Just when I thought the family court couldn’t get any worse, I received an email from Jenny warning me about litigation loans.  She told me the dreadful story of how her solicitors had conducted her divorce: “an absolute catalogue of incompetence, deceit and malpractice”.

Jenny was interviewed last month by Winifred Robinson of You and Yours about the loans her solicitors pressured her to take.  The BBC decided not to reveal the names of the solicitors’ firms being investigated by the SRA because one of them was so aggressive about it, but I can tell you that they are all large, well-known, central London practices.

Jenny was clearly vulnerable fleeing an abusive marriage and being the sole carer of three children, one of whom was disabled.  Social Services were involved and there had been three Multi Agency Risk Assessment meetings. The solicitors were aware of all this at the outset and should have taken into account that Jenny’s mind would not have been on loans.

Jenny told me “I went to them to get divorce advice and they sold me a loan as if it was a normal and essential part of the divorce process.   I did not ask for the loans, they really pushed me to take them.  Their verbal estimate of costs was up to £50,000 maximum, but in writing they gave a maximum cost for the divorce as £100,000.  They reassured me it would not come to that and said I would get back any funds not used at the end of the divorce.   In the end my legal fees came to £350,000 and I also owe £150,00 in interest on this.  The loan company is taking proceedings to force the sale of my home so they can be paid.


Going through my bills, both firms billed me at least £8,000 each for selling and administering these loans.  I was also charged by the loan company for ‘administering the loan’ on their side.

The solicitors told me to engage ADDITIONAL solicitors for public law children proceedings.  They should have told me of their lack of knowledge in this area at the outset.  Despite my then engaging another firm for this work my solicitors ignored the advice they gave to press for non-molestation and occupation orders for my safety and the safety of the children.

When my ex-husband’s father died (as was always, sadly, predicted) my solicitors were unprepared, and pressured me to adjourn the final hearing. They then told me they needed a further £100,000 + which would have taken the lending to over £300,000.  At the point I changed solicitors as they had made shockingly little progress in the divorce: there had been no Children Act hearings, just one first appointment and one FDR. They engaged in a pointless “chattels” exercise, which involved valuing things like a pair of my boots!  The Judge at the final hearing said that they had added no value at all to my case, they had caused confusion, escalating costs, and spiralling debt; in his written judgement he said the sums secured against my home by the solicitors in litigation loans were ‘neither justified, nor justifiable’. “

It’s not only women who take these loans: Jenny knows of two wives whose husbands took loans.  One found out accidentally; she couldn’t understand why the judge kept saying there was no money left and it turned out it had all gone on her ex’s legal fees via the litigation loan, secured on their jointly owned home, without her knowledge or consent.  In the other case the wife was convinced her ex was having an affair with his solicitor as she couldn’t understand why the solicitor was giving him all this money to pay for his fees: he had taken out a loan with Level at 24% interest, on the advice of his solicitor, and it was secured against property in his wife’s sole name!

The loan companies to beware of are Novitas and Level, who charge 24%-29% interest.   Interest on a ‘normal’ loan is around 5%, and when a loan is secured on a property the interest rate is usually less (see your mortgage interest rate).   Iceberg is another litigation lending company and may be better than the others, but they still charge high interest rates.

If you need to borrow money for your divorce please find a better way of doing it because once solicitors have access to this sort of loan they are likely to run up your costs until they’ve used it all, even if they don’t keep asking for more.

It’s always worth asking your bank for a loan, but usually they will only lend if they can be sure to get their money back.  This is of course why the litigation lenders charge a higher rate of interest as they do risk not being repaid: although in many cases the loans are secured on the family home as a second charge so they can take possession proceedings if they are not paid.  So there is no justification at all in these dreadful interest rates – your bank will give you a secured loan for a quarter of the cost.

Family and friends sometimes offer a loan to cover legal fees.  The problem is they can be seen as ‘soft’ loans and the court will not take them into consideration in the final order.  This is especially likely if the loan is from your parents, so if a more distant relative, or a friend, also offered help it may be better to accept that.  And always have a written loan agreement drawn up and signed by both parties.  You can find a template on-line and adapt it to fit your particular circumstances, eg you can have a low or 0% rate of interest until the loan is due to be repaid at the end of your case or when your property is sold, and a higher rate if it’s not repaid within the time limit.

Another possibility if your spouse has money and you don’t, is to apply to the court for a Legal Services Payment Order.  These aren’t easy orders to obtain but are definitely worth considering if you’ve no other option.

If you, or someone you know, has one of these litigation loans you can message Jenny on Facebook where she has set up a page with a lot of information.

Today’s other cautionary tale is a more amusing one (for us, though absolutely not for the poor mother in the case), and a reminder to take great care when attending remote court hearings.

There was a short break in the children proceedings after the mother said she had developed a cough and felt unwell while she was giving her evidence.  The judge had closed her laptop and didn’t realise that the link to the others on the call remained open.

The judge was then overheard on a private phone call complaining that the mother was pretending to have a cough and was trying ‘every trick in the book’ to avoid answering difficult questions.  Oops!

The Court of Appeal was not impressed by the judge’s refusal to remove herself from the case and allowed the appeal.

So be very careful if you’re on a remote hearing.  It takes some time and effort to get everyone onto these hearings so sometimes if there needs to be a short break people are left on the call.  Please be very aware of what you say and do during such times, and double check that you have closed the line at the end of the hearing before you shout expletives about the judge!