With divorce costs becoming increasingly expensive, one of the biggest issues facing the separating parties will be finding the funding for legal fees. The financially stronger spouse is expected – but not obliged – to pay both parties’ fees. With many divorces taking months or even years, refusing to pay the fees may be used as a tactic to force the weaker party into accepting a poor settlement. In order to ensure parity, the financially weaker spouse can either seek funding or apply for a Legal Services Order, which is also expensive and difficult to obtain.

A high-profile law firm created headlines recently when it launched a fund aimed at the financially weaker spouse in high-net-worth divorces, allowing them to borrow money to fund their divorces, with repayment deferred until the settlement is received. These types of loan may be very desirable for the provider, with high interest rates ensuring they will receive a good return, but are they ever a good idea for the client?

In an exclusive feature for eprivateclient, a leading website and news service for private client practitioners, Grosvenor Law Managing Associate Tracey Rodford explores this issue, considering the commercial reasons for why law firms would want to loan money to a divorcing client and examining whether this would constitute a conflict of interest or, in fact, be unethical. The piece also discusses the downsides of such loans, and outlines the alternatives.

Read the full article

The contents of our blog posts do not constitute legal advice and are provided for general information purposes only