For richer, for poorer: LSPOs and Economic Abuse

This week Daniella Adeluwoye, In-House Counsel at Manders Law and Pupil Barrister at 4 KBW, explores this important topic for those worrying about how to fund legal advice and proceedings in a matrimonial dispute, and what you can do to level the playing field if you are the weaker economic party. Are you a victim of economic abuse? Read on ……..

 

I am going through a divorce, but I have significantly less money than my wealthier ex-spouse. I am worried that I will not be able to meet my legal fees — is there anything I can do ?

 

There is an increasing awareness of the intertwined relationship between economic abuse and the funding of legal proceedings.

 

The Domestic Abuse Act 2021 defines economic abuse as any behaviour that has a substantial adverse effect on a party’s ability to:

  • acquire, use or maintain money or other property, or
  • obtain goods or services.

 

Economic abuse is particularly prevalent in cases of domestic abuse — but it is seldom an isolated manifestation of abuse and often occurs with other forms of abuse. For example, one way a partner may exert their control is by cutting off the other partner’s financial resources, thus reducing their ability to be self-sufficient and further entrenching their dependency. This can become particularly pronounced during a divorce if the spouse who controls the family finances withholds money from their partner and refuses to provide to provide funds for living expenses  and obtaining legal advice and representation following separation.

 

To mitigate this scenario, a Legal Services Payment Order (LSPO) is available and is an interim order that the court can make requiring your ex-spouse to make a payment for the purpose of enabling you to obtain legal services for the purposes of the proceedings.

 

To obtain a LSPO the court must be satisfied that, without the payment, you would not reasonably be able to obtain legal services.

 

You must demonstrate that:

  • You cannot reasonably secure a commercial loan to pay for your legal services; and
  • You are unlikely to obtain legal services by granting a charge over any assets recovered in the proceedings.

 

So what happens in practice?

 

There is no good news here. It could be argued that LSPOs in and of themselves provide fertile ground for economic abuse.

 

Judges rarely grant applicants the costs budget they seek, and which are contained in detailed and considered schedules.  The court will assess whether the proposed costs are reasonable and proportionate.

 

In the case of HAT v LAT [2023] EWFC 162, the judge who assessed the sums sought by the applicant reduced their proposed budget by just over £27,000.

 

When the court reduces the budget sought there is inevitably a knock-on effect on the work the applicant’s solicitor can undertake and which, in their professional view, it is necessary to undertake to ensure that the case is properly prepared such that a fair outcome can be achieved.  In sharp contrast there is no such constraint on the budget of the spouse controls the family finances and who has unfettered access to funds for their legal team to work on their case. This is hardly the “level playing” field that the law envisages, but it is what happens in practice.

 

Bear traps to look out for!

 

The failure to provide full and frank financial disclosure. A lack of transparency may impede the economically weaker party’s ability to negotiate properly as they do not have a clear and truthful picture of the resources available, such that the final settlement may be rendered unfair and unsound.

 

If there are deficiencies in the financial disclosure document (Form E) produced by the economically stronger spouse, the court is clear that it will not hesitate to make robust assumptions about their ability to pay. However, in many cases, it is complicated and costly to prove that a party has failed to provide full and frank disclosure and this will often necessitate costly investigative expertise thus incurring additional fees, which may not be funded by the reduced LSPO budget that the court has imposed at the LSPO hearing.

 

Another well-known tactic by those intent on economic abuse and whose aim is to cause litigation fatigue and increase costs, is the sending of numerous communications to the economically weaker party’s solicitors, which at first glance may appear to necessitate a response  thus incurring additional legal costs, which the reduced LSPO budget simply will not cover.

 

What can I practically do if my ex-spouse refuses to comply with the LSPO?

 

You could apply for a Hadkinson order. This is a remedial order of last resort that the court can make when a person is in contempt of an existing order of the court that they should make the payments due to you. It provides the court with the discretion to refuse to hear the defaulting party, or alternatively to impose conditions upon them, such that they cannot continue to litigate their case until the order is complied with.

 

A Hadkinson Order can only be made if the following five questions are satisfied:

 

  1. Is your ex-spouse in contempt e.g. by failing to comply with the LSPO?
  2. Is there an impediment to the course of justice?
  3. Is there any other effective means of securing compliance with the court’s orders?

 

Should the court exercise its discretion to impose conditions having regard to the question:

  1. Is the contempt wilful (deliberate and continuing)?
  2. What conditions would be appropriate?

 

The first and second conditions are questions of fact and non-payment in breach of a LSPO or maintenance order would constitute contempt of court, irrespective of a person’s ability to pay.

 

Impeding the course of justice is likely to include “making it more difficult for the court to ascertain the truth or to enforce the orders it makes”.

 

Be aware however that as to the third condition, if there are other powers the court can deploy in its armoury, it will not make a Hadkinson Order.

 

For an initial FREE consultation on any aspect of family law, call Manders Law on 01245 895 105 or email us here.

 

Note: this blog is intended to give an overview (rather than comprehensive guidance and advice) on your legal or financial position and is provided for information only. It is not an endorsement of any product or service provider.

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