150 firms sending divorce clients to litigation loan provider

More than 150 leading law firms are referring divorce clients to a litigation loan provider, it emerged today.

Jason Reeve, managing director of Novitas Loans, said the company’s first case was only 18 months ago, but already over 150 leading law firms were sending him clients.

“Courts are actively encouraging people to come to them with litigation funding, because if they don’t there will be an increase in litigants in person”, Reeve said.

He told a Westminster Strategy Keynote Seminar this morning that courts were demanding evidence that clients could not get a commercial loan before they considered applications for funding from their former partners.

“A firm like Novitas is essential for people to be able to afford access to justice.”

Reeve said the average cost of a contested divorce in London had reached £70,000 and around £30,000 outside London.

He said Novitas Loans, which is regulated under the Consumer Credit Act, offered loans at interest rates at rates lower than credit cards for legal fees and disbursements, with no compound interest.

Reeve gave as an example of a typical loan customer a wife who gave up her career to look after the children she had with her philanderer husband.

The woman could not depend on the proceeds of sale of the house she jointly owned, because that would cause her law firm cash flow problems, nor could she obtain a personal loan because she had no income.

Reeve added that there were times when lenders had to say to clients: “This isn’t a free for all because you hate the other party.’

“There is an opportunity in the loan agreement for a conference with a barrister and solicitor to say ‘this is not a fantastic case and you are only pursuing it for venomous reasons’. We must have the opportunity to do this.”