Government to review libel system which costs newspapers millions

One of the news organisations’ biggest gripes with the current legal system is being reviewed via a Ministry of Justice consultation paper.

The paper will look at no the win, no fee, libel system which has cost news organisations millions of pounds in recent years.

The complaint is that the system effectively allows libel claimants to hold newspapers to ransom. This is because, if newspapers win the case – they often stand no chance of recovering any costs from claimaints who don’t have the money to pay.

And if they lose the case, lawyers charge up to 100 per cent extra in fees under the no win, no fee system to compensate them for the risk of failure. This means that fees paid to the lawyers can be many times the actual payout to their client.

The no win, no fee system is designed to give poorer claimants ‘access to justice”.

But it was used by Naomi Campbell in her famous privacy case against the Daily Mirror.

In 2005, Daily Mirror head of legal Marcus Partington revealed that law firm Schillings had sent his company a £594,000 costs bill for representing the model at a two-day House of Lords hearing into the case.

He revealed that Schillings charged the paper £4,500 for attending a formal hearing which he said would have lasted around 15 minutes.

The Ministry of Justice consultation paper suggests two ways of reforming the system:

The first is to do nothing, which it suggests could lead to more problems.

“Doing nothing would retain the existing funding procedures with its complexities and increase legal challenges on costs issues.

‘This option might also minimise the use of CFAs and deny access to justice to people with genuine claims, thus hampering the development of CFAs as a preferred means of funding litigation.

“Legal costs would continue to increase with defendants and liability insurers having to pay success fee and ATE premiums from the initial stage of a claim.”

The second option Consultation Paper offers a new protocol to regulate the charging of success fees by claimant lawyers. It outlines a sliding scale of success fees from zero per cent to 75 per cent.

The cases in which no success fee will be charged include those in which the defendant makes an offer of amends under section 2 of the Defamation Act 1996. That means they accept immediate liability, so the claimant lawyer is not incurring any risk.

The Consultation Paper, entitled Conditional Fee Agreements in Publication Proceedings, Success Fees and After the Event Insurance, is available on the Ministry of Justice website at www.justice.gov.uk.

The consultation closes on October 31.

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