It’s been a year since specialist family law lender JustFund launched in New Zealand, and its lending data is providing a glimpse into the cost of relationship breakdown – and who is struggling to pay.
When the Australian company began taking applications here last August, it used industry data to estimate people would need to borrow about $15,000 to cover their legal costs.
A year on, the reality is considerably higher. JustFund has funded more than 150 New Zealanders, and the median loan is $35,000 per person – more than double its initial estimate.
And for some clients, that’s just a slice of their overall legal bill.
JustFund New Zealand director of family law Lauren Milne says people don’t always come looking for financial help at the start of a separation.
Some start out paying their legal bills themselves, but approach JustFund when it becomes clear their dispute is going to be longer and more costly than they thought.
Milne says the lender can provide loans from as low as $5,000, which can help keep a matter moving or assist with immediate living expenses, to as much as $1 million.
Of course, JustFund’s figures don’t represent all divorces or separations in New Zealand – just those of its clients who specifically seek finance for legal costs.
But Milne says its first year here has challenged some assumptions about who might struggle to fund their way through a separation.
Applications had come from across the socioeconomic spectrum, including people earning more than $600,000 a year and people involved in relationship property disputes where the asset pool exceeded $70 million.
Some clients have substantial wealth on paper but surprisingly little access to cash while a relationship property dispute plays out.
It can suddenly mean funding two households, paying maintenance and meeting legal bills, while wealth is tied up in assets like the house or a business.
About 70 per cent of JustFund’s clients are women and they are typically the primary caregiver, Milne says.
“Our typical borrower is a female who has either taken time out of the workforce to have children, or reduced her working hours. She often has limited visibility or control of the family finances, particularly when her partner has set up complex trust or business structures. She has limited funds to pay her lawyers but is also often struggling to meet basic day-to-day expenses such as groceries, school fees and rent or mortgage payments.
“In addition to relationship property division, many of our clients also require help with spousal maintenance, parenting and family violence matters.”
Milne says about 20 per cent of applications involve clients who report being subjected to family violence. But the true proportion could be higher, because it’s not something clients necessarily disclose.
But when people are in that situation, not being able to access help with their legal costs has big consequences.
“Some clients are having to stay in unhealthy or unsafe relationships or not getting the legal advice they’re entitled to,” Milne says.
And if one former partner had greater financial power than the other, the imbalance can influence how a dispute played out.
“The system can be weaponised against one party if the other has the power. Delay is a strong tactic,” Milne says.
A job she didn’t know existed
For Milne, JustFund’s arrival in New Zealand was a dream opportunity.
Her legal career started in commercial litigation, but she specialised in family law after taking time out to have children. She was practising as a barrister at Mills Lane Chambers when JustFund approached.
She says she had always wanted to find a way to use her legal skills for social impact, in some way.
The combination of family law, a new business in New Zealand and the chance to help people through one of the most difficult periods of their lives meant JustFund ticked all the boxes.
She now manages JustFund’s New Zealand business and she’s hands-on – overseeing all applications before a loan is approved or declined.
While it’s sometimes described as a “divorce funding company” the work is broader than that. Clients don’t need to be getting divorced or even to have started court proceedings to apply for funding. Applications can involve relationship property, parenting and family violence matters, and often come at a point when someone simply no longer has the money to keep paying their lawyer.
The role has also given Milne a much broader view of the financial realities facing people going through separation – and the chance to see the impact of her work much sooner.
“What’s really nice about this role is that as a family lawyer, it can take a few years before you see a good result for your client. In this job, we can make meaningful impact for client within weeks,” Milne says.
“We have so many clients on the phone to us literally crying tears of relief because they have been empowered to move forward in life.”
Why JustFund came to New Zealand
The JustFund New Zealand team at an event celebrating their one-year anniversary in this country.
JustFund was launched in Sydney in 2022 by former lawyers Jack O’Donnell and Andy O’Connor and fintech veteran Craig Carroll.
The company provides finance for legal fees and associated costs, with lending based on a client’s expected relationship property settlement rather than their income or credit score.
The loan is generally repaid from the settlement once the case is resolved.
The company says it fills a gap between those who qualify for legal aid and people who can comfortably meet private family law fees as they arise.
Its move to New Zealand came partly because New Zealand family lawyers were already approaching the Australian business asking whether it could fund their clients, Milne says.
Rather than do that from Australia, the company decided to establish a New Zealand operation with local family law expertise.
It also arrived at a time when some New Zealand law firms were increasingly finding themselves financing clients in another way – by carrying their unpaid fees.
Milne says firms had told JustFund that while they might once have had one or two clients who needed to defer their legal bills until a relationship property settlement came through, it was becoming much more common.
“Law firms aren’t banks. They have their own expenses to meet,” Milne says.
For some, continuing to carry those costs was becoming unsustainable.
And eventually that could mean turning away a client who could not afford to pay as their case progressed.
Demand for JustFund’s services had exceeded expectations, Milne said.
In its first year, more than 120 family law firms from Invercargill to Kerikeri had become accredited with the company, meaning they could refer clients for funding.
Some of JustFund’s earliest New Zealand loans have now also reached the end of the legal process and been repaid.
Feedback from lawyers suggests access to finance could, in some cases, help cases progress more quickly because proceedings were no longer interrupted by unpaid bills.
The loans carry interest and administration costs, meaning borrowers ultimately pay more than the amount advanced.
But Milne argued that if having access to funding helped avoid a dispute dragging on, a client could potentially spend less on legal fees overall.
Last year there were 7887 divorces granted in New Zealand, up 5 per cent on the previous year.
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