Conditional legal fees in libel cases

 

A recent decision of the Court of Appeal in a Road Traffic Act case could have serious ramifications for the press in relation to claims against them for libel, where the solicitor for the libel claimant is acting under a conditional fee agreement.

The Court of Appeal decided that where a claimant had agreed a reasonable success fee and insurance at a reasonable premium, when first instructing his solicitor, he could recover both from the defendant if the claim succeeded or was settled on terms that the defendant pay his costs.

Normally, the court held, 20 percent would be the maximum success fee that could reasonably be agreed.

All this, despite the fact that statistics indicate a success rate in traffic accident cases of up to 98 per cent. It could not ever be said that a case was without risk, the court held.

The indications are that solicitors taking on claims for libel on a conditional fee basis will only do so where there are very strong chances of success. The recent decision has yet to be applied in such cases, but the signs are that, even where its first reaction is to admit liability, the unhappy newspaper defendant will be liable for a success fee and an insurance premium.

Some comfort can perhaps be taken from the court’s observation that a solicitor and client could, alternatively, agree a two-stage success fee, which would assume that the case would not settle in the first three months, the protocol period in personal injury cases, but would make the fee subject to a rebate if it did, in fact, settle before the end of that period. But there, it suggested that the initial success fee could be agreed at 100 per cent!

It seems the court is keeping an open mind as to whether, where fees are agreed at the outset, there are circumstances which require the agreement of a two-stage success fee. Nor did it form any conclusion as to what would be a reasonable sum to pay for an insurance premium charged for after the event insurance.

Press defendants and their solicitors will want clarification on these matters fairly urgently.

 Richard Shillito is a partner in the media team at Farrer & Co

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