Judge caps 'no win, no fee' costs in Standard libel case

By Dominic Ponsford

“When
the cost of defending one article can equate to the cost of employing
100 journalists for a year, the consequences for freedom of expression
are extreme.”

This is the view of Associated Newspapers legal
director Harvey Kass, over controversial no win, no fee rules for
lawyers which have caused the cost of defending libel cases to spiral.

He
was speaking after a landmark ruling which for the first time placed a
limit on the costs to be paid by a publisher in the event of losing a
libel action brought by lawyers acting on a no win, no fee basis.

Landlady
Alberta Matadeen is suing the Evening Standard over claims made about
the conditions in her nursing home following a three-week undercover
investigation.

The Standard’s lawyers, Taylor Wessing, persuaded
a judge at a preliminary hearing to impose a cap on the fees charged by
her lawyers which, without such a limit, could have been as high as
£1m. The actual figure for the limit will be set at a later hearing.

Under
current no win, no fee arrangements libel lawyers who take on such
cases and win are allowed to charge 100 per cent extra when they claim
the costs back from the opposition.

And if claimants choose not
to take out insurance, the media company is often still left with
paying its own costs even if it wins.

Kass said: “The conditional fee regime is out of control, probably unlawful and needs to be modified urgently.

“Lawyers are using the inadequate rules to attempt to pressurise publishers from defending claims which are sometimes unjust.

“Conditional
fee claimants have no problem with their lawyers claiming £900 an hour
because someone else is paying. This landmark decision is just one
small step towards correcting this situation.”

The CFA regime
also applies in privacy cases. In 2003, DJ Sara Cox won a £50,000
payout from The People after suing over photographs of her sunbathing
topless on holiday.

Her compensation was dwarfed by the costs
claimed by her lawyers, Schillings, which, without the case even going
to court, still amounted to £272,000.

According to Taylor Wessing
lawyer Niri Shan: “Where a claimant has no after-the-event insurance
[which will meet the defendant’s costs if the claimant is unsuccessful]
and is represented on a conditional fee agreement, defendants face the
real and substantial risk that, if they are successful, the claimant
will not be able to meet their costs.

“Equally, if the claimant
is successful, the defendant will have to meet most of the claimant’s
costs plus a claim for an uplift on the costs of up to 100 per cent.

This scenario could have a chilling effect on freedom of speech.”

He
added: “By capping the amount a claimant can recover, publishing houses
no longer need to rush into a settlement with the claimant or issue an
apology simply because of economical reasons when in many cases the
merits of the defence warrant defending a claim.”

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