Legal Services Payment Orders (LSPO) are vital tools within family matters, particularly in divorce law cases where there is a significant financial disparity between parties in legal proceedings. An LSPO is an interim order that compels one party to provide financial assistance to the other to cover legal costs.

This helps in ensuring that both sides have the means to secure representation and adequately pursue or defend their case. The recent case of MB v CD [2024] Costs LR 1183 brought fresh attention to the principles underpinning LSPOs and the judicial discretion involved in their application.

Legal Services Payment Order – Background

Legal Services Payment Orders were introduced by the Family Law Reform Act 2012, under Section 22ZA and 22ZB of the Matrimonial Causes Act 1973. They were introduced in April 2013 alongside the withdrawal of legal aid in a range of family matters.

Before their introduction, individuals with fewer financial resources often found themselves unable to afford representation, resulting in unequal access to justice.

Section 22ZA empowers the court to order one party to provide funds for the other party to obtain legal services. This could be to fund legal services, such as advice, representation, and related costs throughout proceedings. The goal of a Legal Services Payment Order is to ensure a “level playing field” in divorce and financial matters, including child custody, and maintenance matters.

Purpose of a Legal Services Payment Order

The primary purpose of an LSPO is to ensure that both parties in family law proceedings have access to legal representation, regardless of financial disparity. Without such orders, a financially weaker party might be forced to settle or concede their claims due to an inability to pay for the services of a solicitor.

In an application for a Legal Services Order, it must be proven that:

• One party has access to considerable financial resources, while the other does not.
• The less well-off party cannot obtain legal funding through other means, such as loans.
• The party hasn’t entered into a Sears tooth agreement with a solicitor
• An order is needed to enable fair litigation, where both parties can properly present their case.

Importantly, an LSPO is not a blanket order; it is carefully calibrated based on the specific costs necessary to secure legal services. Courts will not grant more than is required for legal representation, nor will they allow parties to misuse LSPOs for indirect financial gain.

It is also important to note that a Legal Services Order is different to a Maintenance Pending Suit which is a payment that can be used to cover expenditure and basic needs throughout divorce proceedings.

MB v CD [2024] Costs LR 1183

In the case of MB v CD [2024] Costs LR 1183, the Court of Appeal revisited the application of LSPOs, offering important clarifications on how courts should approach such orders. The case concerned a high-net-worth divorce in which MB, the wife, sought an LSPO to cover her substantial legal fees, claiming financial dependence on her husband, CD, who had access to substantial wealth.

MB’s application for a Legal Services Order was initially rejected by the lower court, primarily on the grounds that she had access to alternative financial means through family loans and assets. However, on appeal, the Court of Appeal took a more nuanced view of MB’s financial position and her ability to realistically access the funds she purportedly had at her disposal.

The Court of Appeal’s judgment in MB v CD explored several critical issues relating to LSPOs:

Assessing “available resources”:

The lower court had found that MB could rely on family loans to cover her legal costs. However, the Court of Appeal highlighted that such an assessment needs to go beyond theoretical access. It must examine whether the applicant can realistically secure loans or other funding without undue difficulty.

MB argued that the family loan was contingent on stringent terms, and her ability to rely on it was uncertain. The Court of Appeal agreed that the lower court had not adequately considered the practicality of MB securing the necessary funds.

Proportionality of legal costs:

The Court of Appeal scrutinised the extent of MB’s legal costs, which had risen significantly due to the complexity of the financial issues at stake. It held that while parties are entitled to legal representation, courts must ensure that any LSPO is proportionate to the costs involved.

The appellate court recalibrated the sum requested to match the reasonable costs of litigation.

Timing and fairness:

Another key issue was the timing of the LSPO. The Court of Appeal considered the fairness of delaying the order, which would have left MB without legal representation at crucial stages of the case.

It was held that such delay could unduly prejudice the party seeking the LSPO, and that orders should be granted promptly to avoid disadvantaging the less financially secure party.

Impact on wider access to justice:

The decision in MB v CD reaffirmed the importance of LSPOs as a tool for promoting access to justice in family proceedings. The judgment emphasised that LSPOs play a critical role in ensuring that parties with financial disadvantage are not denied fair legal representation, particularly in cases involving complex financial structures or high-net-worth individuals.

How can ARC Costs assist?

ARC Costs can assist those applying for a Legal Services Order by auditing fees and legal costs to ensure they are reasonable.

To discuss your case further, please do not hesitate to contact us on 01204 397302 or email one of the team at info@arccosts.co.uk. Alternatively, you may complete our online enquiry form, and we will be in touch to discuss your query further on the same day.

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