It’s common for couples to divide responsibilities, with one spouse managing the family finances while the other takes on different roles within the household. This arrangement often works well during the relationship, but can cause challenges after separation. The spouse who manages the finances usually has detailed knowledge of the family’s money, while the other spouse may face a steep learning curve.
This can create an uneven playing field. Fortunately, Australia’s family law system recognises this and offers safeguards, including mandatory financial disclosure obligations and legal avenues to help both parties access funds to cover their legal costs.
Key takeaways:
- Courts can order one party to contribute to the other’s legal costs.
- Savings, loans, and litigation funding are pathways to pay legal fees.
- No-win no-fee does not apply in family law, though deferred payment arrangements exist.
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Paying legal costs
Ideally, each spouse would pay their legal fees from their own income. However, this option isn’t always available. Often, one spouse can cover their family lawyer’s fees while the lower-earning spouse must look for other ways to fund their case.
Some may have savings or liquid assets they can draw upon, but this isn’t always possible.
Court-ordered financial support
As an interim measure, the court has the power to order one spouse to contribute to the other’s legal costs. This may include:
- Requiring one spouse to direct part of their income to the other
- Transferring funds between accounts
- Drawing on a loan or redraw facility
- Ordering the sale of an asset to release funds
These orders help ensure that both parties can access legal representation during their family law dispute.
Borrowing to pay family law legal fees
If a spouse borrows money, either privately from family and friends or commercially from a bank or litigation lender, repayment of those funds is usually treated as that spouse’s responsibility alone.
In other words, the loan is excluded from the property pool to be divided between the parties, and the borrowing spouse must repay it without recourse to the other.
Can family law be no-win no-fee?
Unlike other areas of law, such as personal injury, no-win no-fee arrangements do not apply in family law. Some law firms may agree to defer payment of fees until after a property settlement. However, these arrangements can cause complications, for example:
- If a lawyer advises settlement terms that the client is unhappy with
- If a client wishes to change law firms before the first firm is paid
Levelling the playing field
At the end of the day, there are multiple pathways to fund family law legal costs, from accessing savings and applying for court orders to borrowing privately or commercially.
While each option has pros and cons, these mechanisms exist to ensure that both parties can obtain proper legal advice and representation, helping to level the playing field during what is often a challenging time.
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As a family lawyer, I think this is a really clear and practical overview of an issue that many separating clients underestimate at the outset. The explanation around interim cost orders and the court’s role in levelling the playing field is especially helpful, particularly for the financially disadvantaged spouse who may feel “stuck” without access to funds.
I’m curious about your experience in practice – do you find courts are increasingly receptive to early applications for legal cost contributions, or are they still approached quite cautiously?
Thank you for your thoughtful feedback, we really appreciate you taking the time to share your perspective. In our experience, the courts’ approach remains very measured.