Financing divorce during a cost-of-living crisis

Divorce (or dissolution of a civil partnership) is a significant life decision and it’s natural to have questions about how it may impact your finances, especially during a cost-of-living crisis. While every situation is unique, separating doesn’t have to be as daunting or costly as you might fear. In fact, many people find that with the right guidance and support, they can navigate the process smoothly and start building a positive future.

In this blog, we explore ways to manage the costs of a separation in challenging economic times. We also offer practical ways to keep solicitor fees to a minimum, helping you take proactive steps towards your future; without overspending.

“Money makes the world go round …”

If you’re contemplating divorce or dissolution, it’s natural that you may be concerned about finances: for some couples there can be costly proceedings involved and it’s also important to think about how you will afford to live separately afterwards. Research by Legal and General found that one in five separating couples had delayed proceedings due to financial concerns and cost-of-living pressures.

This added pressure may create a sense of feeling ‘trapped’ in an unhappy relationship due to the potential expense of parting ways. However, enduring an unfulfilling relationship just to avoid the cost of splitting up can have emotional, practical and financial repercussions.

You might be tempted to explore ‘cheaper’ ways of divorcing to avoid paying for professional legal advice, such as a “DIY divorce” or a “fixed fee package”, but these options can potentially leave you open to risk. We have had many clients reach out to us when these alternative options failed or they could not get through to their case handlers who conducted a “package” type case management, and it became more expensive for them in the long-run.

Instead, start off by finding out everything you can about the potential costs. This will help you to manage your budget and show you how to secure the crucial legal support you need.

Starting the right way

It is important to understand that you will ultimately be responsible for your own legal fees (i.e. the fees of your solicitor), therefore engaging with a family law solicitor is a valuable first step in understanding the costs involved in divorce proceedings. Perhaps you’re asking yourself, “How am I going to pay for a solicitor?” Or “How will I afford a place on my own?” These are common questions and, at K J Smith, our solicitors offer a free initial consultation to help get you started.

At your initial meeting, tell the solicitor about your budget and any financial constraints you have. Transparency about your financial position is key.

Ask them about:

• fees and how they are structured
• potential additional costs
• payment options
• how to minimise costs

An experienced solicitor will take the time to understand your circumstances and outline the different approaches you can take to achieve your goals. It’s vital to communicate your needs and wishes early so your solicitor can fully understand what you are collectively working towards.

If you decide to proceed, your solicitor should then provide a detailed “Initial Advice Letter”. This is an important document that lays out your different options, ensuring that you’re well-informed from the start. By understanding the options and associated costs, you’ll feel more confident about the choices you make and the fees involved.

Paying Solicitors

Direct payment options

If it’s not possible to pay your solicitor from your savings or income, you can ask them to work on an “unbundled basis”. This means you will have “limited-scope representation”.

Your solicitor will only carry out specific tasks on certain parts of your case. An example would be if you negotiate your settlement with a mediator and then ask a solicitor to help you understand the financial disclosure and put together a proposal that you can take to mediation. Another example is asking your solicitor to draft documents that you will need in court proceedings, but without submitting them themselves, therefore staying ‘off the record’.

In this scenario, your solicitor would not be providing full representation or giving advice on the various aspects of your case, as and when you require it. If you decide that you want full representation later on in the process, we can easily change to a full retainer, and vice versa.

Borrowing money

You may look to borrow money from family or friends – what is known as a “soft loan”, which can sometimes work out cheaper and easier than borrowing from an official loan provider.

Whilst soft loans may ease immediate financial pressure, they can carry hidden risks. Unclear repayment terms or changing circumstances can strain even the closest relationships, creating tensions and misunderstanding later down the line.

If you have a good credit rating, you may be able to take out a loan from a building society, bank or any other loan provider.

Tips for borrowing money:

✓ Always make a formal agreement, even for a so-called ‘soft loan’.

✓ Make sure you can afford to pay a loan back, even if it’s a soft loan. If you can’t, it may well harm your relationship with the lender.

✓ Take financial advice to understand the amount you can borrow for any kind of commercial loan. Look at interest rates to make sure you can afford the repayments.

✓ Commercial loans often require capital and interest to be repaid at the same time, which could put a strain on your finances. Some lenders may advance money by taking assets such as jewellery, paintings or expensive motor vehicles as security. Make sure that you choose a reputable lender – do your research!

✓ Read our blog about the financial considerations of getting divorced.

You can find out more information about personal loans and other ways to pay for your divorce or dissolution from Money Helper.

Funding from your ex-partner

This might not be an obvious source of funding for legal fees but, in some cases, one party may agree to pay the other’s legal fees without the court ordering this to happen.

This can be arranged directly or through your solicitor. The court can also order one party to pay the other party's legal costs through a Legal Services Payment Order (LSPO). However, such orders are rare and it's best to agree on costs before applying to the court.

Talk to your solicitor

The worst thing to do when you have retained a solicitor but are struggling to pay their invoices is to go quiet. Don’t ‘stick your head in the sand’ and pretend the problem will just go away - your solicitor will want to help you find a way to move forwards. Communication is key!

Tips for navigating divorce fees

Be organised

There are some things you can do to help minimise your costs:

✓ For example, before your initial meeting, send a list of key questions in advance that you would like answered.

You can find out more about questions to ask your family law solicitor in your first meeting in our blog.

Once you have instructed a solicitor::

✓ Gather helpful information for your solicitor in advance– this will save time and money!

✓ Create a document containing items such as:

• a brief written explanation of your issues
• a chronology of key dates
• a detailed summary of your financial assets (joint and own), including your income, regular outgoings and any wider financial interests
• a copy of relevant documentation, such as solicitors’ letters received, deeds to property, court orders, upcoming hearings or pre-nuptial agreements

This means when your solicitor asks you for this information, you are ready to provide it.

✓ Prepare for meetings so you can make the best use of your time.

It may sound obvious, but read your solicitor’s emails carefully and make sure you respond to all their questions, to avoid repetition of advice and ‘chasers’ for information or documentation, all of which is chargeable and unnecessarily increases your costs.

Be concise

✓ Communicate by email and keep messages short and focused.

✓ Save the more in-depth questions for in-person or telephone meetings.

✓ Keep meetings focused whilst having your concerns heard.

✓ Explain your points concisely.

✓ Allow time for the solicitor to communicate their advice back to you efficiently.

Your solicitor will be compassionate and considerate, but try not to use them as a ‘shoulder to cry on’ as this is not the best use of their time and your money. Sources of emotional support are of course incredibly important during your divorce, so reach out to friends, family or a counsellor or a Divorce Coach, to help keep costs down.

Keep lines of communication open and avoid escalation

It’s highly beneficial if you can keep having reasonable conversations with your partner without either of you becoming over-emotional or compromising your personal welfare.

Understandably this is not feasible in every relationship breakdown but, if manageable, it’s a great way to reduce costs. Simple, calm and honest discussions over the kitchen table can help settle minor issues and pave the way for a smoother process.

This minimises the back-and-forth with solicitors and could potentially avoid court proceedings altogether, saving time, stress and money. Amicable relations (where possible) are also in the best interests of any children involved.

✓ Be self-aware and recognise moments when tensions are rising – try to avoid unnecessary escalations that may require the intervention of solicitors.

✓ Even when things are amicable, it’s still advisable to consult a solicitor to ensure your financial agreement is fair and sustainable.

Explore Mediation

When a relationship has broken down irretrievably, direct negotiation may not be possible, but an amicable approach can still lead to a smoother path and reduced costs. Be aware, however, that mediation is not binding, and we have sometimes seen cases where everything was seemingly settled at mediation, but the agreement broke down shortly afterwards.

Mediation is becoming more and more popular with couples who want to divorce but at the same time avoid the emotional stress and potential expense of going through the courts.

You can find out more about how mediation could benefit you here.

✓ Look for a solicitor who is a member of Resolution and committed to helping you explore conciliatory methods of negotiation.

✓ Mediation can reduce acrimony and find resolution faster and more affordably.

✓ Couples are required to consider mediation before making an application to the court.

Undertaking mediation does not mean you will be without legal advice as you will still need a solicitor to draft any required Consent Orders, including the Financial Consent Order. Therefore you should still consult your solicitor throughout the mediation process for advice on whether the agreement being put forward is right for you: we can do this as part of our ‘unbundled’ service.

Knowing when to accept a reasonable settlement

One of the most important tips for saving money is recognising when you’ve been offered a fair and reasonable settlement, so you should consult a solicitor to discuss any concerns you may have before accepting a proposal.

Obviously, if a settlement seems unfair, it is completely reasonable to contest it. However, if it is actually fair and reasonable, continuing to push for more could result in additional delays and increased legal fees. Recent cases have also shown that family judges may view prolonged litigation unfavourably and there's no guarantee that the court will award you a better outcome. In fact, it is rare that a Judge’s decision is favourable to one party only - both parties tend to regret not settling sooner.

A good solicitor will not be looking to make money from your case, but will always conduct a cost-benefit analysis for you at every stage of your proceedings, to advise you when it might become counter-productive to pursue certain avenues.

Conclusion

When all is said and done, you should finalise your divorce with confidence and clarity. For this, your solicitor’s experience and advice are key. At K J Smith Solicitors, we understand that you need our support, even if times are tough and finances are stretched.

We help you navigate your divorce, providing as much support as you need while helping to safeguard your budget and achieve the best outcome for you. We never shy away from seeking innovative solutions that will meet your needs and are sustainable in the long-term.

If you’d like to take that first step in understanding the potential costs of your divorce, book a free initial consultation with a member of our team today. This is an opportunity to shape your future – so let’s plan for it properly!