Legal Aid. There is no free lunch?

With the number of matters which are now eligible for public funding (Legal Aid) decreasing exponentially and more and more people therefore having to fund their own legal actions, many legal issues remain unresolved.

The main areas of law which are still eligible for public funding are Criminal, the Tenant part of Landlord & Tenant and Family/Matrimonial.

Contribution to Cost of Legal Aid

Some criminal matters may be means tested and may require a contribution towards the legal costs but legal aid is available for most people facing criminal prosecution.

The situation with Legal Aid for family/matrimonial matters is somewhat different and the rules are beyond the scope of this article. Broadly speaking if a litigant is on benefits then they won’t have to make a contribution toward their legal costs and it will all be funded by Legal Aid.

If they are not on benefits and earning a wage they may have to make a contribution towards the cost of their legal work. It happens that very few people who are not on benefits fall in to the category where all their legal costs would be publicly funded.

It has always been the case that anyone who has the benefit of Legal Aid would go running to their solicitor at the first sign of any problem. They did this on the basis that they weren’t paying for any legal work so they would have as much as possible! Sometimes however this shot them in the foot.

Divorce and Legal Aid

Very often, Legal Aid funding is not a free lunch. If, (in a divorce for example) the parties are arguing over money or a house then some of the value of their house or their money may be at risk. There is an exemption which (the last time I looked) was £5000 but other than that any monies or property in dispute were at risk.

In a nutshell, if the Legal Aid fund paid for someone to fight over the old matrimonial home then in the event that the matrimonial home was awarded to the person with the benefit of Legal Aid then the Legal Aid Board would want the costs they had paid, repaying from the value of the home. Similarly, if part of the argument was over a bank account, Legal Aid will want repaying if there is a successful outcome with a value over £5,000.

Let me give you a scenario. A couple are getting divorced and they are arguing over who owns the £50,000 in a bank account. The Legal Aided party claims that 50% of the money is theirs and the non-Legal Aided party is claiming that all the money belongs to them.

The matter goes to court and the court decides that the money should be split 50/50 and awards £25,000 to the Legal Aided person. The bill for arguing litigation was £10,000. The legal aid board would want £10,000 of the £25,000.00 that was awarded leaving the legal aided person with only £15,000 out of the £25,000. Ouch!

Legal Aid Cost Exemptions

With regards to the exemption, if the amount that was being argued over was £10,000 and the award was 50/50 then half of £10,000.00 being argued over (assuming 50/50) is £5,000.00. There is a £5,000.00 exemption ring fenced and therefore the Legal Aid board would get nothing.

• Awarded £5,000. Legal costs £10,000. Exemption £5,000. Legal Aid get £0. U get £5,000
• Awarded £7,000. Legal costs £10,000. Exemption £5,000. Legal Aid get £2,000. U get £5,000
• Awarded £10,000. Legal costs £10,000. Exemption £5,000. Legal Aid get £5,000 U get £5,000
• Awarded £15,000. Legal costs £10,000. Exemption £5,000. Legal Aid get £10,000. U get £5,000
• Awarded £20,000. Legal costs £10,000. Exemption £5,000. Legal Aid get £10,000. U get £10,000

The situation is a bit different if what is in dispute is a house. Obviously, the house can not usually just be sold to repay a Legal Aid bill (it may be home to children) so what happens therefore is that the Legal Aid board will attach what is known as a “Statutory Charge” to the house in respect of monies owing.

This means that when the house is sold or re-mortgaged then the Legal Aid Board will get their money. It is not a free loan however. Interest attaches to the charge and continues to accrue. It is rare for the Legal Aid board to agree to postpone their charge in the event that the house is eventually sold or is perhaps re mortgaged in the interim but they will consider it.

As stated earlier, there is no “free lunch”.