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Funding for family law clients is critical moving forward

Legal fees can often be prohibitively expensive, and for clients in an area as sensitive as family law, assistance from the outset can make all the difference.

user iconJerome Doraisamy 24 June 2021 SME Law
Funding for family law clients is critical moving forward
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As a practice area, Coleman Greig associate Daniel Rod mused, family law is unique in that each party pays their own legal costs, but also because the “legal costs borne by the parties are often met through credit cards, and by borrowing funds from friends or family”.

“Many firms do not act on a ‘pay at the end basis’, and often I see clients who do not have access to liquid funds in order for them to retain lawyers. We will often have to find ways for clients to make Applications for Interim Spousal Maintenance in order for them to have access to funds to meet their legal costs. Where there are no such assets available, clients are in a difficult position especially when it comes to matters where there are urgent parenting issues,” he explained.

“It creates a huge disparity for clients, especially because men traditionally (and unfortunately) earn more than women do, and when mothers have taken time off from their working lives to care for children, they are in a more vulnerable financial position.”


Balance Family Law co-founder Jonathon Naef agreed, reflecting that the more complicated or contentious a matter is, the more expensive legal fees will often be.

“One of the biggest challenges for clients who seek family law assistance is often having to pay these potentially significant expenses alone, and from a single salary, where when they were still in a relationship, major expenses were usually shared. This situation is especially difficult for those clients who were not the ‘breadwinner’ for the family,” he said.


In response to such concerns, consumer lending service Plenti provides financial support for family law clients going through separation.

In conversation with Lawyers Weekly, Plenti director of growth Rose Dravitzki (pictured) said that the service supports clients who do not have enough income to obtain legal advice to move towards resolution by paying legal fees – plus other expenses – on time so that lawyers are not out of pocket themselves.  

Clients draw down from their line of credit only what they need to pay for fees, disbursements, counsel fees, funds in trust, report writers, etc. It is so important because the existing options open to people currently are often not suitable, or come with other difficulties (using a credit card, lean on family, ask the law firm to carry, dip into savings),” she explained.

More firms, Ms Dravitzki outlined, are realising not only the financial implications of their firm carrying clients to settlement, but “also the ethical implications in encouraging interim applications to secure funds for further litigation when there are non-litigious options available”.

“The ability for law firms to have Plenti as a funding option for their clients means they are relieving themselves and their clients of the financial pressure often associated with family law matters,” she proclaimed.

Lenders such as Plenti are great, Mr Naef noted, for clients on single incomes or who were not breadwinners prior to separation, and for those who are asset rich but cash poor.

“As long as the client can provide some security for repayment of the loan and details about when they will be repaid (for example, from a property sale or pay-out figure), they can enter into arrangements with these lenders that provide certainty, as the amount to be repaid is known and based off work completed,” he outlined.

“This model differs from the traditional litigation funding model, who, from our understanding, take on family law matters in limited circumstances (where it is a ‘winner’), and whose fees relate to a percentage of the settlement sum or judgement amount, which can cause the client further stress as the amount to be repaid is unknown, or taking on a matter on a deferred payment or ‘payment on settlement’ arrangement, where the risk lies with the firm.”

Mr Rod supported this: “Plenti offers an opportunity for clients to have high quality legal assistance without the financial stresses of ensuring that there are sufficient funds in trust and to focus on resolving the dispute.”

Flow-on financial support for family lawyers

It is very difficult to run a practice without sufficient cash flow, Mr Rod lamented, and Family Court delays are such that it often takes in excess of three years before a matter is listed for final hearing, he said.

“There are also many disbursements along the way, which firms are liable to meet such as title searches, ASIC searches, postage, process servers’ fees and office expenses that all add up during this time,” he said.

Family lawyers are also under budgetary pressures from within their own firms, he continued, in order to meet their targets and billable hours, because law firms need to remain profitable in order for them to continue to operate.

“Access to outside funding removes that pressure and allows for lawyers to be able to focus on matters holistically, and without the need to make costly Applications seeking urgent interim financial relief,” he said.

The reality, Balance Family Law co-founder Perpetua Kish said, is that litigation or any type of protracted legal process will be “costly and often stressful”.

“When clients have difficulty paying their legal fees, this can put undue pressure on the lawyer/client relationship. A funding organisation such as Plenti can provide a comforting buffer between the running of the case and the financial challenges facing clients,” she noted.

“Lawyers face moral, and potentially ethical, dilemmas when trying to balance the management of cash flow and getting paid in a timely manner against working with clients who are often at their most vulnerable, both financially and emotionally. These elements often give rise to a deferred payment or ‘payment on settlement’ arrangement.”  

Lawyers can feel, Ms Kish went on, that this is indeed a privilege for clients, as they have put aside their commercial interest to assist a vulnerable party.

“In turn, some challenging clients can see this as their right, and as such, they may not appreciate or even acknowledge the concessions made by the lawyers. This can have a deleterious impact on a lawyer’s mental health as a sense of disheartenment, or even resentment, can start to build. The more often this occurs, the more disheartened and disillusioned a lawyer may become,” she said.

Mr Naef added that just as clients want certainty about their legal fees, so do lawyers and business owners.

“We want certainty that our invoices will be paid, so we can pay ourselves, our employees and also cover business overheads. For some of us, especially smaller and boutique firms, it’s just not possible to take matters on a deferred payment or ‘payment on settlement’ arrangement, where fees may remain unpaid for potentially years – and then what happens if the client ultimately doesn’t have the cash to pay? The firm then gets tied up in debt recovery actions, etc.,” he listed.

Lenders like Plenti, Mr Naef stressed, give lawyers and business owners certainty about their own cash flow.

“These arrangements make sure that our invoices are paid as and when they are due, and once a settlement or judgement occurs, the lender is repaid from the settlement or through alternate arrangements determined between them and the client. It also means that we, as the lawyers, don’t have to worry about lodging securities like caveats over client’s property to ensure repayment occurs – that risk lies with the lender,” he said.

Subsequent opportunities for family lawyers

Entrepreneurial lawyers are “more readily seeing the opportunity cost” of carrying matters to settlement, Ms Dravitzki said, noting that they could be using these funds to grow their business or gain the personal financial benefit of the funds. 

“They can open their services to more clients (i.e. not turn away those who cannot pay immediately) thus boosting their client base. They also experience reduced conflict with clients over unpaid bills as well as counsel who are paid on time,” he said.

There are “obvious advantages”, Ms Kish noted, for lawyers and their clients if the lawyer is able to focus their time and energy on the legal issues at hand, “rather than negotiating and re-negotiating pay arrangements, chasing debtors and taking other steps to secure their legal fees”.

“And, because they do not have the additional pressures of unpaid legal bills, which can be an inhibiting factor when making decisions, clients may also feel more empowered to explore further options and make more considered decisions about their case and ultimately, their future,” she added.

“A funding provider such as Plenti can reduce premature settlement occurring on the basis that a client may be otherwise unable to afford to continue to engage a lawyer, or even participate in the legal process at all.

“It can also serve as a deterrent against the other party (and their legal team) engaging in tactics designed to drain them of money and increase their legal fees and associated expenses. Through Plenti, caveats are lodged, often on jointly owned property, so both parties will potentially be disadvantaged in the event of such behaviour.”


The family lawyers who Plenti works with “really care” about obtaining a fair result for their clients, Ms Dravitzki noted, “but they shouldn’t have to be burdened financially in order to act for these clients”.

“There is also an increasing number of clients that can pay their legal fees, but they simply wish to use these funds elsewhere. Family law clients do not need to be earning an income to be eligible,” she said.

Developments such as Plenti’s offering are “really valuable” in family law, Mr Rod surmised, because for many years it has been very difficult for clients in tough financial positions to have access to lawyers.

“This will undoubtedly have a major impact on their financial position on a final basis as they will be able to be able to ensure that funds are not dissipated, disclosure has been made, their contributions recognised and their future needs accounted for,” she said.

Ms Kish agreed, noting that difficulties around payment of legal fees put pressure on both clients and lawyers alike.

“I have observed how Plenti can alleviate these pressures first hand. It’s meant that issues around the payment of fees are one less problem to solve, challenge to overcome or risk to mitigate. We were able to use the more time and resources we had to achieve a swift and effective resolution for our clients,” she concluded.