Pound for Pound Orders: Are They Legal?

Published: 13/10/2022 12:43

It is now over 20 years since Holman J, in A v A (Maintenance Pending Suit: Payment of Legal Fees) [2001] 1 FLR 377, recognised that a maintenance order could reasonably include a contribution towards the payment of legal fees. At the time he handed down his decision, the Judge identified a mischief that he sought to remedy, namely the fact that the wife was denied eligibility for legal aid by the making of her maintenance pending suit (MPS) award. The problem of providing a level playing field to all parties, however, remains one which has consistently faced litigants since that time, aggravated by the removal of legal aid funding for almost all financial remedy cases.

The law in this area has evolved considerably since then. Sections 49–64 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 gave us section 22ZA of the Matrimonial Causes Act 1973 and power to make legal services payment orders (LSPOs). Funding orders have also been made (on an A v A basis) in proceedings under Schedule 1 to the Children Act 1989 (see BC v DE (Proceedings under Children Act 1989: Legal Costs Funding) [2016] EWHC 1806 (Fam), [2017] 1 FLR 1521 by Cobb J), Part III of the Matrimonial and Family Proceedings Act 1984 (see LKH v TQA AL Z (Interim Maintenance and Costs Funding) [2018] EWHC 1214 (Fam) by Holman J) and the Inheritance (Provision for Family and Dependants) Act 1975 (see Weisz v Weisz & Ors [2019] EWHC 3101 (Fam), [2020] 2 FLR 95 by Francis J).

That the law should permit the proper availability of litigation funding (and with it, access to justice) is now well settled, but this article seeks to investigate an increasingly common new type of legal funding order, the so-called ‘pound for pound order’, described in its simplest terms as an order requiring the respondent to pay the applicant’s lawyers £1 for each £1 which he chooses to spend on his own.

The use of such orders at an LSPO hearing are (anecdotally) becoming more common at all levels of the Family Court, giving rise to the question: Is it legitimate simply to fix the husband’s contribution to the wife’s costs by reference to his own?

What of the 14 principles set out by Mostyn J in Rubin v Rubin [2014] EWHC 611 (Fam), [2014] 2 FLR 1018 at [13] – a list of guidance which has been followed at High Court level and noted by the Court of Appeal with approval in Villiers v Villiers [2018] EWCA Civ 1120, [2018] 2 FLR 1183? While it is not necessary to replicate the entire list of the judge’s principles, a pound for pound order would seem to offend against the following (using the same subparagraph numbering as found in Rubin):

‘(iv) The court cannot make an order unless it is satisfied that without the payment the applicant would not reasonably be able to obtain appropriate legal services for the proceedings.’

‘(xi) Generally speaking, the court should not fund the applicant beyond the FDR, whereafter a further hearing should normally be listed to consider ongoing funding needs.’

‘(xiv) [The] evidence must … include a detailed estimate of costs both incurred and to be incurred.’

To order that a husband (more commonly the payer) must pay to the wife whatever he pays his own lawyers seems to break the causal link between what the wife reasonably needs in order to be represented and what the husband is to pay for those services. His own reasonable legal fees may be more or less than the wife’s, meaning she may suffer or profit unfairly and, to complicate the picture, LSPO orders in fact rarely cover 100% of the costs sought, since the parties’ solicitors are often expected to ‘carry’ an acceptable element of unpaid costs until the next stage.

So why then does the pound for pound order seem to stand as an outlier to the Rubin principles? It is true that there have been some other limited examples of exceptions to those principles – for example, in Villiers v Villiers [2018] EWCA Civ 1120, [2018] 2 FLR 1183, the Court of Appeal declined to interfere with the LSPO made by Parker J, despite there being no detailed cost budget and the order being made ‘until further order’ rather than until the financial dispute resolution. In giving the lead judgment (in what was an exceptional case of wilful non-disclosure), King LJ said (at [111]) ‘in dismissing the appeal in relation also the costs allowance, I should not, on any basis, be regarded as in some way condoning any “dumbing down” of the now accepted procedural requirements in the making of such an application. However, this was a discretionary exercise in an interim application’.

The answer may lie in the fact that a pound for pound order is not in fact an order for LSPO at all; it appeared (by proper application) as an enforcement order or injunction – pursuant to the Hadkinson line of authorities – dating back to Mubarak v Mubarik (Contempt in Failure to Pay Lump Sum: Standard of Proof) [2006] EWHC 1260 (Fam), [2007] 1 FLR 722 (a case which requires little introduction to the family lawyer). Mr Mubarak had been guilty of the most egregious breach of court orders (he had been ordered to pay his wife £4.8m over the previous 7 years but had paid almost none of it) when Bodey J dealt with the wife’s Hadkinson application to debar Mr Mubarak from defending her substantive applications (for the setting aside of certain transactions and the variation of nuptial settlements). Bodey J refused her request for blanket Hadkinson relief; her secondary position appeared to be that his participation should instead be conditional upon his compliance with certain terms (including that if he paid £1 to his own lawyers, he should also pay £1 into a joint account in the names of the parties’ respective solicitors). In acceding to Mrs Mubarik’s submissions, (and if the pun be forgiven) Bodey J seems to have coined the phrase ‘pound for pound’ during the course of that hearing. Such an order fits well in this context given that Hadkinson relief is available only where there exists an ‘impediment to the course of justice’ (see de Gafforj v de Gafforj [2018] EWCA Civ 2070).

What this order was not, was an order for legal services (at the time, A v A) provision. It was argued by Mr Mubarak’s counsel that the wife should have passed down that route: Bodey J rejected that argument in the following way:

‘85 On the question of terms, Mr Howard says that there is no reported case of facts remotely like these where conditions have been imposed, and that it would be quite wrong to use Hadkinson to put money in the wife’s hands as a condition of the husband’s participation at the December 2006 hearing. It would amount to enforcement by the back door. The wife could instead have used the conventional route of an application pursuant to A v A (Maintenance Pending Suit: Payment of Legal Fees) [2001] 1 WLR 605 to obtain a costs fund. However, I consider that such would have been both déjà vu and pointless. She already has more than adequate income provision; but the husband does not comply with it and practical enforcement has not proved possible.

86 An A v A application would simply have been a re-run of the same expensive hare as previously ended up in stalemate when the wife tried to enforce the existing periodical payments order … ’

In LKH v TQA Al Z (Interim Maintenance and Costs Funding) [2018] EWHC 1214 (Fam), Holman J said:

‘20 … it is, in my view, an especially strong thing for any court to debar a litigant even from being heard in defence of an application made against him. It is one thing under the Hadkinson jurisdiction (Hadkinson v Hadkinson [1952] P 285) to prevent a party who is in contumacious breach of orders from making some further application for himself or herself. That may in appropriate cases be appropriate and permissible. But it is, in my view, a very different and indeed very extreme, course for a court altogether to debar somebody from being heard. In the process the court in fact denies itself the opportunity of being as fully informed as it would wish on the issues in question …

21 In my view, however there is an alternative approach which is clearly available to me. I will injunct the husband from paying any further money (whether for their profit cost or disbursements) to any firm of solicitors practicing in England and Wales (or any counsel instructed him in on a Direct Access basis) unless he pays an equal amount (i.e. pound for pound) to the wife’s solicitors towards satisfaction and discharge of the arrears and current instalments of legal services …

22 Mr Hale objected that such an order and approach was denying the husband the means of obtaining legal advice, which he submitted is contrary to principle and is impermissible. I wish to stress very clearly indeed that it is not intended to deny, nor is it denying, him the means of obtaining legal advice. As far as I am concerned, he can go straight out and pay £100,000 to Stewarts Law for further legal advice, the only condition is that he also pays pound for pound £100,000 to the wife’s solicitors.’

Holman J was there dealing with a Hadkinson type situation – not a freezing injunction (in respect of which there is a significant body of authority that such an injunction should not impede the payment of legal fees at any billed cost – see Cala Crystal SA v Alborno, Times Law Report, 6 May 1994, HMRC v Begum [2010] EWHC 2186 (Ch), or what Neuberger J said in Anglo-Eastern Trust Ltd and Kermanshahehi [2002] EWHC 2938 and 3152 (noted with approval by Mostyn J in Xanthopoulos v Rakshina [2022] EWFC 30) authorities which might, perhaps, provide persuasive grounds that this form of order had the practical effect of operating as an interference in the husband’s right to instruct whomever he chose, and at whatever the cost levied to him – although such arguments could be assuaged or deflected by showing that non-payment amounted to an ‘impediment to the course of justice’.

It is important to note then that ‘Pound for Pound’ in LKH v TQA Al Z [2018] EWHC 1214 (Fam) was not used as to fix the quantum of the LSPO award (that had already been determined according to the Rubin principles), but by way of a means of enforcement – the order (in the form of an injunction) requiring the husband to make a contribution to the arrears and ongoing LSPO in the same amount as any future contribution to his own solicitors.

Sometimes, pound for pound orders appear where there is a lack of clarity about the husband’s resources or his ability to meet an LSPO. This should not happen; instead (as stated by Charles J in G v G (Maintenance Pending Suit: Costs) [2003] 2 FLR 71), the court is entitled to take ‘a broad and robust view as to the means which it is not then in a position to decide’. The husband can and should address any potential unfairness (as Charles J confirmed in G v G) by providing proper disclosure of his means and applying for a variation (which would now be made pursuant to section 22ZA(8) of the Matrimonial Causes Act 1973).

A not uncommon phenomenon without a fixed sum underlying the pound for pound order is that the husband simply sacks his legal team in order to act as a litigant in person, leaving the wife with an unenforceable order.

The authorities demonstrate that pound for pound orders should not be made as a general form of LSPO but should rightly exist in the context of enforcement (or security), and when there are grounds for an injunction against the payer of the sort identified above; to make such orders by way of general cost funding goes well beyond the ‘reasonable’ test associated with maintenance/the A v A provision or the strict terms of section 22ZA. More is required to justify such an order, Holman J was clearly describing the impediment to justice presented by the husband in LKH v TQA Al Z [2018] EWHC 1214 (Fam) at [23]:

‘It is, frankly, intolerable and an affront to justice that in the last month this man paid £95,000 to his new solicitors at the very time when he was already in arrears and getting further into arrears with his wife and her very patient and long-suffering solicitors in the amounts I have described. The rationale behind the Mubarak decision must be to try and achieve an equal or level playing field and that is all I seek to do by this order …’

The laudable aim of providing a level playing field to all litigants should not be confused with a somewhat laissez faire method of fixing the quantum of an LSPO in a way which ignores (or at least sidesteps) the Rubin principles.

Annex – Pound for pound injunction precedent

Legal services order

    1. This is a legal services order made pursuant to [section 22ZA of the Matrimonial Causes Act 1973] /[paragraph 38A of Schedule 5 to the Civil Partnership Act 2004].
    2. The court was satisfied that without the amount specified below, the [applicant]/[respondent] would not reasonably be able to obtain appropriate legal services for the purposes of the proceedings.
    3. The [respondent]/[applicant] shall pay the amount of £[amount] [by [time and date]/[per calendar month commencing on [time and date] until [time and date]⁠] to [name], the legal representatives of the [applicant]/[respondent].

Pound for pound injunction

  1. The [respondent]/[applicant] is prohibited from paying (or causing to be paid by any third party) any further sums after [time and date] (whether for their profit costs or disbursements) to any firm of solicitors practising in England and Wales instructed by him in relation to these proceedings (or any counsel instructed by him on a Direct Access basis) unless he pays an equal amount (i.e. pound for pound) to the [applicant’s]/[respondent’s] solicitors in respect of [the arrears of] [MPS]/[LSPO], ordered [above]/[on [time and date]⁠].
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