Navigating Compliance Issues in Family Law Litigation Funding

Ampla Finance’s ‘Litigation Funding guide for family law practitioners’.

There is a range of funding options available to those facing divorce or other family proceedings if they don’t have resources of their own to pay for the legal advice and representation they need. One option is to borrow from family or friends, but there are disadvantages to this. There is a risk that the debt could be treated by a court as a “soft loan” that might not have to be repaid and there is also a concern that the lender might feel their financial stake entitles them to have more of a say in the proceedings than the client is comfortable with. For this reason, and because the pandemic has impacted on the ability of some relatives and friends to help out, there’s been an increased focus on “hard loans” including borrowing from specialist third party litigation funders.

The funding conversation with clients has been difficult for practitioners to navigate effectively due to the lack of guidance previously available on the subject.

Louise Hall, Commercial Director of Ampla Finance, agrees and recently stated that:

“In our conversations with family practitioners, member firms and industry peers, it quickly became evident that, whilst the volume of guidance around litigation funding at consumer level is significant, there is a surprising absence of profession-facing advice currently available.”

This lack of industry guidance is the reason why Ampla Finance, a fair funding provider in the legal space, has produced a guide written by Nigel Shepherd, a family law veteran, and informed by Simon Popplewell, a barrister at Gough Square Chambers. The guide is aimed at professionals and practitioners, to help them navigate the sometimes complex and delicate issues that arise in litigation funding conversations between family lawyers, clients, and compliance teams.

The majority of advice found in the guide focuses on the most prominent client questions encountered by practitioners, such as: which funding option is best; should the client be looking to commercial lending and, if so, which is the best choice of litigation funder; what’s the role of independent legal advice; can the firm charge for the work being done in relation to the funding options; and what are the advising lawyer’s regulatory and professional obligations and responsibilities when helping clients make these decisions?

Also discussed is whether provision of client information to lenders by practitioners implies a duty of confidentiality, therefore restricting what, if any, documents can be provided to the funder. Advice to practitioners here and referencing the judgment of Knowles J in Akhmedova v Akhmedov, is that there should be no cause for concern because the provision of documents is a necessity when assessing the merits of a loan application. Ampla Finance explains that such material is produced in connection with the conduct of the litigation, in much the same way as when it is provided to counsel or experts.

Ampla Finance explains in detail throughout the guide the regulatory framework underpinning the information and advice that is given, referring to the Financial Conduct Authority, the Solicitors Regulation Authority Codes of Conduct and Principles, and the legislation that governs lending. This is a valuable resource for compliance teams wishing to ascertain a firm’s position on regulated activities such as credit brokerage, or if any formal regulatory impediments to discussions around litigation funding exist.

For further information on Ampla Finance and their family products contact: [email protected].

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