Loans 'will help poor wives fund divorces'

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Wives too poor to divorce their husbands are to be offered bank loans to finance court proceedings, under a new scheme launched yesterday.

The loans provided by a private London bank will enfranchise thousands of women who do not qualify for legal aid or fall outside recent reforms in litigation funding. Solicitors behind the new scheme claim that women who are financially dependent on their husbands either cannot afford to bring divorce proceedings or agree to unfair settlements.

Aimed at housewives whose only wealth is tied up in the family home, the brains behind the scheme were encouraged by last year's House of Lords ruling by which a husband was ordered to pay his 66-year-old wife £1.5m in their divorce settlement.

Mrs Pamela White was originally awarded £900,000 in a settlement at the Court of Appeal, but that did not include the couple's three farms, livestock or buildings.

The law lords, headed by Lord Nicholls, subsequently decreed that the wife's contribution to the marriage should be recognised in the final financial settlement. Traditionally the courts have always looked merely at what a wife reasonably needs, such as a house and maintenance.

Yesterday, Jeremy Freedman, one of two London solicitors behind Alternative Matrimonial and Litigation Funding Ideas (Amalfi), said: "With recent cutbacks in the legal aid system we have seen far too many tragic cases of injustice for those without ready cash to fight for their rights."

Under the new scheme, private bank Leopold Joseph & Sons will release funds to wives to finance divorce proceedings and related matrimonial actions. Mr Freedman said that high street bank managers were unlikely to look favourably on a woman who "walks into the office asking for money to divorce her husband on the basis of an secured loan."

Leopold Joseph & Sons will recoup its investment from the final settlement. Neil Russell, the fellow founding director of the new initiative, said: "It will be a lifeline for those cut off from financial resources just when they need them most, when there's everything to fight for but nothing to fight with."

A typical client may be a woman who lives in a jointly owned house worth £350,000 with a £100,000 mortgage and an annual income from a part-time job of £10,000. In such a case the client would expect to pay around £15,000 in legal fees.

Mr Freedman said that the rapid reforms in funding litigation had largely ignored matrimonial cases. "Whereas other forms of civil litigation offer before-the-event insurance you can't insure against the cost of your own divorce."

And "no win, no fee" arrangements, where clients pay nothing, are recognised as difficult to apply because in most divorce cases there are no official winners or losers.

In a recent divorce case Mr Justice Wilson acknowledged the problem faced by wives who do not qualify for legal aid but want to divorce their husbands. He said it was particular difficult for a wife whose husband was "rich, litigious or obstructive".

Free legal help for drafting a divorce petition is available under state-funding only where the applicant has a disposable income of less than £87 a week and savings of less than £1000. Mr Freedman said many wives fell outside this criteria.

Funding a divorce action can be a very expensive business. Mrs White was left with a £500,000 legal bill.

But her case could pave the way for an American-style "equal share" settlements which would dramatically increase payments to wives.