Many people are concerned about the cost of family law proceedings. However, there are many options available. If you’re financially vulnerable, there is no reason you should face legal costs without assistance. However, it’s important to understand the differences between the financial options available. This helps with an informed decision about what financing is right. One point of confusion is the difference between litigation funding for family law and a line of credit.
Key takeaways
Litigation funding is a third party covering a client’s litigation costs.
Litigation funding is non-recourse; financers lose out if the case fails.
Funding is reliant on the case having a high chance of success.
Litigation funding can cover legal services, court legal fees, expert witnesses, and more.
This funding aims to provide fairer access to legal representation for both parties.
Litigation funding may leave clients with cost orders if unsuccessful.
Litigation funding requires clients to acquiesce to their lawyer’s direction.
JustFund credit lines give clients the flexibility to work with the lawyer of their choosing.
What is litigation funding for family law?
Litigation funding involves a third party entering into private funding agreements with clients or law firms to cover their own legal fees. Here are some basic elements of litigation funding.
Repayment
Litigation funding for family law often requires repayment, usually from the property settlement. In some cases, if the case isn’t successful, the financer won’t ask for repayment.
Chances of success
Certain funders offer non-recourse financing. These financers will want to know your chances of success. Funding is reserved for cases that will likely result in sufficient assets to cover their fee.
What legal fees are covered?
Family law matters that proceed to court involve various costs. These costs may include the following.
Legal services
Lawyers charge hourly to represent clients in court. Their rate depends on the lawyer’s experience. The case complexity determines how long a lawyer needs to spend on it.
Court fees
There’s a flat fee for every day clients appear in court.
Expert witnesses
Expert witnesses may be required to give evidence during a hearing. Expert witnesses could include psychologists, valuation experts, etc. Procuring professional reports to submit as evidence can cost thousands of dollars.
Value of litigation funding in family legal proceedings
Litigation funders could offer value to family law clients due to the dynamics of divorce proceedings. It’s common in family law that one litigant will have access to much greater financial resources than the other. This is often due to one party giving up employment during the marriage in favour of caring for children and keeping the home. This spouse is left financially vulnerable in the event of a divorce.
A litigation funding order could help level the playing field in Australian family law litigation. This is particularly important because extended litigation in Family Court commonly leads to exorbitant legal expenses.
In cases where there is insufficient existing property to cover these costs, litigation funding can provide a crucial financial lifeline. As the Australian legal marketplace continues to adapt, such funding options are becoming increasingly vital for clients navigating the high costs associated with family law disputes.
Traditional funding flexibility
Many funders expect the client to adhere to the advice of their nominated family lawyer. While this expectation may seem reasonable, family law disputes are rarely simple. Issues such as spousal maintenance, monthly legal fees, and other complex aspects of family law require clients to be active participants in their cases, as these financial considerations can significantly impact the case’s progression and outcome.
Clients in family law cases often face complex issues, such as spousal maintenance or negotiating with the other party. This means they need to be active participants rather than passive observers in their case. These cases frequently require a more nuanced approach than typical litigation funding options provide, especially as the case moves toward a final hearing or requires a lump sum to cover costs. Legal financing can alleviate some of these burdens, but the intricate nature of family law often makes securing adequate legal services difficult without active client participation.
Legal fee loans, for instance, offer clients the flexibility to actively engage in and fund legal battles in a way that aligns with their personal and financial needs, including obligations like spousal maintenance. These loans can provide essential support as clients navigate the complexities of family law matters within the Federal Circuit, ensuring they have the resources needed for a fair legal process.
Litigation funding orders
Parties can apply to the Court for assistance with family law legal fees, including support for spousal maintenance needs and legal expenses. Although the Family Law Act doesn’t specifically reference litigation funding orders, certain provisions can be interpreted to assist financially disadvantaged litigants. In some cases, legal aid may be available to supplement funding, ensuring access to the legal resources needed to navigate family law matters effectively.
The Court can issue an interim property order under Section 79, allowing a party to access a portion of their property settlement before the case concludes. This helps cover immediate legal or living costs. An interim property order may also require the other spouse to pay spousal maintenance. A spousal maintenance order can assist with childcare duties and compensate for a decreased earning capacity.
A line of credit for your property settlement
A line of credit differs from other forms of litigation funding in important ways. JustFund provides a better financing solution than other litigation funders by offering more flexibility that can be applied toward covering legal expenses and achieving a final property settlement. JustFund provides a holistic set of benefits that contribute to an optimal financial outcome.
Repayments
As we’ve already discussed, different types of litigation funding require the initial funding to be repaid, often along with a portion of your property settlement, which can impact the resources available for quality legal representation.
Additionally, some funding arrangements may not fully consider spousal maintenance obligations or the complexities of the legal system, limiting the financial assistance clients receive. JustFund’s line of credit offers a tailored approach, allowing clients to address these financial commitments while preserving their resources for effective legal representation.
JustFund’s line of credit, however, is reimbursed from your property settlement at a fixed interest rate, allowing clients to focus on securing the best legal representation for their case. Which provides greater benefit? This leads to the next factor.
Tailored financing
JustFund’s team of family law professionals ensures clients get financial solutions tailored to the unique challenges of Family Court cases, such as legal fees or spousal maintenance. JustFund is concerned with the merits of your case, with funding decisions overseen by family lawyers who understand a client’s financial needs. This ensures that funding aligns with the case’s requirements.
Other lenders can’t assess funding in the same way. Litigation funders aren’t experts in the family law system, particularly when it comes to navigating the Family Court. This feeds into the next point.
Flexibility
One of the great benefits of a line of credit from JustFund is its flexibility. With other litigation funders, clients are handcuffed to the legal advice they’re given. JustFund can work with whichever law firm the client wishes to engage, allowing them to manage their legal fees in a way that suits their circumstances. The clients and their lawyers can pursue the most appropriate legal strategy together. This is important for many reasons.
Clients need to be comfortable with their lawyer, their legal strategy, the associated legal fees, and any considerations around spousal maintenance. JustFund partners with over 600 of the most reputable family law firms and legal professionals in Australia, ensuring clients receive the guidance and support they need.
Rather than receiving a lump sum, JustFund’s credit line provides funds as needed, giving clients the flexibility to manage costs throughout their case. This approach provides financial certainty to clients and law firms, ensuring funds are available precisely when required.
Broader coverage
Certain forms of litigation funding, including litigation funding orders, only apply to cases that proceed to court. Many family law cases don’t go to court. Lawyers often prefer mediation because it is less stressful, quicker, and more affordable for clients. JustFund financially supports lawyers exploring alternative resolution methods outside of court legal proceedings.
Conclusion
We understand that many Australians fear the prospect of legal disputes, especially when facing family law matters. Family law litigants are often in financially difficult circumstances and may require financial support to manage their legal costs effectively. Clients have options to manage these costs, and it’s important to understand the differences between them.
Litigation funding is popular in family law, especially for clients facing challenging legal disputes. However, it has drawbacks within the Australian legal landscape. JustFund strikes a balance by providing clients with the funding they need at minimal cost, tailored to the unique demands of family law cases in Australia.
