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?

Hi Missed The Boat Again

Very interesting...hmmm, when I found out that the barrister of choice chosen by my solicitor (the solicitor himself specifically recommended as being highly experienced and able to deal with domestic abuse case challenges where the abuse is perpetrated through the court process...) had chosen a barrister who shared a room in the same chambers as my soon to be ex...I went to the conference with the two of them in chambers and smelled a rat.

I had no experience of all this...one doesn't as divorce is not a preferred route for any of us who have invested in relationships with every good intention...but I left the conference, walked down the road, and my gut instinct said ditch the barrister...I turned on my heels and waked back into chambers and collected all my files...7 of them. There was no way 2 barristers were cooking a deal between them where there was obvious conflict of interests...of course this all makes sense now that the hidden truth has been revealed. There was a litigation loan directing and orchestrating events. The dishonesty is astonishing. Clearly they all knew and set up a ...'hopefully she won't find out' situation.

So MissedTheBoatAgain...did your ex have a litigation loan to pay for her legal fees and did she have security for the loan held against your joint assets, whether that was a house, a car, a bank account etc?

Forgive me if you have explained this previously...

If she did, were you told about it?

To MissedTheBoatAgain

They call the issue of barristers sharing a room in chambers 'space sharing conflict' and it is a legitimate reason not to use the services of counsel in such situations...of course all these terms you start to gather along the way but sometimes when something feels very wrong, then it is good to act upon it.

Of all the barristers in all the city why elect one who sits next to the other!

My solicitor said in his brief to counsel that he did not think anybody had actually sat me down and explained to me how things worked. Sounds great and noble...well nor had he! He never sat me down and said well I am going to

a) fail to turn up at court at Final Hearing nor send anyone now you have chosen not to use the conflicted barrister because actually you are f*ed anyway because there is a litigation loan
b) I chose a same chamber barrister because of a)
c) your assets are charged now by a consortium of people all with a financial interest in your assets and input in your court case and all of whom are processing your data without your knowledge
d) I am going to ensure nobody else in my law firm can deal with your case except me as I am keeping a big secret from you
e) I am going to write you lovely long sympathetic and informative letters but do nothing because it is important it looks like you are represented (as that is your right) but actually you are stitched up from the outset and I am going to charge for fake representation but then not turn up to court because actually morally this is totally wrong and my professional integrity is compromised so rather than do that I shall let you go it alone

I think these lawyers have a lot to answer for and the SRA need to pull their finger out and

a) develop an actual investigation process (they don't have one!!!!)
b) put their money where their mouth is and intervene earlier with the law firms people are raising complaints about
c) do as they have published and where serious allegations are being made by the public, consult their lawyers on the issues (they have at least identified they need to do this)

It is a shambles but the problem and challenge for amicable settlements is hindered by the actual wish for lawyes to prolong a case to squeeze more out of it. In my case I was told my ex would not answer me direct on anything that everything had to go through his lawyers.

This comes back to a small but worrying term used in the Novitas Loan terms which is that
The Loan is 'unserviced' by the client....does this mean the lawyers have to control the case hence why half answers and no deals are in their interests?

For my final hearing I/we are to be charged 25k a day for 3 days .

Not quite sure why we have a 3 day trial so 75k however, I have run out of money now and having borrowed and took a loan for all I can so far.

I have not been advised of a litigation loan but then I have no assets to secure it . The comments people have provided above have been very useful for future reference

No idea on legal processes but an unserviced loan is one where the interest is all paid at the end. Not particularly unusual so no reason for that term to influence your legal team. So hopefully one thing less to worry about.

To wakeupsmelltheroses

I am not sure what your circumstances are but a 3 day final hearing suggests a case that is not straightforward.

However...question this...is your case really very complex?

Why are you saying I/we are being charged 25k per day...do you mean you are sharing the costs...if so under what arrangement?

Could there be a litigation loan because I believe they can manipulate things to take legal costs off the top of your assets and then divide what is left down ie. split between you. A litigation loan is supposed to be taken only from the settlement of the person who took it out. See here:

National Debtline website 18.04.18

What does a charging order affect?
A charging order may be made against any item in which you have an ‘interest’. This usually means property that you own (or part own) and will usually be your home.

If you own your home in your sole name, then the charging order will be made against the whole property. This is sometimes called a ‘notice’.

If you own your home in joint names with someone else and the debt is in your sole name, the charging order will be made against your share or ‘beneficial interest’ in the property. This is sometimes called a ‘restriction’. When the property is sold, the debt should only be paid out of your share of the equity.
...................................................................................

In my case to give you an idea on timescales and complexity of case...the Judge heard an application by me to turn the Final Hearing into an FDR on the same day as Final Hearing was listed which is very frowned upon.

So he rolled that application on into a Final Hearing which means I did not succeed in getting the disclosure you are entitled to get to have a fair Final Hearing but he got through it in a day and reconvened for another morning too.

At stake...2 properties, some land and a teachers pension.

Value of this lot? No more than £1m - we live in the provinces! This was a very standard family case, better than some in money terms but no comparison to London figures where property can make assets be of a significant value.

So if you have no assets to secure a loan on...who does have assets because if your soon to be ex has, have they secured a loan against them?

Otherwise it seems steep to have a 3 day Final Hearing if there are no assets...what is everyone going to talk about that takes 3 days!?

25k per day is huge. Perhaps I am on provincial prices too!

Ask lots of questions...ask why is this necessary? Can you manage to settle without a final hearing?

Ask your other side (ex) if there is a loan because if decree absolute has not been passed you have a right to be told. It should be declared.

Do it in writing to them and their solicitor, then you have proof and copy the court in. Ask the court to get a declaration if there is anything else impacting proceedings and your legal rights that you may not know about, like third party charges on what you are allegedly needing 3 days to divide up.

Also, have your solicitors agreed a schedule of assets because no final hearing should be allowed to go ahead without one being agreed. Mine did but mine was cleary a very unhealthy case.

If one side will not agree a schedule, they are not cooperating and have something to hide.

Good luck...!

Thank you Mrs Wobble!

To HiddenTruth

Yes. My Ex's Barrister was from same chamber as mine appointed by the Solicitors. Was the FDR at set up to ensure that a Final Hearing took place? Judge at FDR said Joint Lives Spousal Maintenance and Ex's solicitor apparently told Ex that Judge at Final Hearing would say the same.

Ex did not have a Litigation Loan as she had no UK assets such as property to secure against. Her solicitors made 2 applications for Legal Services Order, but rejected on basis that ex had expensive jewelry that could be sold to cover her costs. After all she was the Applicant.

However, fair play to the Ex's Barrister for advising that Joint Lives Spousal Maintenance was unlikely to be awarded in the circumstances as ex was; in good health, in employment and was offered a larger share of assets to reflect that Ex was the weaker earner.

But from Barristers' point of view once it has been decided that a Final Hearing will take place the ball is in the back of the net and fees have been maximized?

@hiddentruth

Yes it is complex.

There is no FH just a property that belongs to ex but his mum lives there rent free but put some deposit down . Ex pays mortgage. mum pays her bills and food.

The judge said at FDR that costs for us will be £25k for the 3 of us per day inclusive of legal help. This would come out of the equity in the property but no contract or loan for this unless exh has agreed to this ?? and I don't know.

My sol said mine would be for the 3 days £10k

I do have a charge on the property via home rights notice.

No decree absolute yet till financials sorted and then Final hearing in March.

It just boils down to ex not wanting to pay me anything nor his DC hence I was the applicator to start divorce proceedings .

It just boils down to ex not wanting to pay me anything nor his DC hence I was the applicator to start divorce proceedings

If there is an obstructive Ex involved sometimes Courts can't be avoided. On the plus side the Courts can award costs against either of the Parties if they think that proceedings have been prolonged longer than necessary.

I was awarded most of the Final Hearing costs as Ex had not honoured the previous cost orders against her and the Judge thought that offers I had made before Ex had applied to the Courts were more than reasonable.

Good luck

It is really helpful to get all these anecdotes and there has been a bit of a gap on communications on this thread.

Can I put out there some queries just to help my understanding of how common all this is

Can any of you please reply on the questions below who are prperared to share...Within divorce proceedings have you:

a) used a litigation loan yourself for legal fees with Novitas or Ratesetter or any other company offering such a product ....please say who offered the loan
b) obtained a Sears Tooth agreement with your solicitor to delay paying for legal fees til the end when you get settlement
c) known that the other side (Ex etc) used a litigation loan secured against your jointly owned assets and how were you told about it if so? Was it declared in court too?
d) have you had any of the above experiences a)-c) where it has not been put into a court arena...ie. where loans were used by either side just in negotiations between solicitors
e) did you know if unknown investors were funding any such loan for your divorce?
f) were you offered truly independent legal advice ever about such loans for legal fees or any conflicts of interest that may occur
g) were you told clearly you could lose your house or assets?
h) were there any disasters in any of these scenarios that you can share?

Thanks for any comments!

To Hidden

My Ex applied for a Sears Tooth agreement, but her solicitors did not agree and she claimed not have have any assets in the UK (a lie) and her overseas property was considered too risky (some truth in that). However, as my own Solicitor advised:

"Your Ex's solicitors have seen your Form E and know how much liquid cash is available so they will be happy to wait till the end"

True. Ex thought her solicitors were working for free as they did not bill her anything at all. Just waited till the settlement was received from my solicitor, took their slice (about 15%) and passed on the remains.

Don't know anyone who has used Litigation Loans, but from is already posted they sound like a scam.

To @MissedTheBoatAgain

Thank you for sharing ..well that is rather strange that they refused a Sears Tooth because that is effectively what they have done by delaying the fees until the end. Essentially it sounds like they used their rights called the solicitors charge. What you describe does sound suspect if they truly just took money off as your ex would have needed to approve their bill for them to 'take' their 15% and if the bill was considered excessive she could get it assessed for reasonableness at court.

But the figures being discussed for legal bills is staggering. Some people are talking hundreds of thousands where these lititation loans have featured and there is a case reported by one Judge. ..will try to post it when I remember whone it was...but liquid assets of around 3 million ended up with an almost 3 way split between wife, husband and solicitor. The legal bill was 920k! The Judge was astounded but the weird thing is he said it needs to stop but I also read he had approved litigation loans ...need to check my facts a bit on this...but overall the left hand does not seem to know what the right hand is doing at judicial level but what is absolutely evident is that solicitors are a commercial business designed to bleed your assets these days and not preserve them.

That realisation alone has been truly shocking.

My Ex made mistake of signing how much the final hearing would cost long before it happened. Maybe she thought, or was led to believe, that her legal costs would be paid in addition to the settlement figure?

The link for the case whereby 920K fees were incurred on total assets of 2.9 million can be found on the following link:

www.stowefamilylaw.co.uk/blog/2014/11/17/mr-justice-mostyn-and-the-question-of-costs/

Missed the boat again, it is pretty much certain that the lawyers and the loan companies persuaded her that costs would be met by you, and your observation that she made the mistake of £60 something thousand the loans are not subject to CCA regs.... But she would certainly have been told, as we all were, that the full amount of the loan would never be used, sign for £100k, but we won't use that, as pinkfog has found out, of course they use all that, and then come back for more, at crucial times - in my case and in pink fogs case, 2 weeks before the final hearing.. so you either extend the loan and get represented at the final hearing, or you self represent at final hearing, which is pretty unrealistic if the case is complex.... You may have the right to get some information from your exes lawyers and from the loan company relating to this because of course the loan was secured against your joint assets... Try an SAR...

Ex was almost certainly fooled. Two different solicitors wanted 30K from sale of a vehicle to be deposited into their account to draw down against. I said no as did my solicitor as they too stated that Ex's solicitor would make sure they billed every penny. Money was deposited with my solicitor and informed other side money would be kept towards a final settlement. However, made no difference as Ex's solicitor knew there was liquid cash available and just waited till they received the settlement from my solicitor and then pounced and took a big bite.

I suspect that lurking in the back of the Mostyn, JvJ case there is a litigation lender, smacking they lips! I would be interested to know... Perhaps we could all write independently and confidentially to Lord Justice Mostyn and give him the bare bones of our cases, and the costs, and make it clear these were out of control from the outset because of the litigation funding, which lawyers pressure sell... Regulation, particularly in the divorce arena, could apply a cap on interest and fees charged by the loan companies, and as Mostyn says, the obligation for lawyers to provide new clients with a stage by stage reasonable costs guide, produced by the SRA (NOT the lawyers!) so people who have never hired a lawyer before, still less been through divorce, have an idea of what is excessive...... That article is interesting, apparently I should have agreed in writing to each hike in cost estimates - I did not, nor was I asked to. Their initial estimate was £20-50k, then it went up to £50-150k... It stands now with interest at over half a million - I didn't even have a credit card, I was so risk averse......

To HighlandHeath

Your case sounds horrific. Have you not been able to withdraw the loan or settle without Legal? To go from 50K to 500K sounds like its heading towards the Mostyn case?

To @ MissedTheBoatAgain

Reference your link to the case of astounding fees above...where there was a litigation loan involved I recall.

Now here's a thing...I approached a forensic accountant at Marilyn Stowes who report this case who has a certain reputation...he would not touch my case recently and if you note Marilyn Stowes views on legal fees the whole rotten lot of them are corrupted by this charade that they put on to allegedly sort out finances when in fact it is a game of who can withhold and lie smartest which makes a mockery of any process to declare assets and finances in divorce ancillary relief. Bet Stowes offer Novitas loans...or Ratesetter etc. and have signed their so-called "global terms' they refer to. In my case they cannot even decide what was really my real case number at court..,it is laughable were it not so utterly tragic.

This is financial abuse perpetrated by solicitors and barristers and dodgy investors manipulating indeed directing cases in what are supposed to be private family court cases but behind the scenes investors are monitoring your case. It is total violation and frighteningly the judiciary are playing the game too.

They are facilitating fraud by running down assets and enabling their carefully selected investors to buy them at an undersale.

Highlandheath has a staggering case which the FCA need to come clean on because I believe the FCA are running the illegally constructed loans through court on some private deal they have agreed with the litigation loan holders to stop a public outcry and because they have now restructured their format to give out FCA regulation to these sharks.

On a good day I hope the FCA are going to wake up and smell the coffee and go for the custodial sentences required for this organised abuse of process and in some cases like mine extensive breaches of data protection and human rights.

Here we go...extract from Marilyn Stowe reporting this case before she retired in 2017...

It is evident she is pro the solution many lawyers firms have latched onto...the litigation loan. It keeps them buoyant and drip fed with investors money ...the return being that they work for the investor in truth and the carrot dangled to the loan taker is some promised advantage like getting the other party to pay their costs or some secret deal to shaft the ex where a litigation loan is used as a tool to claim unfair advantage.

She says:

'Should costs be controlled by a court from the outset? How far can and should the Judge become a nanny to a mature, responsible and informed client? However would it be done? To which cases would it apply? Who would calculate the payment and how? How could it work from a practical perspective, given a one man band on the High Street representing a wife against a substantial firm with all its significant overheads? Then even assuming somehow it all happened, what happens when the costs cap is met and the determined bully has successfully outsmarted the weaker spouse, using up all the costs?

And from a competition perspective, how legally enforceable would it ever be?

There are practitioners (me being one) who are calling for more costs orders in cases that merit it, and doing away with the general “no order for costs” principle. Currently it’s very difficult to obtain an order for one spouse to pay the others’ costs but I think it should become far more routine.

These are rather different to the costs rules that used to exist – without prejudice offers the court knew nothing about until after a judgement which could be unbalanced by them.

There is surely now an argument for requiring open offers throughout, and introducing a costs risk when open offers are made but not accepted and then beaten. The risk of paying costs out of the assets which are left would surely concentrate minds and as a result, cases like J-v-J might settle sooner.

Of course, I repeat, and my remarks should be taken in this context and cannot be stressed too strongly, that cases like J v J are very much the exception rather than the rule. They make the headlines because they are so spectacularly out of kilter with most other cases, and they do not in any way fairly represent the thousands of cases which roll through the courts every year without a glitch or bump and believe it or not, clients all paying their lawyers without a problem.

That’s how in reality, we retain the confidence of the public.

I think Marilyn that the public have lost confidence. Best that you retired when you did!

Author: Marilyn Stowe
The founder of Stowe Family Law, Marilyn Stowe is one of Britain’s best known divorce lawyers. She retired from Stowe Family Law in 2017.

www.familylawweek.co.uk/site.aspx?i=ed136685

See the full case here and paragraph 32 of the reported case.,scroll through the article and it is there in full...the wife had a litigation loan...and Mostyn recognised that format from civil cases.

Put one of these in the hands of a no win no fee lawyer who cannot act this way in family cases as it is unlawful...just a minute...oh it is the same thing!

Except better as the law firm gets drip fed fees to do a crap job and prolong litigation or incite it in the first place.

Except better as the law firm gets drip fed fees to do a crap job and prolong litigation or incite it in the first place

I work in Dispute Resolution and Arbitration. Very often that the Legal people press to keep on going as they are convinced a better deal can be had whereas the Claims Consultants and Arbitrators advocate amicable settlement.

Think most on this thread have worked out why Legal want to take the dispute to the next level - to maximize their fees.

I have rattled several of the Legal people on MN by advising that couples should try to settle amicably and avoid the Courts. Why doe they get rattled? Why do they not recommend amicable settlement?

Think everyone on this thread knows the answer to that question.

Hi @MissedTheBoatAgain

Good points but there are problems where there is determined and purposeful financial abuse as a motive where a backdrop of domestic abuse exists. This is where the litigation loan is an abusers dream product. It is also a greedy lawyers dream product and the issue of arbitration in a situation where assets have been charged in proceedings is a moot point.

In my case arbitration was offered after the event of a final hearing and in absence of me.,,my solicitor refused saying he could not attend without his client to take instructions. They had refused mediation prior to final hearing even though mediation was unsuitable to the case in my mind due to the abuse it had been offered by me in desperation due to the highly aggressive litigation and assertions over assets with no evident basis...because they had not declared the loan! That is, it was already too late...the third party claims to our assets had been done long ago without any notification to me or paper trail at Land Registry.

I am dealing with regulators in duplicate and think we may be getting somewhere...see this important development hot off the press. ..

www.sra.org.uk/sra/news/press/risk-outlook-autumn-update-2018.page

I will be content when some involved are struck off and we have some custodial sentences. The allegations are serious and the evidence compelling. I do not appreciate being stolen from. It is fraud and those who have knowingly perpetrated this level of deceit are not the sort to settle. This is the problem with people who need to win. However reasonable you are if you have a perpetrator it is hopeless. As the SRA say solicitors should not be the hired gun to do the abusing by proxy.

If we could change people to suddenly become reasonable that would be a different thing but an abusers does not suddenly stop being an abuser and will be furious to have lost control. I did not leave my marriage for no reason!

Did anyone post anything on this on the legal boards? I'd be interested to see the lawyers arguments...x

Did anyone post anything on this on the legal boards? I'd be interested to see the lawyers arguments...x

I had similar thoughts when I first saw this thread, but not seen any posts on the Legal Board on this subject. Can't imagine they would say much. Most likely response would be:

"we can't comment as have not seen all the details of the case"

Good bet though that few of them will admit to overcharging or prolonging the Divorce process for their own gain?.

I can't find the legal board!!! There doesn't appear to be a heading on MN for Legal.... Could you point me in the right direction please?