BridgePoint's innovative solutions ease financial strain for both legal practices and clients
January 15, 2024
Separating couples are confronted with financial challenges from the outset, compounding the emotional and psychological toll of the process. When funds for legal fees are unavailable, reaching resolution can seem impossible to achieve.
Often parties are unable to access shared assets and it’s common for one or both parties to exhaust financial resources before the divorce is finalized, delaying proceedings, and causing interruptions that impact both clients and legal professionals alike. In addition, with resources like the matrimonial home or shared business assets tied up, qualifying for the traditional funding may not be an option.
This inherent access to counsel, and ultimately access to justice issue, was the objective behind BridgePoint Financial’s Family Law Financing, a funding solution developed on the request of family law lawyers to help their clients overcome such financial obstacles. Launched in 2021, this funding solution provides clients with an advance on their eventual entitlement when they truly need it.
Family Law Financing can help clients who are asset rich but cash poor due to lack of income, or over-extended due to everyday expenses, alternate living arrangements, and dependent-related costs. In many of BridgePoint’s borrowers’ cases, the parties have sold the jointly owned matrimonial home and the funds are being held in trust pending the resolution of the outstanding issues between the parties. Often, this situation leads to an inability to continue paying legal fees and ongoing personal expenses. Access to Family Law Financing means that the borrower can use the funds to pay their legal fees, moving the matter closer to resolution.
“We see the need for funds happen at all stages of the process, from pre-retainer — when couples are trying to cement the separation process — to needing funds to move out of their current matrimonial home during separation, to people running out of financial resources as the divorce nears its end,” says Keri Campion, Family Law Team Lead, Risk Management at BridgePoint Financial, adding that BridgePoint loans are repaid once assets are liquidated and dispersed, or if there’s an interim release of funds.
According to an analysis conducted by the company, in the last two years, more and more applications have started to come during that later stage in the process, as clients run out of liquidity and have maxed out their debt capacity. Lacking the funds to continue or get through a necessary Trial can put a hold on proceedings or result in a change of lawyers or self-representation, creating inefficiencies and delays, adding even more stress for clients.
In one recent scenario, a wife had been litigating separation for many years and ran out of funds on the doorstep of the trial, despite being a high-income earner with numerous jointly owned properties. This left her exposed and without being able to cover her $100,000 trial retainer, she would have to represent herself in a complicated trial which was only months away. Funding was set up as a line of credit and drawn from to replenish the retainer funds until the trial date. After the trial’s completion, the borrower was able to repay the loan from the settlement of outstanding issues and eventual sale of one of the properties.
There are several ways in which Family Law Financing can benefit both legal practices and their clients.
“When counsel is able to continue to work on the file, it keeps clients happy, and that’s better for the practice,” Campion points out.
“If you’re able to resolve files on a more consistent basis, you’re able to close files quicker and ultimately have a larger volume of files. Consistent file progress leads to consistent results and resolution. There are many benefits to being able to turn over files more quickly and efficiently.”
She notes the consistency that comes from having a securely funded divorce process is a benefit to legal support staff as well, “because they get to know one their files, and are able to continue the process without interruptions in workflow.”
Campion appreciates the importance of the relationship between lawyers and clients, adding that a sense of support and camaraderie can be lost during the “tough conversations” that must come when funds are unavailable.
Every time there is a change in representation due to the start-and-stop caused by depleted funds, clients incur additional costs without necessarily increasing profits for legal practices. This not only slows the process down, but also creates internal overhead related to the practice management and administrative tasks, as files must be updated, and accounts recovered.
Of course, should a client completely run out of funds and become self-represented and/or change firms, there becomes yet another delay as a new lawyer must review the file and “get up to speed.” Campion explains for clients, this can be confusing and overwhelming.
“Client peace of mind and satisfaction is extremely important,” Campion says. “Most are emotionally exhausted, financially drained and they are going through one of the most difficult times of their lives. The faster they can get through the process the better.”All Blog Posts