do that when he was awarded the property? Im unemployed because his default made me lose my job in banking. I can’t move home where I’ve been told to get a cheaper place because of my liability so your comment is derogatory without appreciating the facts

      • Stitchedup says:

        Get a job outside of banking perhaps?

        • Sarah says:

          I’ve been trying to get a job for a year. My issue is all my assets have gone on legal proceedings and I’ve nothing left. My issue is I’m stuck in a tevted property but cannot move home as I’m refused on an affordability basis whilst I remain liable for my ex husbands but to let property of £166k please only respond if you are legally trained as you aren’t helping -thanks

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