Legal Aid changes will cause divorces to cost a fortune
Divorce could break the bank after legal aid changes next year
Nearly all family law advice will be removed from legal aid scheme, leaving poorer partners struggling to afford a lawyer
guardian.co.uk, Saturday 14 April 2012 22.59 BST
Cash-strapped spouses who want to split from their well-off other halves could find themselves seriously out of pocket because of impending changes to the availability of legal aid.
Sir Nicholas Wall, the most senior family judge in England and Wales, is predicting “a substantial increase” in the numbers of people ending up in the family courts without lawyers or any proper advice as a result of proposals included in the legal aid, punishment and sentencing of offenders bill. It is set to come into force in April 2013.
The legislation will cut £350m from the £2.2bn legal aid scheme by removing entire areas of law from public funding, including nearly all family advice. At present, where there is a disparity in wealth between spouses involved in a divorce, state-funded legal advice can provide equality through access to a lawyer. But the legal aid bill will limit public funds for legal advice at the end of a relationship to only those cases which involve domestic abuse.
“What worries me are the smaller cases where there is no representation, where, for example … there is a serious imbalance between an impoverished wife and a better-off husband,” said Wall, speaking at the annual conference of the family lawyers’ group, Resolution. “The difficulty is compounded if neither side receives sensible advice.”
Cathy is all too aware of the difficulty in paying for a divorce case after she split from her merchant banker husband Paul (not their real names) five years ago. At the end of a 14-year relationship, she was working two days a week as a nurse and looking after their two daughters, then aged four and two.
“I was devastated. I was left with our two girls and he lived it up, enjoying the single banker’s lifestyle,” she says. “We wasted money on lawyers’ fees. He could afford it, I couldn’t. But that was money that would have been better spent providing for our kids’ future.”
Paul had, Cathy says, “a six-figure salary and bonuses. The works.” The couple co-owned their Hastings home and a flat in London; Paul also had four other properties. “The finances were complicated. He had fingers in many pies, but everything was in his name,” she says.
Cathy picked a solicitor from Yellow Pages. “She sounded nice and agreed to see me for free. Most solicitors give you 30 minutes and then you start paying. I was in there for 90 minutes on the first day.” The lawyer charged £200 an hour, which Cathy initially paid out of her child support from Paul, supplemented by money from her parents. “It was a colossal amount of money.”
Cathy’s lawyer advised her to contact the Child Support Agency, which told her that Paul was underpaying by half and should be paying 20% of his salary for maintenance for two children.
It took two years from when she first saw a lawyer to the estranged couple signing a deal. Her lawyer initially advised that her legal costs could be as much as £10,000; they eventually came in at five times that amount.
Priya Palanivel, a family law solicitor at Goodman Ray, is concerned about the impact the new legislation will have in such cases: “It is not child-focused, nor is it family-focused. 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.”
Most family law solicitors have given up legal aid work because it is less remunerative and can be overly bureaucratic compared with private work.
Palanivel, whose firm remains committed to legal aid cases, says clients are often surprised to learn that legal aid “is a loan and not a gift” and can be secured against the family property – called a statutory charge – and that the situation is already difficult.
“Even where there is legal aid, we go pretty much cap-in-hand prior to each hearing providing reports to the Legal Services Commission to explain why spending should be continued,” she says. “The process is incredibly frustrating for clients and for us. It’s often very difficult to explain to the client and courts.”
The prospect of paying £200 an hour, as Cathy did, is too much for many people uncertain how they are going to make ends meet after the end of a relationship. So what can clients do when legal aid is scrapped?
Alternative legal funding
David Allison, a partner at Family Law in Partnership, a team of family lawyers and mediators, says “one of the few good things” the bill does is to introduce the possibility of interim lump sum payments. “So where you have a husband with cash in the bank, that can be used to pay legal fees,” he says.
Lawyers may also offer a Sears Tooth agreement, a deed that assigns the client’s settlement to the solicitor to allow them to cover their costs in full before the money reaches the client.
Your bank may be willing to give you a loan and let you roll up the interest and repay it out of the settlement. Your solicitor may need to set this up for you.
There is also a burgeoning litigation funding industry – lenders who back legal action as an investment. “These solutions tend to be for the bigger cases,” Allison says. “Lenders want security and, for example, may be looking for £1m in overall assets so that there is plenty to make sure that the loan is paid off.”
If there isn’t a spare £1m knocking around, you might want to consider other options to cut down legal fees. While the justice secretary, Ken Clarke, is cutting back the legal aid scheme, he is planning to increase funding for mediation services by two-thirds.
Couples might also want to consider collaborative law where you, your lawyer, your ex and his or her lawyer meet to negotiate agreements on finances and other issues. It can take between three and six meetings. You and your ex agree not to go through the courts unless negotiations fail.
Consumers who are worried about lawyers’ costs spiralling may be interested in the Co-op’s move away from an hourly rate towards fixed fees. At the end of last year, the Co-operative legal services hired a leading team of family legal aid lawyers. A key part of its move into legal services will be a low-price, fixed-fee tariff for divorce work. “I always thought that as a lawyer I couldn’t afford my own services,” says Christina Blacklaws, who joined the Co-op at the end of last year and chairs the Law Society’s legal affairs and policy board. “No one likes hourly rates.”
In Cathy’s case, the judge eventually agreed maintenance for herself and her children until she remarried or cohabited and agreed that she should have a share of her husband’s pension.
“Paul wouldn’t negotiate” she says. “We went to court once, twice and still he wouldn’t talk and then a third and final time for the judgment. By then it was so nasty, I had to go in with all guns firing.
“In the end, Paul had to hand over the Hastings house and some money, and out of that money I paid off the mortgage. I got far more than I was looking for. But the experience was horrible and a daily grind for two years.”
• To work out eligibility for legal aid try legalaidcalculator.justice.gov.uk To find out about collaborative law go to resolution.org.uk