Litigation Funding

Retaining a lawyer can be expensive, and not everybody always has funds available to start their legal proceedings. It may be that you don’t have access to the cash savings that were accumulated in the relationship. Or, you and your former partner may be “asset rich and cash poor”, with limited available savings in the bank.

In those circumstances, it is possible to make an application to the court for funds to be made available for you to pay for legal representation. This is commonly referred to as “litigation funding”.

There needs to be a potential source of funds available to apply for litigation funding. Examples of a source include:

• a savings account in your former partner’s sole name;
• an investment property that can be sold;
• non-essential assets that can be sold (such as a caravan, or vehicle not for everyday use);
• funds from the sale of property already being held on trust.

If there is agreement about accessing these funds, then you don’t need to make a court application. You and your former partner may agree, for example, to sell an asset and split the proceeds.

Before making an order for such funding, the court will consider whether you have access to other sources of funds to pay your lawyer. If you earn significant income, or have cash savings or assets of your own, it is less likely that a court will make an order for litigation funding.

The court can specifically make the following orders:

1. Part property settlement – The court can make an order for one party to prematurely receive part of their final property settlement early. This is only appropriate if the amount sought by the party is within their likely entitlement. The court will not make an order for a party to receive a part property settlement of $100,000 for example, if they will only receive $50,000 as a final property settlement. The funds may be categorised as a part property settlement (where it will be deducted from the amount paid to the party at the final property settlement stage) or how it should be treated may be left open to be determined by a judge at a final hearing.
2. Spousal maintenance – The court can make an order for one party to pay the other party an amount to meet their reasonable expenses (which can include legal fees). To make an order for spousal maintenance the court must be satisfied that the party seeking the order cannot meet their reasonable expenses from their income or financial resources and that the other party has the capacity to pay. The court can make orders for spousal maintenance to be paid weekly/fortnightly/monthly or in a lump sum. Spousal maintenance is an amount additional to what a party will receive as part of their final property settlement and will therefore not be deducted from a party’s final property settlement.
3. Costs Orders – The court can make an order for one party to pay the costs of the other party, if the court considers there are grounds. Again, this is not deducted from a party’s final property settlement.

If there are no assets that can be sold, or savings that can be transferred, then a litigation funding application is not recommended. In those circumstances, it may not be possible to retain a private lawyer to represent you. Organisations such as Legal Aid or community legal centres may be able to help you in circumstances where you have an important family law matter that needs to be resolved, but you cannot afford to pay a lawyer to help you.

For advice or representation in any legal matter, please contact Armstrong Legal.