Litigation Loans for Divorce - Has anyone used one of these and what are your experiences of them?

[Highlandheath]

I took a litigation loan out to fund paying for my divorce. My ex went for the most expensive Divorce lawyers in the UK. The litigation loan I took out was secured against the house, which I have to sell. Interest rates are astronomical, despite this being a secured loan, so no risk to the lender. Right now I am finding it almost impossible to make sense of what was done by the lawyers (I had to get other lawyers, recommended by them, to give me independent legal advice) it seems 6 loans were taken out, which would normally run for a year, however they all appear to start and end at the same time, and I appear, but can't get clarity on dates the money was actually transferred to the lawyers, to have been paying interest on money BEFORE I received it. The loans are personal, but dealt with by the commercial department. Has anyone had experience of litigation loans, and are you clear on how they were managed? If you are in a similar boat to me, I'd like to hear from you, these loans are possibly being mis sold, to women in severe emotional and financial difficulties. What's your experience?

The issue for me is that all the people (and all are women) who have taken out litigation loans on the advice of their lawyers have found every penny of the litigation loan has been drawn down, then more money has been asked for by lawyers, in my case at the 11th hour just before a court hearing which I would have had to go into on my own, and unrepresented if I didn't extend the loan.. The lawyers appear to be going to the maximum of the loan, certainly I know of no one who has followed this route, and not found that the maximum amount has been arrived at very fast....

The issue for me is that all the people (and all are women) who have taken out litigation loans on the advice of their lawyers have found every penny of the litigation loan has been drawn down, then more money has been asked for by lawyers, in my case at the 11th hour just before a court hearing which I would have had to go into on my own, and unrepresented if I didn't extend the loan.. The lawyers appear to be going to the maximum of the loan, certainly I know of no one who has followed this route, and not found that the maximum amount has been arrived at very fast....

Hi Babybarrister, I really suspected as much myself, it's very worrying... Thanks for the advice, I have already approached the financial ombudsman, interestingly the loan provider wants me to meet with them at my former divorce lawyers' offices - the loan is with the loan company, to pay the lawyers... the lawyers have been paid. What are your thoughts on this?

Hi I’m going through a difficult divorce.......now month 14! I finally got the courage to leave an abusive controlling marriage with the help of the Police and domestic violence team December 2016....... as you can imagine I was not in the best state of mind and having zero money and leaving my beautiful home to now find myself homeless........I didn’t know where or who to turn to.....with help from my Sons I was able to rent a small place and be afforded some level of security but unfortunately this wasn’t to last and had to obtain a non molestaion order through the courts! This now brings me on to my first experience with Solicitors........With zero income I was expected to fund my own divorce proceedings which I made clear from the onset that this was going to be almost impossible..... but I had credit cards which I maxed out to get things going.......up to Christmas 2017 I had paid out over £16,000 then to be told by email a few days before Christmas that my Solicitor was not willing to represent me further if I did not pay in full a balance of £15,000 of fees incurred.......so with no means to pay this I’m left to represent myself in court in March.......I feel the victim of years of abuse and now a victim of the system.......I totally understand why women are so reluctant at leaving the family home even when going through the most horrendous times.....as once you step over the threshold there is absolutely no financial help!
I have been desperately searching for a Solicitor to help but they are all asking for financial security something that I cannot provide other than that there will be substantial monies due to me from jointly owned assets once the financial side of my divorce is agreed.
I have been advised to take out a litigation loan but I’m unsure of where to source one and very concerned about getting into any further debt.
Does anyone have any information on this and if anyone has gone to court unrepresented.
In August of 2017 I was forced to terminate my rental property due to my ex only paying 3 months out of 8 months at the time maintenance so am now relying on friends and family to put me up....... December 2017 I did however secure maintenance at long last through the courts.
Any advise would be greatly appreciated.

Kindest Regards To All Susanna

sussanna You’re best straying a post of your own in order to get the appropriate advice...However having been in a similar position, I applied for my Novitas loan through the firm that is dealing with my matters. They made the application on my behalf, I then got independent legal advice then signed the documents. It was a fairly simple process. I hope you manage to find a way forward, I really wouldn’t recommend self rep. unless you really have to. My counsel has managed to uncover a host of funny tricks that my ex has been trying to pull in both financial and child proceedings.

It is possible to apply for a legal expenses order from the other side in certain circumstances but you do have to show first that you can't meet your costs by way of normal loan, your own capital or legal expenses loan. Not many solicitors will accept payment at the end of a case now due to their own cash flow and difficulties with getting paid in some cases. Novitas are pretty good and I think Iceberg might be ok

No experience of litigation loans but feel too have been a victim of the system - extremely acrimonious divorce with complicated finances - x played a nasty game manipulated whole process _ got ripped off by my sols who ditched me 6 weeks before final hearing although managed to get it adjourned due to mental health issues and then got let down by direct access barrister. Funded divorce from insurance payout for breast cancer diagnosis just as marriage fell apart. Feel as though have been abused twice first by x then by legal system - x is still financially controlling me now via CMS - my MH is precarious - have felt suicidal and think on verge of breakdown - trying to claw back whatever I can but also don't know where to go to for help - have even asked on legal board here and get no response - just want to say be very careful question everything because sadly agree women are taking advantage of when emotionally vulnerable

Please, whatever you do, avoid Divorce Litigation Loans, and if a lawyer recommends them, then don't hire that lawyer. The process of divorce is entirely unsuited to this kind of high interest loan, the risk is entirely on your side, the lawyer gets paid, the loan company gets paid, you lose your home. I the summing up at my final hearing the judge actually said the litigation loan had skewed the entire course of the proceedings, and what should have been a simple case had been made unnecessarily complex as a result - in short, the lawyers claimed it would cost me between £20k and £50k to get the divorce through to final hearing, and persuaded me to sign for a litigation loan with Novitas of £100k, in order to dissuade my ex from fighting, he came back with Vardags, and my lawyers admitted he was trying to "run me out of funds" even so they insisted I go along with him having everything in the house valued (including the effing kitchen sink, and even a skanky old mink coat I got from granny and a pair of boots... Not. Joking. Think. Of. The. Fees.......). They wanted me to employ additional lawyers in France for a small property he had a quarter share in worth only about £20k.... FFS!!! Basically, once they knew how much equity I had in the house that became a target for their fees, and they reached it..... The interest with Ratesetter is higher than a credit card - (thank you, one of the people posting on this thread pointed that out to me!). If you are going to a Divorce Lawyer, it probably means you are not able to settle through Mediation, so, it's likely there is some form of abuse, financial, coercive control, emotional, sexual or violent... in my case there was all three and the corresponding MH issues... I was a sitting duck to be ripped off by expensive, and amoral lawyers, the "independent legal advice" turns out to have been a quid pro quo - my law firm use them for their mugs, and their law firm used mine for their mugs, the correspondence is chilling, I've only just received it, an instruction from my lawyer to the "independent Legal Adviser" saying "Get her to sign the loan documents, and if ever you need me to do one of your clients don't hesitate".... Feeling green just thinking about it... avoid at all costs, go to the CAB and Rights of Women and Women's Aid, don't go near any lawyers who use these, and don't go near the loans either...xxx

Omg is this how expensive divorce is?

Short reply, from speaking with other Mumsnetters and other divorcing women using Lawyers rather than mediation (and obvs there's a reason for that, generally DV) if you take out one of these litigation loans, the cost of your divorce will be the amount of your equity in the family home.... The fees will expand to fit! Beware! They will start you on a high, but sort of reasonable amount (like £20k for everything) and then carry on spending til they've spent you out and then they will drop you....

One of the Divorce Lawyer tactics is this, everything is going fine, it's all coming in on budget, final hearing is in 5 days time, suddenly they need more money, you are locked into that law firm, how can you get anyone else at such short notice? And if you have a litigation loan you are doubly locked in because changing lawyers means you are in default of the loan.... you either represent yourself or you let them draw down more money.... It happened to me before every visit to court... Every. Single. Time..... Looking back, that 5 day emergency time line is exactly the amount of time it takes for the lawyers to get the papers signed (with legal advice waiver, natch) and off to the Litigation Loan company to get the money......

Highland this sounds totally scandalous! I'm really shocked to hear that the legal system can tolerate such deliberate manipulation if what you describe is really going on.

Are you able to challenge them (on their past behaviour) at this point?

It sounds heartbreaking. Especially as you trusted them to be working in your best interests, not just this own.

their own

Nearlythere35 - Novitas charge 18% interest, and roll into the loan £1000 in admin charges and £500 for "independent legal advice". Solicitor's arranging these loans with Novitas will also charge their usual rate for filling in forms which borrowers could easily fill in themselves. Novitas only gained full Financial Conduct Authority regulation in 2016, and Ratesetter, who initially invested in Novitas, then went out on their own to sell their loans via lawyers, only gained FCA approval in 2017 having applied in 2014, this means until that 2016 for Novitas and 2017 for Ratesetter, these two loan companies were not fully regulated, staggering, then, that Solicitors were selling these loans to people at a time the FCA recognise as being highly vulnerable, when the Solicitor's first duty is to act in the best interests of their clients and the loan companies were not fully regulated. Staggering too that Ratesetter's failure to gain regulatory approval was down to FCA concerns relating to their models, structure, safeguarding and transparency, having at last got approval, Ratesetter have now quit the P2P independent standards body, because they do not choose to rise to it's standards. Four years down the line, and I have just discovered that my Solcitors had obtained my "independent legal advice" for free, in a quid pro quo with another firm of solicitors who also sell Novitas loans and who have a mutual arrangement to advise one another's clients. What is even more shocking is that while the Solicitors obtained the advice from their solicitor chums for free, I was still charged for it though, Novitas paid my solicitors for it, and my solicitors pocketed the money. ... I have also uncovered that while my solicitors were telling me they would make my ex pay my legal fees, they were telling Novitas that it didn't matter what my settlement was, as Novitas could always get the money from the sale of the family home. Bear in mind, on a loan of £75,000 you will pay £900 a month in interest for the life of the loan.... for someone on no or low income, that's a lot of money...and divorce is not a process with a clear end date.... These loans are not a good thing...

@Highlandheath I would report them to the Competition and Markets Authority, especially if it's a trend across the industry, they do crack down on breaching consumer rights

Thankyou Asleepallday, that's really helpful! Hadn't occurred to me...! Will look into that.

I just wanted to share my experience. I am going through a really bad experience having been persuaded to take out a litigation loan.

I’ve been in a high conflict battle with ex for a year now over divorce/ child arrangements. He is a high earner and forced me into litigation despite my having zero funds. Mediation was unsuccessful as he was /is highly manipulative, financially controlling/emotionally abusive and I had to agree to his terms or nothing.

I scrambled £2k together to get a solicitor. I was told I wasn’t eligible for legal aid because the level of domestic violence I experienced didn’t meet the criteria. Ex refused to pay my costs and I was told that I could only apply for a legal services order if I was rejected by two litigation loan companies. I was rejected by one but (to my detriment) taken on by another.

Solicitor said cost estimate for everything (up to final hearing in divorce/finance/child matters) would be approx £80k but that it should be £60k if ex is sensible. Litigation loan company lent £100k.

One year on, ex was not sensible. He wants to win. There have been 5 hearings (no Final hearings yet) and I’ve amassed three huge lever arch files of correspondence and nothing has been achieved.

Two months ago my solicitor leaves the firm and his colleagues take over. Now, three weeks before two hearings (one Final) I’m told loan has been depleted and they want to extend it! I am in shock because my solicitor who left had been reassuring me all along that everything is within budget/on track.

I am now disputing costs as they promised to manage the loan and ensure they kept within budget and kept me informed of rising costs / changes. Yes they sent me detailed highly extortionate invoices every month, which I questioned. They justified these by telling me that ex was raising my costs by not complying and they have to keep chasing him plus that they were ‘front loading the work’ so that they saved time.

It’s all a big mess.

I am now trying to switch solicitor whilst disputing costs but can’t because they refuse to transfer my files unless I drawdown the remainder of the £100k. The amount of interest accruing is frightening. They have me over a barrel.

I have contacted the Legal Ombudsman but am told to wait 8 weeks before filing a complaint.

I have recently been told by five independent solicitors (offering free 30 mins consultations) that I have been well and truly shafted and should have gone to two high street banks for a loan instead as no doubt I would have been rejected and then could have applied for a Legal Services Order.

I deeply regret taking out a litigation loan. I was highly vulnerable at the time of signing up and trusted my solicitor when he said this was my only option of having a level playing field in proceedings.

Please think twice.

Hello Pink Fog, these litigation loans are a nightmare, and completely inappropriate to divorce funding, for so many reasons, they incentivise bad lawyers to string out the case, that 2 weeks before a final hearing demand for additional funds is an absolute classic, the assurance that the maximum will be far lower than it ends up being, they spend to the max, and they know exactly how much more they can wring out of you once that has gone, and when to time their demand for more money too, plus the loan allows the husband to run you out of money, and gives them the upper hand, it does not make for just settlements, in the end children and mother lose the house, and are left seriously worse off, the husband is fine, and the lawyers are in clover.... I'm going to PM you, as I have a few questions to ask and may be able to help you... But thanks so much for posting, the more people are warned off these ruinous and unethical loans, the better....

My divorce cost £35K over almost 2 years.

I was applicant for the Divorce and Ex was applicant for the Financial Settlement. She made ridiculous demands for money and assets that did not exist. When finally over she blamed her Solicitors (4 different Law Firms) for giving her bad advice.

I never believed that 4 consecutive Solicitors would give bad advice. More likely that Ex was not hearing what she wanted to hear. ie she was entitled to everything forever and I should be made homeless and bankrupt. A statement that she was foolish enough to send by email.

Even at Final Hearing she blurted out:

The Divorce was not my idea. It was his. Why should I be worse off because of a Divorce I did not want?

Judge quite correctly pointed out that Settlements were base don NEEDS and what assets are available. Courts would not make an order that plunged one partner into poverty so the other could continue as though nothing had ever happened.

Legal Fees litigation loans...are a can of worms and are a danger to our society and a public interest issue. I am thankful to Highlandheath for raising the important points and warnings ....of which there are many....and to Pinkfog for prompting a question and that is, can Pinkfog expand on WHO advised that a legal services order under 22Z (A) and (B) provision could ONLY be applied for if loan applications failed? Interested to know.
The last 4.5 years has been spent trying to get a finances case right way up and rectify the catastrophic harm caused by...in my case...a completely undeclared litigation loan on the other side. It was not declared to me or into court despite spousal rights.
So I am posting as the receiver of the behaviour and not the applicant of the loan. I can see there can be different harm caused whether as applicant or non applicant and I will try to share my findings. Overall I say these are unlawfully constructed self-serving routes by lawyers and investment consortiums to help themselves to a families finances. With these loans third parties are meddling in your finances for their gain, not your best interests. However they can be used to gain advantage over a spouse as in my case. They can be used to effect financial abuse.
I am dealing at high level to address the myriad of issues this artificially constructed nightmare product impacts. Essentially such loans...a major provider in the family arena is Novitas ...are designed in such a way as to interfere with legal rights and processes. These are constructed as a commercial type of litigation loan...an American concept...and have no place in the family courts in my view. The Ministry of Justice tasked the Association of Litigation Funders in the UK to self regulate litigation funding. Very few on their panel will offer family funding...presumably as it is wholly unsuited to it!!! So ALF are no use to Novitas cases.
It sounds as if those who have taken out such loans on this message board have not fully understood what powers they have afforded to the loan consortium...what rights they have permitted third parties over their assets. This is despite the 'independent' legal advice the loan requires they take where the absolute risks should be being explained? Please tell me they explained equitable charges and LIENS to you all? My blood is bubbling at this point!
I call the set up a consortium because none of it can operate without the other parties...and the loan applicant is one of the parties. Let me explain a bit more. There is a tripartite (3-way) arrangement between applicant, loan company and solicitor behind which are a host of investors...investing as peer to peer money lenders to Novitas say, or simply investing on a case by case basis in y
YOUR financial settlement using your assets to secure their lending. An example: Husband and wife divorcing. Property is jointly legally owned. Let's say wife takes loan out. The loan company uses equitable charges in many cases to secure the loan against assets of value..often jointly owned....could be a house but could be a car, yacht etc. In this case the equitable right assumed by the loan holder is NOT a legal right. They have pitched up...enabled and facilitated by the wife...to lay claim as a debtor to these assets as and when and if they fancy calling in their debt this is when the asset is forced to be sold. Also loan applicant needs it sold as they need their settlement to repay loan BUT there is additional risk and competing rights as to whose assets they are to sell by this point. Alarm bells ringing yet....they should be!? In a case of an equitable charge NOTHING will show on property title deeds for example. Sometimes Novitas will take a legal charge which turns the loan into a second mortgage. It is getting muddy already...who gets repaid first? The terms are different here if they take a legal charge as they limit the length to a year but in an equitable and thus invisible charge situation the whole thing can roll on...blissfully eroding assets....already you can see the main players in the consortium rubbing their hands together. It is not in the interests of the consortium players to mediate or settle. They want their days in court...kerching! !! These loans were Office of Fair Trading regulated and now have FCA regulation but there are suspicious issues on this too...that the regulators may have been hoodwinked on. I am trying to address some of this and would encourage anyone with a grievance or evidence of all and any malpractice to step up and make noise. Remember you have an MP. Check if your litigation loan supplier is an ALF member. It is likely they are not. Demand answers. Do subject access requests. Look up the current consultation by government on the divorce process...proposal to move towards non fault divorce and think about what this means with litigation loan consortiums on the prowl...make their life even easier and court won't want to consider financial abuse. It is all a complete disaster area. Please do the consultation and have your say...deadline is in December. Highlandheath I think we need to speak but I am new on here and unsure how to do so. Thank you for bringing this very important issue for discussion.

Hello Hidden Truth! We certainly do need to speak! No, no explanation about Leins, what is that? or Equitable charges, but I can say unequivocally, as a result of my SAR to Novitas, to my first Barrister that behind my back the legal team were absolutely hell bent on getting the house sold, while to my face they pretended they were fighting for it to be retained.... I have absolute proof of dishonesty on the part of the lawyers, who are in writing lying to the loan company behind my back (only got this through an SAR) saying the marital assets were worth £4 MILLION MORE than they actually were, in order to get a loan extension of £100k. Every corner I look into there are more lies. The "independent" legal advice lasted half an hour, and was with a firm my divorce lawyers had a quid pro quo with - they both provided each other's clients with "advice" gratis, to sell Novitas loans on the back of. But, get this, my lawyers didn't even bother to find out whether Novitas had FCA approval for the sale of these loans until 2018 and then only on receiving a letter from me saying they were NOT FCA regulated (they had interim regulation) I will pm you with my email. Let's speak. Also, I'm trying to get women (it is as my awful Mr Creosote Fat Cat Lawyer said "always the ladies" bleughh!!!) who have been sold these loans to contact me - I know its a painful subject, and lawyers are great at gaslighting you - mine told me if I told anyone about the loan I would compromise my case... for example... which is a lie... So do, please reach out, PM - working together we can help one another... It might save the roof over your kid's heads..

Another vital issue is that the loan holder's solicitors have to obtain control of the selling of property/assets. To get this involves fabrication of reasons to breach the rights of the other legal owner. Does it assist animosity? Is the court getting involved in favouring one party over another..,yes. In equity a judge makes a decision apparently. However a very promising bit of news is that solicitors are in breach of rule 14.5 which is misuse of their client accounts if they allow their bank accounts to be used for banking purposes. Oh dear. The loan company cannot handle proceeds of sale of assets and the solicitor operating the loan has assigned the proceeds of sale to the loan company and so they are the ones doing the banking! So please complain to the SRA and they may be expecting your letter. Breach of rule 14.5 is extremely serious as theyou may be facilitating financial crimes too...for all this interference in legal rights there is conveyancing going on without money laundering due diligence occurring, breach of human rights too etc etc. Basically none of it should ever have been able to happen as it should have been stopped dead in its tracks long ago. I would like to see every financial case infected by a litigation loan be open for fee free review and massive compensation paid back to the family pot and those harmed by it. It is even possible for assets to go missing because it seems the court is not insisting on full disclosure where a litigation loan exists. Any comment on how your loans were declared to the other side and into court would be gratefully received.

The loan required the consent of my ex as it was secured on the FMH which we jointly owned. He has private wealth, and didn't need funding, however he was also empowered by the loan, as he knew his off shore funds were out of reach and therefore pressed for massively expensive but ultimately pointless things like the valuation of the contents of the FMH, including the kitchen fridge (no, it's not a Wolf one, just standard John Lewis!!). My lawyers were in clover, and spent up to the max, then extended the loan and spent up again, my ex was also in clover, because he knew the only funds being depleted were marital ones, so really the only person who would be left broke was me... He likes gambling, and it was a safe gamble for him, the money didn't matter, he knew he would always be wealthy. He agreed to the litigation loan faster than he had ever agreed to anything in his life!