20th February 2024

Separating couples are confronted with financial challenges from
the outset, compounding the emotional and psychological toll of the
process. When funds for legal fees are unavailable, reaching
resolution can seem impossible to achieve.

Often parties are unable to access shared assets and it’s
common for one or both parties to exhaust financial resources
before the divorce is finalized, delaying proceedings, and causing
interruptions that impact both clients and legal professionals
alike. In addition, with resources like the matrimonial home or
shared business assets tied up, qualifying for the traditional
funding may not be an option.

This inherent access to counsel, and ultimately access to
justice issue, was the objective behind BridgePoint Financial’s
Family Law Financing, a funding solution
developed on the request of family law lawyers to help their
clients overcome such financial obstacles. Launched in 2021, this
funding solution provides clients with an advance on their eventual
entitlement when they truly need it.

Family Law Financing can help clients who are asset rich but
cash poor due to lack of income, or over-extended due to everyday
expenses, alternate living arrangements, and dependent-related
costs. In many of BridgePoint’s borrowers’ cases, the
parties have sold the jointly owned matrimonial home and the funds
are being held in trust pending the resolution of the outstanding
issues between the parties. Often, this situation leads to an
inability to continue paying legal fees and ongoing personal
expenses. Access to Family Law Financing means that the borrower
can use the funds to pay their legal fees, moving the matter closer
to resolution.

“We see the need for funds happen at all stages of the
process, from pre-retainer — when couples are trying to
cement the separation process — to needing funds to move out
of their current matrimonial home during separation, to people
running out of financial resources as the divorce nears its
end,” says Keri Campion, Family Law Team Lead, Risk Management
at BridgePoint Financial, adding that BridgePoint loans are repaid
once assets are liquidated and dispersed, or if there’s an
interim release of funds.

According to an analysis conducted by the company, in the last
two years, more and more applications have started to come during
that later stage in the process, as clients run out of liquidity
and have maxed out their debt capacity. Lacking the funds to
continue or get through a necessary Trial can put a hold on
proceedings or result in a change of lawyers or
self-representation, creating inefficiencies and delays, adding
even more stress for clients.

In one recent scenario, a wife had been litigating separation
for many years and ran out of funds on the doorstep of the trial,
despite being a high-income earner with numerous jointly owned
properties. This left her exposed and without being able to cover
her $100,000 trial retainer, she would have to represent herself in
a complicated trial which was only months away. Funding was set up
as a line of credit and drawn from to replenish the retainer funds
until the trial date. After the trial’s completion, the
borrower was able to repay the loan from the settlement of
outstanding issues and eventual sale of one of the properties.

There are several ways in which Family Law Financing can benefit
both legal practices and their clients.

“When counsel is able to continue to work on the file, it
keeps clients happy, and that’s better for the practice,”
Campion points out.

“If you’re able to resolve files on a more consistent
basis, you’re able to close files quicker and ultimately have a
larger volume of files. Consistent file progress leads to
consistent results and resolution. There are many benefits to being
able to turn over files more quickly and efficiently.”

She notes the consistency that comes from having a securely
funded divorce process is a benefit to legal support staff as well,
“because they get to know one their files, and are able to
continue the process without interruptions in workflow.”

Campion appreciates the importance of the relationship between
lawyers and clients, adding that a sense of support and camaraderie
can be lost during the “tough conversations” that must
come when funds are unavailable.

Every time there is a change in representation due to the
start-and-stop caused by depleted funds, clients incur additional
costs without necessarily increasing profits for legal practices.
This not only slows the process down, but also creates internal
overhead related to the practice management and administrative
tasks, as files must be updated, and accounts recovered.

Of course, should a client completely run out of funds and
become self-represented and/or change firms, there becomes yet
another delay as a new lawyer must review the file and “get up
to speed.” Campion explains for clients, this can be confusing
and overwhelming.

“Client peace of mind and satisfaction is extremely
important,” Campion says. “Most are emotionally
exhausted, financially drained and they are going through one of
the most difficult times of their lives. The faster they can get
through the process the better.”

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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