Legal Services Payment Orders: interim orders for your spouse to fund family law proceedings

Legal Services Payment Orders ('LSPOs') are a potential method for funding matrimonial disputes.

What is an LSPO?

An LSPO is an interim order used in proceedings where one of the parties to the marriage does not have the financial means to pay for legal representation and cannot secure a loan (usually because they do not hold any assets in their name). Hence, the court through an LSPO can order one party to the marriage to make payments to the other spouse so that they can obtain legal advice and representation.

In what proceedings can LSPOs be granted?

An LSPO is intended to cover legal costs relating to divorce, nullity, financial remedy, and judicial separation proceedings. It can also be used to fund alternative forms of dispute resolution such as mediation and arbitration.

What are the eligibility criteria for an LSPO?

The court will only make an order if it is satisfied that without the LSPO the applicant would not reasonably be able to obtain legal services. This means the applicant will need to show that they cannot reasonably secure a loan to pay for legal services and they are not able raise the funds in any other way, such as placing a charge against a property. It is common for applicants to provide refusal letters from at least two commercial lenders to prove this. In addition, a letter from the applicant’s solicitor stating their unwillingness to enter a Sears Tooth arrangement (which assigns part of the client’s settlement to the solicitors in order that the costs can be met at the end of the case) will need to be provided. Lastly, the applicant will need to confirm that they are not eligible for legal aid.

What is the application process for an LSPO?

As soon as the divorce application has been issued, the court can make an LSPO.

An application notice alongside a statement in support an LSPO and a draft order will need to be filed at court.  This should normally be prepared by an applicant's solicitors.  In addition to providing evidence of lack of funds and a statement from their solicitors, the applicant will also need to set out the particulars of their legal fees. This would include a detailed estimate for the anticipated work involved in the proceedings.

In considering the application, the court will balance the financial circumstances of the applicant and the respondent and the effect of the order on the paying party. This includes considering the parties income assets, financial needs, obligations, and responsibilities either now or in the foreseeable future. Further, the court will consider whether an LSPO will cause the respondent undue hardship and prevent them from affording their own legal fees.

The court will also take into account the anticipated proceedings and steps taken to resolve them before issuing court proceedings and the applicant’s conduct regarding the proceedings to date.

How is money received?

An LSPO can be made as a one-off payment, in instalments, or as deferred payments.

The court can limit the award of an LSPO to a specific time or a specific portion of the proceedings. Similarly, if more money is required, the court has the power to issue more than one LSPO or vary the terms of an order to reflect a change in circumstances, if necessary.

Does money received pursuant to an LSPO need to be repaid?

The money one receives under an LSPO can be taken into account at the conclusion of the case if a financial order is made. In practice, this may mean that costs advanced are offset against any financial settlement.   When seeking an LSPO, the Court will normally expect an applicant to provide any undertaking to the court  repay monies advanced under an LSPO if at the end of the case it considers this appropriate.

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