The Ministry of Justice is to bring in new rules from 1 October which are intended to curb the huge libel costs which have hit news organisations in recent years.
Conditional Fee Arrangement rules (also known as no win, no fee) have led to legal costs for publishers in libel cases which can run into the millions, even when actual damages given to victims are just a few thousand. And they have led to many cases being settled rather than fought because of the risk of massive legal fees.
Now, following a wide-ranging consultation, the Ministry of Justice has revealed three major changes which should limit libel case costs for publishers.
1.Early notice of After the Event insurance. This means that when claimants take out insurance against losing they must tell the publisher immediately. Publishers have to pay this insurance premium if they lose and it can vary from around £2,000 to £50,000 – depending on how long the case has been going on for. This change will stop the current practice of publishers being forced to pay a claimant’s insurance premium when they did not even know such a policy was in place.
2. A 42-day cooling-off period after a publisher has been informed that ATE insurance has been taken out. If the publisher settles in this time-frame, they don’t have to pay the ATE premium.
3. A compulsory cost budgeting pilot on defamation cases. This means that from 1 October judges will monitor legal spending in libel cases to keep tabs on it, ensure it is not excessive and then feed this information into a further review
The measures announced today do not address one of the most controversial aspects of the no-win, no fee regime – the success fees which allow claimant lawyers to double the charges they levy on publishers who lose libel cases.
But Press Gazette understands that a second consultation with new proposals on limiting success fees is set to be released by the Ministry of Justice shortly.
Justice Secretary Jack Straw said in a statement today: “Freedom of expression and investigative journalism are fundamental protections to the democracy of this country, of which we are rightly proud and the Government is working hard to protect.
“Spiraling costs and disproportionate legal fees are too often a feature of defamation proceedings, skewing justice as defendants choose to settle unwarranted claims rather than face huge libel costs.
“After the Event’ insurance premiums, a common accompaniment to ‘no-win, no-fee’ civil proceedings, coupled with generous success fees, can make libel cases difficult to fight for some defendants, particularly regional media organisations.
“That is why the Government is taking action to ensure that, where ATE insurance is taken out, defendants are notified as early as possible, and given the opportunity to reach a settlement without being liable for the insurance premiums.
“As recommended by the CPRC, publication proceedings will also be part of a mandatory costs budgeting pilot, with judges scrutinising costs as cases progress to ensure that they are proportionate and within the agreed budget.
“But these are only the first steps. We will be watching the pilot carefully and actively considering whether further measures are needed to control costs in this area.”
Press Gazette has been highlighting the huge cost to publishers of no win, no fee libel rules – and the chilling effect they have on freedom of speech – with its Fair Play on CFA campaign.