12 Jun Q&A: What You Need to Know About Litigation Finance
By Isabel Agudo (Junior Associate) and Adam Paterson (Senior Associate)
Q: What types of cases are suitable for litigation finance?
A: You should discuss litigation lending options with your appointed solicitor who will consider with you whether a loan is suitable in your case. Some non-exhaustive examples of where we can help:
– If you are the financially weaker party and your ex-partner refuses to make funds available to you/does not currently have funds available to assist you in meeting your legal fees.
– Where you have assets which form part of the matrimonial pot but they are not currently liquid (for example a property that is to be sold).
– If you are a business owner and do not wish to withdraw funds from the company in order to meet legal fees. This may be for practical, financial or commercial reasons.
Once you have decided that you need our assistance, your solicitor will help you complete an application form for our consideration. We assess each case on its own individual merits. Our Credit Committee carefully considers each application and the affordability of the loan alongside your best interests as the applicant. We endeavour to consider cases as quickly and efficiently as possible in order to assist the smooth progress of your case.
Q: Can I apply for litigation finance if I am the financially dominant party?
A: Yes, we are able to lend to either the financially weaker party or the financially dominant party. Indeed, there are a variety of circumstances where it may be advantageous to obtain a litigation loan. See above for two examples.
Q: How does the litigation finance process operate?
A: Ordinarily, the process will begin with a brief conversation between one of our lawyers and either you or your solicitor. This gives us the opportunity to work with you to highlight any potential difficulties in the lending application and answer any initial questions about our process. We will then ask your solicitor to submit our application form for formal consideration. If your application is approved, we will continue to liaise with your solicitor and issue loan documents for your consideration.
We require all clients to obtain independent legal advice in respect of the loan agreement before signing, in order to ensure that you understand and are comfortable with the terms and conditions. Once the paperwork is executed, the funds will become available. Your solicitor is expected to update us with key changes and developments that affect your case.
The loan end date is typically six months after the maximum expected duration of your divorce proceedings at which time the entire sum due under the loan agreement is paid.
Q: What are the administrative costs and interest rates?
A: Interest on our loans is not charged at a set rate. Instead, we apply an interest rate based on a risk-based analysis of the case. If you would like to know more detail, please get in touch by emailing us at email@example.com.
Q: Is it safe to borrow from a third party litigation lender?
A: Litigation lending is widely used in the matrimonial and private client dispute space as a practical and reliable solution. Schneider Financial Solutions is authorised and regulated by the Financial Conduct Authority which means that we must have regard to the interests of our customers and treat them fairly. We are very proud of our success stories – we have assisted many clients from a variety of backgrounds in obtaining suitable awards within their proceedings. Our loans allow clients to secure expert advice and instruct their lawyers on their terms.
Q: How does the litigation loan work during my case?
A: We ask that your solicitor estimates their fees to each stage of your proceedings. For example, in a financial case following a divorce we would ask that your solicitor estimates their fees to each hearing. We then make that sum available for the relevant stage of the proceedings.
In terms of paying your legal fees, your solicitor will send each invoice to you copying us in, we make payment of the invoice once it has been specifically approved by you. This means you are fully up to date with fees incurred and billed.
Q: What purposes can the loan be used for?
A: We fund solicitors’ fees as well as disbursements ranging from counsels’ fees, expert witnesses and valuations. Your solicitor will provide us with a costs estimate so that we can coordinate the loan amount in advance. We may also be able to offer a separate loan facility to cover your living expenses if you find yourself unable to meet your day to day costs of living.