Litigation Loans to fund divorce

[Highlandheath]

Any views, experiences, recommendations please, or do these contribute to what Mostyn describes in JvJ as "gross leaching of costs" and solicitors charging for nothing but time?

@Xenia

Any useful info you can give me in relation to this please

I think in some divorce cases people can have a settlement over turned later if it is found their spouse lied about finances at the time. I am sure I have read occasionally cases along those lines which might help greenberet

I had a barrister for my 2nd final hearing - for pensions - she pointed out all the reasons why I had not had a fair trial for 1st final hearing - house proceeds and company split - and asked judge to either allow a fresh trial, reconsider her judgement especially in light of the false evidence or allow an appeal - she refused all three options.

I could not face the prospect of appeal at this time - firstly it would have meant pursuing an agreement to appeal - before an actual appeal - which my x would have found many a way to manipulate!

So if a judge refuses as she did the only reason I can see is to cover up her own errors - even after the final hearing I sent her an email as her maths were wrong - the settlement did not add up - it was ignored too!

I lost out on several counts but had I accepted an offer a year or so previously I would have been £150 k better off - but I was told I would not be able to survive - joint lives spousal was secure - therefore keep going and we deal with this at final hearing. This is without taking into account the mental toil this extra year put me through.

So which professional body deals with the judge ignoring evidence and then refusing retrial etc purely from what I can see to protect her own reputation!

Maybe I need to write to SRA again if they are upping their game - the other option is reporting solicitors to police - because I believe they owe me money and are now just refusing to correspond with me at all - hoping I will go away no doubt!

Maybe I was unlucky and I got one of the few dishonest ones - but as I’ve said before it was not just my legals but the x’s Too and they were not just dishonest but they were nasty with it abusing my mental health as the only way to over power me and ensuring that I was incapable of functioning - and what is worse the judge allowed this!

This is what galls me more than the financial impact - maybe this falls under human rights?

www.hfclaw.com/renato-labi-comments-in-the-daily-mail-and-aol-news-re-the-alison-sharland-and-varsha-gohil-supreme-court-divorce-case/

However from what you posated above it seems more that the judge just took a different view on who got what rather than one side had £050k hidden away they had not disclosed kind of issue that some lower earners discover later.

It is only worth doing if there is a lot of money at stake I would have thought (and in most cases there is not) and if people are sure things were deliberately hidden by the spouse I would imagine.

The judges have a lot of discretion in many areas of law. Litigation is a lottery which is why 90%+ of cases that are started settle without court hearings as most people don't think the cost and risks are worth it. I do realise that in the area of divorce law people often have fewer choices about this and it is all very close to home compared with business disputes however.

Ok, so 18% simple interest on 10,000.00 cost you £1800 interest if you only had the loan for a year. Novitas charge £1000 arranging fee, plus £250 for independent legal advice, and your lawyer would have charged their hourly rate for arranging the loan. So with simple interest the loan cost you something round £2,825.00, I don't know what compound interest would have taken that to (from memory Novitas loans are compound interest) and I don't know how much your lawyers charged you, or if you were double charged for the independent legal advice (once by Novitas and once by the lawyers who gave the independent legal advice, if you got any, it was in the contract prior to 2017 so I'll assume you were charged something for it in any event). Let's say your lawyer wasn't expensive, and also charged only £250.00 for processing the loan - you will also note, if you look through your legal fees that your lawyer will also have charged their hourly rate, in 8min increments for every phone call, drawdown, email or conversation with you about your loan, for only one year, including interest and fees cost you at a very conservative estimate, £3,000.00. If you had got a bank loan at base rate for a year, borrowing the same amount would have cost £50.00 in interest and none of the associated fees. If you had maxed out on a credit card with one year interest free it would have cost you nothing. Why did you choose to pay £3,000.00 plus the solicitors fees for every drawdown, for the litigation loan instead of zero or £50.00? For information, it would not have been easier for your solicitor if you had taken out a bank loan, they would have had to submit bills to you, of course, which you would have been more likely to carefully scrutinise, and any issues you had to be clarified before you paid...the bill. With the litigation loan your solicitor had far more control of your £10k and you paid £3k to give that control to them.... I don't understand why for such a relatively low amount you went for such an expensive funding option....? I've read somewhere that any loan charging 5% above base rate is classed as "extortionate", what motivated you to choose an extortionate loan over a normal loan? Please don't think I'm being arsey, I genuinely am curious to know why this loan appealed the most...

Hi Greenberet... Re the Judge getting the arithmetic wrong - I am absolutely pants at maths - thankfully there are on line interest calculators so I could get what I think are the right numbers for Xanterose... But after it was all sealed I showed the judgement to a friend who IS good at the arithmetic, and really good at mental maths, and she was absolutely gobsmacked, the numbers did not add up, the arithmetic was just plain wrong, at my expense, and by tens of thousands!!!! The solicitors, the barrister, his assistant, the judge, the clerk of the court, everyone - not one of them noticed, and I know the lawyers believe we clients should be super on the ball and understand everything that's going on in court and double check all their work we are paying so much to them to do, and if we don't then that's our fault, but it is difficult to concentrate when your abusive ex is throwing things at you, following you into the ladies in the court building, harassing you etc... So I didn't do the maths..... Staggering really! The arithmetic is just WRONG... All wrong, the whole Judgement is based on numbers which do not add up to the amount she calculated they did - and so I have lost that.. all of it!

I think we used to have laws on extortionate credit bargains but they were removed and replaced with more general legislation. Commercial post graduate loans eg for lawyers to study post grade charge about 6 - 8% I think. (We paid 15% on our mortgage in the 90s but that was a long time ago).

Presumably some people have no credit cards or any kind of credit available other than pay day loans and just have equity in a house which they will be likely to get a fair chunk of so I imagine some kind of divorce loan is their only option other than representing themselves.

Sorry Xanterose, I see you say you did not have the option of a bank loan, did you approach a credit union, do you have a union you could have used financing through? I'm still baffled about why anyone would choose to pay 18% interest rather than max out on a credit card and pay zero interest for a loan of £10k... Even people on JSA can get credit on a credit card, and money is money, right? I mean you might pay more for a pie from Harrods, because it's going to be different to a pie from Tesco, but money - wherever it comes from - is always the same, so why pay more? The interest your friend with the £180k litigation loan from Novitas would not have been far shy of £300 A DAY by the time the loan was maxed out and she was delighted with it? Woosh!!! I had one person on MN PM me, she had never calculated how much she was paying so we did the sums... And she felt physically sick as a result.... She genuinely hadn't realise how costly the loan was, and that there were options - not different litigation loan companies, but completely different funding options not involving litigation loan companies... Can I ask, did all your friends who were so happy with their loans, get any money back from the litigation loan company at the end of proceedings? Or was the loan fully spent by the lawyers down to the last penny? So, for example did your friend with the loan for £160k pay a solicitor's bill of £160k - or did the solicitors spend exactly £160k... not a penny less?

@Highlandheath Ok so, I borrowed from Iceberg, not Novitas. As previously mentioned, I was not required to obtain independent legal advice beforehand. Secondly, the account was approved with a credit limit of £10k - this does not mean that I paid 18% interest from day 1. I was only required to pay interest on the balance, equal to 1.5% per month (similar to a min monthly payment on a credit card). So this increased as more work was carried out, and more bills were submitted by my solicitor. Interested is not compounded as it is paid monthly.

An example (hypothetical as cannot remember exactly the amounts my solicitor requested and when):

£2.5k requested by solicitor at account opening to cover work carried out to date - I was then required to pay £37.50 (1.5% of 2.5k) per month (plus £10 fee for drawdown).

A further £2.5k requested by solicitor at end of month 4 to cover work carried out since last request - My monthly payments increased to £75 (plus a second £10 drawdown fee incurred).

A further £5k requested by solicitor at end of month 11 to cover work carried out since last request - I was then required to pay £150 per month (plus a third £10 drawdown fee).

I continued to make these monthly payments until the sale of the house had completed (I think 3-4 months) at which time I repaid £10k.

Yes, I was charged for my solicitor’s time spent administering this. But, it was manageable and It can’t have been that time consuming for my solicitor, as I wasn’t charged too much at all.

As mentioned in my initial post, if you have the option of a bank loan, or a credit card, then you would be foolish not to take it as it is clearly the cheapest option. If you do not look into this before deciding how to finance, then you must be mad. However, these were not options available to me, and to obtain borrowing when I otherwise couldn’t, at a rather crucial time, was an absolute blessing.

I was in a position to meet the monthly interest payments, thankfully. Obviously, on a higher balance, these may be substantially higher. I do not know for sure but think that clients are also offered the option to pay these interest payments at the end if they cannot afford to do so monthly.

Thankyou Xenia, re Student Loans:

www.independent.co.uk/student/study-abroad/news/student-finance-loans-brexit-article-50-illegal-and-unenforceable-says-top-lawyer-a7410261.html

Thankyou Xante... That's all very clear, it's so unfair that those who can least afford have to pay the most, if you had been able to get a credit card you would have saved so much, I do think legal aid at BofE base rates is the only route in a supposedly civilised country, for someone to be in a position where they have to pay over the odds to borrow money for something like divorce, because they have less is not equitable to me, given the circumstances I see you had no choice, but I still feel queasy that you were in that position, and that the loan company profited from your divorce..... Hope it all worked out well for you!

Hmm, solicitors charge in 6 minute tranches.

Well, this thread makes me glad I’m not a divorce lawyer!

Imagine what they come back as in the next cycle of existence!!!

Gosh, yes, of course, they charge even more, 6 minute tranches... that's one little email saying "cancelling the meeting" Kerching!!!

Judge failed to take into account that x had taken on two new employees which contradicts his narrative that company going down the pan - together with experts report that confirmed otherwise.

First employee taken on after 1st final hearing adjourned - obviously x not expecting this as not something he could control. 2nd employee taken on after final hearing 3 months later but before 2nd part of final hearing a month later - again something x did not expect to happen.

So two seperate deliberate actions that totally contradict everything he said from the start coupled with directors loan taken out of company to the tune of £100k all adds up to one huge steaming pile of bullshit - all either ignored by Judge or she didn’t read my statement!

At my firm we charge in one minute units. The 6 minute system is unfair to clients.

At my firm we charge in one minute units

Must spend more time checking the minutes every minute than giving advice?

@Collaborate

Where does this 6 minute system originate from? does it predate computers and email communication? Because it seems pretty unfair to me when it is now easy to see exactly how long it takes to read an individual email and a serious of emails get charged at 6 units per email - when it may only have taken 6 minutes to read the whole lot!

I’ve just timed this it’s taken 2 minutes - but would have been charged as 6 - So 4 minutes extra for nothing!

Must spend more time checking the minutes every minute than giving advice?

All emails and documents are created in a case management system, which times in real time how long a task takes. Our phones record and time each conversation.

Where does this 6 minute system originate from?

It’s one tenth of an hour. It predates everyone getting desktop computers, when everyone would have a paper time sheet to fill in and someone would be paid to input all this on to the office computer. It is a clumsy attempt to recognise that in reality no one picks up a file for one minute, and there is thinking time involved in every task, but you get unfair situations where, if 10 short letters come in, you’re recording an hour but taking 5 minutes. We feel we charge enough anyway (and I’m not saying by that that we charge a lot. We still charge much less than our direct competitors. We simply manage to keep overheads low.

Before computers I understand that a solicitor would look at how thick a file was and bill accordingly.

All emails and documents are created in a case management system, which times in real time how long a task takes. Our phones record and time each conversation

My solicitor did not do that to my knowledge. Certainly never saw any evidence of that detail. Invoices listed figures for; calls, letters, court preparation and time at Court.

Not convinced it was necessary to involve Barristers for the Court appearances. They did not seem to present anything that the Solicitors had not already done. One reference to the FPR that it is not allowable to repeat to the courts what was said at the FDR. Would have thought any Family Solicitor would know that?

Solicitors use different systems of charging as is permitted under the rules. I will often give clients a fixed quote to do a first draft of an agreement or a letter then we both know the cost. That is not so easy to do if you are doing something that might take one letter or 100 hours of work or more. I can tell a client exactly what time I spent on what day but most of my work is large chunks than a few minutes. Yesterday the shortest was £40 for some advice. It would be quite rare I would spend one minute on something as a lot of thought has to go into most of my work. Even just to read a long email I get is likely to take a while, check it against previous correspondence etc.

Extortionate credit bargain law did change but it sounds like from the above it is still around and used. I don't agree with the view on that link that student loan rates (as they compare favourably with the terms of private commercial loans for post graduate study) will be held to be invalid but we shall see. The competition authorities looked at the pay day loans sectors and introduced more rules I think www.gov.uk/cma-cases/payday-lending-market-investigation. It has always been a difficult issue as to what can be charged or not which is why the bible and koran were/are against charging of any interest and left others to lend money. If no one else will lend you money (and most pay day loans are apparently paid back very quickly - sometimes by your next pay day in full) then that might be better than having no option and the rates of all loans tend to reflect the risk although I am certainly not a supporter of massively high interest rates being offered to consumers. There are lots of interesting points on this thread and far too many points to answer.

On the one about whether a barrister is needed some people getting divorced prefer it and some solicitors persumably don't do court work. I tend to find it is cheaper to use a barrister for the business cases I do. I sent one off to a county court in the last case I won (not family law) but in my kinds of cases you would always be discussing everything with what is usually an experienced business client so it is not too relevant to divorce situations where often people are using solicitors and barristers for the first time.

@Collaborate

I guessed as much. I’m sure if it wasn’t in the sols interest they would have changed from this system.

I’ve got many instances where I have been charged 6 mins per email for a series of emails which substantially increaese the fees.

What would you suggest I do where I now believe I have overpaid my account ( not through this) and solicitors are ignoring my communication and my complaint at LO seems to have disappeared into a black hole!

I’m thinking police!

Hi Greenberet, I've also contacted the LO, and the SRA. I read the SRA the most recent letter from my sols (big, established London firm) in response to my complaint to them, and the SRA told me it was "deliberately mis-leading" and to add that to the complaint to the LO, but that the volume of complaints to the LO is so high there is a six months backlog. This means that you will have to wait six months before your complaint is even looked at, unfortunately. And, of course, this means we all have to deal with the escalating financial difficulties caused by the solicitors' actions - for which they have been paid, but for which they take no responsibility! I've had a solicitor friend who was at uni with me look at my file and he says the independent legal advice I received (which wasn't independent) was all about "the solicitors covering their arses" they got me to pay for legal advice to cover their own arses, it doesn't get much better than that does it!

On the 6 minutes billing system, it took me less than 6 minutes to type the above... I could - effectively, if I was a solicitor, bill two clients for the same six minutes, or portions of it! If you are just sending a yes/no email, you could bill 6 different clients for 6 minutes each for one 6 minute period! That's almost as good as getting the client to pay for legal advice to cover your legal arse!

Routine emails, I agree. Non-routine letters and emails take time. Time to consider the appropriate response, and time to word it just right.

That is where 1 minute time units come in to their own. Even with longer documents, On average every item of recorded time is on average 3 minutes less than had I used 6 minute units. This amounts to £12, repeatedly, and over a whole case this makes a huge difference.

As for your bill, @greenberet, it depends on whether your case is contentious or not, and when it was rendered. I presume you've already paid it. The invoice should set out your rights regarding disputes.

I think you get six months to query a bill... The association of costs lawyers has good advice on their website.