Funding financial matters upon divorce – Legal Services Payments Orders (LPSO)

Family Law

In some instances, someone going through the divorce procedure may find themselves in a position where they need additional funds to be able to settle unpaid legal fees and also afford to pay for the services of a solicitor, barrister, or any other legal costs to be incurred.
Formerly, applicants would be able to apply to the Court for Cost Allowance Orders in a Maintenance Pending Suit Application. This would mean that the maintenance received by the Applicant would also include an element towards their legal costs.
However, more recently, following the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) 2012, the Court is also unable to make any Maintenance Pending Suit Provisions in relation to legal costs. Additionally, in the majority of financial remedy cases, aside from matters concerning child abuse or domestic violence, public funding is not available to the parties involved.
LASPO 2012 added new sections 22ZA and 22ZB into the Matrimonial Causes Act 1973 (MCA 1973) and created Legal Services Payment Orders (LSPO) as the answer, in some cases, to such funding problems.

What is a LSPO?

LSPOs are used by parties in connection with proceedings for divorce, nullity of marriage or judicial separation.
LSPOs are now particularly useful in instances where one party is heavily reliant on the financial support from the other party.
They are made by the Court requiring one party (the Respondent) to pay the other (the Applicant), an amount in order for them to obtain legal services to reach a financial settlement.
LSPOs can be varied in the event of any material change in circumstance of the parties and are available in the following forms:
– A single, lump sum payment
– Payments by way of instalments
– Payments in relation to one specific period of time within the proceedings (until a particular stage of the proceedings, the entirety of the proceedings). In this event, it is preferred for monthly instalments, rather than a single payment.
– Deferred payments. The Applicant’s costs can be paid by the Respondent in the specified sum, at the conclusion of proceedings, and sale of any property. In some instances, they can be regarded as a charge over the Respondent’s property to fund the Applicant, particularly where there are no resources available for the LSPO to be made.
There is usually an undertaking within the Order by the Applicant whereby they undertake to repay the Respondent all or part of the amount ordered, if the Court considers they should do so.

What are the requirements to making an LSPO?

The court must be satisfied that, without the LSPO, “the Applicant would not reasonably be able to obtain appropriate legal services for the purposes of the proceedings or any part of them.”
The Applicant must therefore demonstrate:
– They don’t have any assets, or other source, that could reasonably be used to pay legal fees.
– They are unable to borrow the money; e.g: a loan. This will need to be demonstrated through providing correspondence from the potential lenders. This can also be instances where the loan may have a high rate of interest and it would be unreasonable for the Applicant to take it.
– They have been unable to reach an agreement with their solicitors in relation to the incurred fees (Sears Tooth Agreement). This can be demonstrated through correspondence from the Applicant Solicitors.
– They are not entitled to Legal Aid.
Before the Order can be granted, the Court must also have regards to:
– The Overriding Objective and the need for proportionality, saving expense and ensuring the parties are on an equal footing;
– The parties’ present financial needs, obligations and responsibilities and those they are likely to have in the foreseeable future. This is not limited only to existing resources the Respondent has. It can also include consideration of future earning capacity of the parties and whether there is any increase in this, which would be reasonable for the party to take steps towards acquiring;
– The subject matter of the proceedings, and the matters in issue; whether the application is speculative, doubtful, of if the issues are simple ones which do not require legal assistance on either side;
– Any steps taken by the parties, particularly the Applicant, to avoid the proceedings, eg: proposing or considering mediation;
– The impact of the LSPO on the Respondent; specifically, whether they may be prevented from obtaining their own legal services, or suffering undue hardship as a result of the order;
– Whether the Respondent has legal representation. The rationale of this, is that both parties must be on an equal or level playing field, and the Respondent must not be required to pay substantially more to the other party than to their own solicitors;
– The Applicant’s conduct in the course of Proceedings;
– Any amount the Applicant owes to the Respondent

How to apply for a LSPO?

Form D11
– Statement in Support
– Draft Order

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All information is correct on the date of posting.