What's the future for divorce litigation funding after Young? Would you lend?

Commercial litigation funding is still relatively new for divorce and family law. One or two of the first widely advertised schemes seemed to become popular rather quickly. They were seen as good for cashflow. However, certain funders looked to the lawyers to pay back the debt if the client defaulted. A few practitioners got their fingers burned as a result.

A new wave of lenders came along with slick, reassuring profiles. This time, thankfully, the lawyer was not the underwriter of the debt, simply a recipient of well-marketed munificence. The model was simple. The lender obtained the money at x% and loaned it at a rather higher interest rate.

The wife's funding in Young

Earlier this month divorce litigation funders must have stopped in their tracks when the judgment in Young v Young [2013] EWHC 3637 (Fam) was handed down. Moor J stated that a number of different lenders had paid for her previous advisers. (Her trial lawyers were representing her on the basis that they would only get paid if she received a significant lump sum from the husband.)

Moor J spelled out the extent of the wife’s borrowing. He said, ‘I accept entirely that a litigant who has no assets and cannot obtain legal aid is in a very difficult position in funding very complex litigation. In one sense, the Wife did amazingly well to be able to obtain as much litigation funding as she did, given that she had no security to offer.’

Moor J referred to the amounts spent as ‘truly eye watering’. The wife had three separate arrangements, he said: ‘The first was with an organisation called Harbour who provided her with funding of £400,000. The arrangement was terminated on 4^th December 2009. She then obtained funding from Bracewell Law who provid