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Family law firm has to “live with the credit” it has given client
A leading family law firm that had extended credit of £200,000 to its client in an intensely contested divorce has been told that it has to “live with” its decision, rather than be paid back at the moment.
In LKH v TQA AL Z (Interim maintenance and costs funding)  EWHC 1214 (Fam), Mr Justice Holman was ruling on an application by the wife in a high-value divorce for interim periodical payments.
One element was in relation to legal funding. The wife already owed her solicitors, Payne Hicks Beach, in excess of £200,000 and sought provision to start paying it off at the rate of £30,000 a month.
Holman J said he was not willing to do so. Were it an English matrimonial suit (which it was not), he said the law envisaged orders looking forward to obtaining legal services, “not backwards to legal services which have already been obtained”. The case law also indicated that previous costs should only be made subject to such an order “very sparingly indeed”.
He continued: “The fact of the matter is that, in this family law field, prestigious firms of solicitors, practising here in central London, do very frequently make a decision to allow an element of credit to their clients on the assessment by them that the client will ultimately be in a position to pay the bill. Indeed, in this present case the prestigious solicitors who act for the husband, namely Vardags, have, as I have already said, themselves allowed considerable credit to their client.”
The wife’s counsel submitted that if Payne Hicks Beach were not relatively swiftly paid all their outstanding costs, they would not continue to act, even if there was an appropriate award of monthly payments to cover future costs.
The judge said: “I cannot accept that as a matter of submission. If a partner of Payne Hicks Beach had made a clear and unequivocal witness statement, to be publicly relied upon, to the effect that they would now, to quote Mostyn J ‘down tools’ or, to use another metaphor, pull the plug on their client unless the past costs are rapidly paid, even if the future costs are provided for, then I would have to consider that.
“But it would in my view be a regrettable and regressive development in this class of expensive family litigation. I am not prepared to assume, on the basis of a submission, that this very distinguished firm would act in that way.”
He stressed, however, that he was not “in any way whatsoever” precluding that the costs should not later be the subject either of a costs order, or of capital provision to be made by the husband at the substantive hearing.
“But for the time being, the solicitors, having made a decision to extend that credit, must, I am afraid, live with it.”
Future costs were “a very different matter”, however, and Holman J said there was “absolutely no reason whatsoever to suppose or presume that [Payne Hicks Beach] would be willing to allow such great credit to be increased yet further”.
The estimated costs from the time of the hearing were £247,000 inclusive of VAT. “These are of course eye-watering figures, but they are proportionate to the sort of costs that the husband/father himself is envisaging incurring with his own prestigious and expensive solicitors, Vardags.”
Holman J said: “It seems to me that it would be grossly unjust to this wife, and very contrary to the interests of these children, if he was able to litigate with great intensity with one of the most prestigious firms of solicitors in London and highly experienced leading counsel, and the wife and mother was left to fend for herself by self-representing.
“For those reasons, I will make legal funding provision by way of maintenance which I calculate as £250,000 to be averaged out over the next six months, making just over £40,000 per month.”