Even for those who are relatively well-off, accessing joint assets during separation can be difficult—so where does the money come from to fund your life, legal expenses and basic needs in the meantime?
Ben and Heather are joined by Amanda Kerdel from JustFund, Australia’s leading provider of family law and estate finance, to discuss the options available for funding your divorce or separation.
Topics covered include:
JustFund – legal funding for family law and estates
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Benjamin Bryant: Welcome to episode 65. I’m your host Benjamin Bryant from Bryant McKinnon Lawyers. Today we’re tackling a topic that can cause serious stress during separation: how to fund your divorce. Even for those who are relatively well off, accessing joint assets can be difficult. Often you can’t touch them until the property settlement is finalised. So the big question is where does the money come from to fund your life, legal expenses and basic needs in the meantime? To help us unpack this issue, I’m joined by my partner and family law specialist Heather McKinnon and our special guest, Amanda Kerdel, Director of Partnership Development at JustFund, Australia’s leading provider of family law and estate finance. Amanda is also a family lawyer with a background in community legal centres and private practice. In her current role at JustFund, she acts as a bridge between clients, law firms and funding, enabling legal teams, like ours, to help clients access financial support when they need it most. This is going to be a very practical and valuable conversation, especially for people in the early stages of separation who are wondering how on earth they’re going to get through it financially. So if you know someone at the beginning of their separation journey, now is the perfect time to share this podcast with them. Alongside today’s episode, we have a growing library of episodes designed to answer real life questions, ease fear, and help people make better informed decisions. And now on with the show.
Benjamin Bryant: Well, thank you, Amanda, for being here with us today.
Amanda Kerdel: Thank you so much for having me.
Benjamin Bryant: No worries. And thank you, Heather. Welcome back to the show.
Heather McKinnon: Excellent.
Benjamin Bryant: Heather, let’s start by talking about costs. What are the most common expenses people underestimate or forget about when going through divorce or separation?
Heather McKinnon: By far the biggest on-costs, if you like, relate to valuations and expert fees. So most people would anticipate that they would have fees from their solicitors. But if you get into a dispute over the value of real estate or the value of a business, or the value of antique car collection, you have to call in experts. And that’s where fees really start to escalate.
Benjamin Bryant: And I guess from our point of view as well, Heather, it’s difficult because when we see clients for the first time, we’re trying to give them an idea of how much it may cost, and especially those things with the disbursements. Like it depends if it’s real estate, if it’s businesses, if it’s superannuation, depends where the assets are or how complex it is as well, so the fees can range quite significantly. Can you give the listeners a ballpark range of what typical separations may cost?
Heather McKinnon: Yeah, we have sort of three categories of cases in a property settlement in Australia. The first is where people negotiate a settlement and the lawyer’s job is just to do what we call consent orders. So in a regional area, both of them will spend around $5,000 for that process. In capital cities it’ll be a bit higher 8 to 10. The next category of expenses are those parties who weren’t able to negotiate a deal and had to get help from the court. They lodged their applications, and then the court orders that they go to mediation. If you’re in that second tranche, if you like, of people, then you’re going to spend between $10 and 20,000, depending on the sort of valuation evidence that’s needed. Those two sort of groups of people get rid of the bulk of Australian families, and what we’re left with then at trial is about 3%. And they’re the horror stories that we hear about. So if you run a property case in Australia, you’ll spend, you know, the cheapest you’ll get out of it for around $30,000, and then the fees can go to the hundreds of thousands, depending on how complex the financial issues are.
Benjamin Bryant: And again, it’s really difficult to advise parties if they’re in the 3%. I think it’s fair to say most parties, when I explain the stats to them, most clients will say, I’m definitely part of the 3%. We’re definitely one of those cases. And obviously most often than not, they’re not. And they can resolve pretty quickly even if they do file with the court. And then there’s other people, of course, Heather that come to us and say, we’ve reached an agreement, we just need consent orders. And then when you drill into it, they haven’t actually reached an agreement at all. And I guess, the advantage for our firm as well, Heather, is that we use fixed fee. So we’re really conscious of trying to manage people’s expectations as well. And so that also takes away a lot of the stresses from people having to engage a time recording lawyer as well, and get the surprise at the end.
Benjamin Bryant: Heather what are the types of things that drive up the costs of separation?
Heather McKinnon: By far the biggest is conflict. So if you get stuck in a dispute where people really are positional bargaining. So I’m right. It’s fair. I’m going to get the judge to tell you that. That sort of behaviour means that you can be in for a long journey that gets very expensive. The only other sort of really unknown then is something like a business valuation. So if you’re in a family business that employs a number of people, and one of the experts has to come in to work out what it’s worth, you can quickly rack up $20,000 or more in expert fees. So it’s horses for courses. Commercial reality happens in the outside world, but in the family court world, people are not just commercial. There are a lot of things playing on the process, and high high-conflict divorce is catastrophic for everyone, and it costs a fortune.
Benjamin Bryant: And dear listener, for more information about ways to reduce costs, I can refer you to episode nine of this very podcast on how to keep divorce costs down.
Heather McKinnon: Heather, the big question, of course, is where to find the cash to fund divorce and separation costs. So I’m going to explore some options with you. Can people use shared assets to fund separation costs? For example, can they withdraw on their mortgage or take money from joint bank accounts?
Heather McKinnon: Absolutely. And that’s what sensible people do. So, you know, they might have sold a house and they need to get the lawyers to tidy it up with consent orders, and they agree to pay the fees out of the proceeds. They may agree to each take an amount on a redraw. But unfortunately, if you’re in a situation where trust has broken down, those deals are very hard to negotiate. Often there’s unequal bargaining power. One person will have a lot more financial resources and skills than the other, and so the one with the power will try and starve the other one out so they can’t access appropriate advice.
Benjamin Bryant: Yeah. And I think the operative word again is joint. If it’s a joint asset, then really it should probably be a joint decision. And there in lies the problem.
Benjamin Bryant: Heather, what about borrowing from family and friends? Are there risks associated with this?
Heather McKinnon: Yeah. Look, a lot of people do go to the bank of mum and Dad if they’re in their 30s and 40s. But as we know, with the cost of aged care really hitting that generation, it’s not sensible in my view, for people to, in mid-life, go to parents and seek that their capital be put into the mix, because you just don’t know how long it’s going to be stuck there for. And if Mum and Dad need to get a bond for a nursing home or help out a sibling who’s got a catastrophe in their life, you’re really putting pressure where you shouldn’t have to.
Benjamin Bryant: That’s right. It can complicate things as well. For example, if you get a loan from a family member and some of it’s for legal fees, but some of it’s for relocation costs or rent deposit bonds or something like that, characterising how that looks on the balance sheet and how it’s going to be dealt with can be quite complex.
Benjamin Bryant: What about taking on an advance or personal credit card or a personal loan from the bank? Is that possible?
Heather McKinnon: Well, in my experience, certainly if you want to go into your credit card, you can, but the interest rates are through the roof. It’s also, in my experience, very unlikely that banks will do much by way of personal loans once they know a couple have separated, because the algorithms say, well, this is high risk. We don’t know how long this money is going to be out there. You can do it, but it’s expensive and it’s very stressful to be waiting on those applications. It’s a very complicated sort of field we’re working at the moment with banks. So yeah, it can work for some. But you know, you just don’t know how long you’re going to have that interest rate being clicked over.
Benjamin Bryant: And finally, what about a divorce loan or litigation finance? Amanda, can you explain what litigation funding actually is?
Amanda Kerdel: Yeah, absolutely. I think a lot of people call what we do litigation funding, but we can actually assist at any stage of the matter. So it’s not just limited to litigation. That’s the the first point. But why it’s so helpful and Heather what you touched on before about banks and their criteria and how long it takes for them to approve an assessment. For us at JustFund, our criteria is very different. So, for example, a lot of the women that come to us, they’re not necessarily on the property or they’re not on the title and they can’t access any funds. We can help them even though they’re not on title or like they have no access to the property at all and provide funding that way, and that can be dependent on whether they’re working or not. Most banks will generally look at sole income and if you’re on the title as well. How our model works, we allow clients to just spend their lives as they should be, you know, having to pay for school fees and all of that associated. And our model works as we get paid from the settlement proceeds.
Benjamin Bryant: And Amanda, just to drill down and who and what litigation finance is for. Who is eligible for this type of funding?
Amanda Kerdel: Any family law clients. So generally speaking, there needs to be a property settlement associated. But a lot of our clients, it’s a variety. So you have borrowers who essentially don’t want to spend any of their funds. They have the funds available, but they just want to live their lives as they want to and then pay at the end. And then you have the borrowers who really need it and have no access at all. And Heather you mentioned financial abuse. That’s a lot of the borrowers that come through are victims of that as well as coercive control. A lot of our borrowers are women, but we help a variety of family law clients.
Benjamin Bryant: And I think, Amanda, because litigation funding specifically for family law hasn’t been around forever, sometimes Heather and I get the sense from our clients that they think it’s just for wealthy people or something like that. You can confirm it’s not just for wealthy people.
Amanda Kerdel: No, it absolutely is not. And that’s what makes what we do so rewarding, because we are helping those people not in the situation where they are well off, but in all stages of their lives.
Benjamin Bryant: And Amanda, you touched on this briefly before, but we understand that litigation funding, as you said, is not just for litigation itself. It’s pre litigation, but it’s also other things like Heather mentioned before, the disbursements and the expert reports or something. And more recently with JustFund it’s also living costs. Could you just explain and give some more detail about that for us.
Amanda Kerdel: Yeah, absolutely. So as borrowers are going through separation we had a lot of inquiries asking us basically if we could assist with just daily living costs, personal expenses. That could be mums who need to pay for their kids school fees, or they just need to pay for rent. And so we can now step in and help pay for that. We had an application the other week from a dad, for example. He needed a car to go visit his daughter and so we assisted in that scenario. So we’re very excited to be able to provide that to clients going through that difficult time.
Benjamin Bryant: Yeah, it’s a great service. And Heather you mentioned before the power imbalance and Amanda, I know JustFund previously in one of their publications, they were spruiking that litigation funding is essentially levelling the playing field. So I think it’s so important. Heather you would agree with that?
Heather McKinnon: Yeah. The only way we had it before, there was some case law, we used to have to make an application, but it was almost as expensive to do that as to get the loan. So this really allows people to stand up and have some sense of dignity in the year or so that they might be in conflict.
Benjamin Bryant: And Amanda, I can hear a dog barking in the background. With other living expenses… pet expenses okay too?
Amanda Kerdel: Yes, yes, I’m sure that we can cover it. Pets are very expensive. Our dog alone, it has cost thousands this year, just on ear infections. So, things like that. That’s a necessary cost at the end of the day. We could potentially cover.
Benjamin Bryant: Sure. And I think also, you know, it’s a renewed focus with the amendments, the property amendments in the Family Law Act as well. You know, the concentration on the ownership of the dog. Um, and of course, that comes with who’s going to pay for the dog. So I think it’s really relevant. Amanda, can I talk about the application process with you? What does it look like? Is it complicated or is it time consuming?
Amanda Kerdel: It’s actually pretty easy. On speaking with your lawyer (clients can apply without their lawyer, and we can suggest one to them) but generally, clients will apply with their lawyer. They just apply online. It’s really easy. They click a button, come to our website. It takes about ten minutes. We just need their basic information. If they have no idea about what their assets are or how much they’re owing, that’s completely fine. They can skip over those questions. We receive that. We get that information. In that we get consent from the client to reach out to their lawyer, and we then reach out to their lawyer to get the relevant documents we need. So our in-house family lawyers can make their assessment and then provide the funding. And our turnaround time is usually between 1 to 2 weeks. If anything is ever urgent, we will just put that as a priority. So again, very different from banks to be able to assess that quickly. And it’s such an important thing when you’re so stressed about where you’re going to get funds from. To be able to assess that quickly is really important in the family law space.
Benjamin Bryant: Yeah, and I think that’s a good element of it as well. Amanda, what you were talking about, where one of your in-house lawyers assesses it as well, I think that’s really helpful. And it’s also, I think, reassuring for the client as well that it’s not just a tick a box you’re going through, and it’s just some administrative assessment. There’s a real-life person looking at this, assessing essentially the need as well, as well as the eligibility. I think it’s great.
Amanda Kerdel: Yeah. We do provide as much support as possible, because we’ve had a lot of borrowers calling us, asking us for information, or who do they call when they’re in times of need? You as lawyers would get that as well. So we’ve actually addressed that. And we’ve developed a hub so clients can actually go to a central place and call certain organisations if they need assistance and things like that. So we try and be as client centric as possible in that process, not just a finance company. We just really want to look after borrowers who come through.
Benjamin Bryant: For what it’s worth, from our end, you can tell.
Benjamin Bryant: Let’s talk about costs and risks. How does repayment work.
Amanda Kerdel: So repayment is and we explain all of this before anything happens as well. But essentially all the repayment happens at the end of the family law matter. So when everything is settled, essentially we would be paid from those settlement proceeds. The lawyer’s aware of that. The client will be aware of that, and then the client will receive whatever they’re supposed to receive. We just receive that portion of them, and it’s usually how much they’ve drawn as well, depending on what their credit line is.
Benjamin Bryant: And I love this next question. And we actually get asked it all the time. What if a person doesn’t end up with a large settlement? Do they still have to repay the loan?
Amanda Kerdel: That’s why our assessment process is very, very important. At the end of the day, they will need to repay a loan if they’ve signed whatever agreement they need to sign. But we run our assessment very, very carefully. So we ensure that clients won’t be left with very little at the end of their settlement. For example, when we make an assessment, we can only lend up to 25% of what we determine as what the client is legally entitled to.
Heather McKinnon: One of the things I thought I’d clarify with you there, Amanda, is in relation to people who aren’t going to get cash and settlement. So if a mum wants to try and retain the home, at the end of the day she’ll get her housing finance, which will include the amount she has to pay to her ex-partner and the amount she has to repay. So it works seamlessly. And it’s a very good option for people who are looking to try and keep a house.
Benjamin Bryant: And also, you know, the assessment that Amanda was talking about, it’s really important not to put people that are already under financial pressure, under more financial pressure. So it’s that really fine line.
Benjamin Bryant: And on that Amanda, what are the interest rates like, and how would it compare to other forms of finance?
Amanda Kerdel: Yeah. So our interest rate is 9.85%. Very competitive interest rate compared to other funders out there, banks. And the key point of that is that interest rate will be charged at the very end, and it will be charged on the amount drawn. So in other instances, it may be that someone lends $100K and they have to pay that full interest on that full $100K. But for instance, if we approve $100K in terms of the loan and the client only uses $30K of that, then that 9.85% is calculated based on that $30K only.
Benjamin Bryant: Mm. Interesting. And Amanda, without breaching confidentiality, can you share an example of how litigation funding has helped someone access justice and to reach a fair settlement?
Amanda Kerdel: There are so many cases that we get, because we have a dedicated channel for clients coming through saying how much we’ve assisted. And I think the ones that stand out most are the ones generally the women to me anyway, the women who say that there was coercive control, there was financial abuse, and we had nowhere to turn to. And I’m so glad that we came to JustFund. And now I can live in peace with my children. And those are really common stories that we receive on a weekly basis as well.
Benjamin Bryant: That’s so great to hear. And Heather, what would you say to someone who is hesitant to start legal proceedings because they feel they can’t afford it?
Heather McKinnon: Look, the biggest group are the ones who come to you, who have been trying to work out how to separate for years. As Amanda said, they can now get a bond, get the initial few months’ cashflow, get their court case started, all without it affecting the cash flow. It’s such a game-changer. Because even in times where you could say, get a grant of legal aid for property proceedings, legal aid wouldn’t pay a bond. So they’re the sort of things. And some of these women are in marriages where the asset pool, might be a couple of million dollars, but they literally have no access to anything. It’s a real absolute game-changer.
Benjamin Bryant: Well, for sure. And I think with any separation, there’s always that element of walking off the precipice. So many questions, so many things unknown. So having this available and also, podcasts like this available to give the people the information to give them some assurances in some pretty daunting times. It’s fantastic.
Benjamin Bryant: Well, that is the show wrapped up. Thank you so much, Amanda, for joining us today.
Amanda Kerdel: Thank you so much for having me. I had fun.
Benjamin Bryant: Excellent. That’s great. So did we. And Heather.
Heather McKinnon: Good luck with the ear infection for the dog, too.
Amanda Kerdel: Oh, thank you so much. It’s a never-ending story.
Benjamin Bryant: That brings us to the end of this episode on funding your divorce. A huge thank you to Amanda Kerdel from JustFund for sharing her expertise and shining a light on an option many people don’t even know exists. And thank you, as always, to Heather McKinnon for helping break down the practical realities of navigating family law. If you’re in the early stages of separation, today’s conversation may just be the beginning of the information you need. We’ve built a comprehensive library of podcast episodes covering everything from parenting arrangements and property division to coping with emotions and rebuilding your life. Whatever stage you’re at, you’ll find straightforward, practical advice to help you move forward. You’ll find all past episodes at bryantmckinnon.com.au or search for The Family Matters Show wherever you get your podcasts. Thanks for listening. And until next time, take care.