Is the libel wheel loaded against free speech?

Newspapers claim that nowin, no-fee libel cases are holding them to ransom. By Dominic Ponsford
in the 1980s, the London libel courts were likened to the most
exclusive casino in the world, where only the very rich could afford
the huge legal bills necessary to take on newspapers in the High Court.

With no legal aid available, the risks in terms of barristers’

were high, but so were the rewards. Elton John won a £1m settlement
after The Sun falsely accused him of having sex with under-age rent
boys and Jeffrey Archer famously won £500,000 after the Daily Star’s
(true) report that he slept with a prostitute.

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In the early
1990s, Appeal Court rulings capped payouts to the current maximum level
of about £200,000 (paid to two nurses falsely accused of child abuse by
Newcastle City Council in 2002). But libel continued to be mainly a
rich man’s game until 1999 when no-win, no-fee rules for lawyers –
pioneered in personal injury cases – were opened up to libel and
privacy matters.

These Conditional Fee Arrangements (CFAs)n allow
lawyers to charge up to 100 per cent extra on their normal fees if they
win their case, but they get nothing if they lose.

On the face of
it, the Access to Justice legislation of 1999 has achieved what it set
out to do – allowing teachers, doctors and even the very poor to take
on newspapers in the libel courts and win.

Nigel Tait, from libel
specialists Carter Ruck, explains: “Ten to 15 years ago, when I had to
read books for libel before they were published, the first thing you
asked was ‘has this person got any money?’

If they don’t have any money, they won’t sue for libel.

Even middle-class people with houses wouldn’t have been able to afford to sue.”

added: “No-win, no-fee is a good thing. We’ve acted for people accused
of being paedophiles, murderers and grossly negligent doctors when the
allegations are just not true and before no win, no fee they wouldn’t
have been able to sue.”

But, in recent years, newspapers have
become increasingly concerned about the so-called “ransom factor” and
“chilling effect” inherent in the CFA system.

This is because
some of the firms offering a no-win, no-fee libel service, such as
Carter Ruck and Schillings, are among the most expensive in the country.

with the 100 per cent uplift, their fees can rise to as much as £900 an
hour, meaning the stakes get very high very quickly for newspapers
involved in legal disputes.

Libel claimants with lawyers working
on CFAs generally can’t afford to pay the newspaper’s bills in the case
of losing, so publishers have ended up paying out hundreds of thousands
of pounds over stories that aren’t even libellous (see box).

month, lawyers acting on a CFA for Romanian criminal Alin Turcu took
the News of the World to trial after he disputed its claim that he was
involved in a plot to kidnap Victoria Beckham.

Ruling in favour
of the NoW, Mr Justice Eady pointed out the flaws in the CFA system
saying: “Significant costs can be run up by the defendant without any
prospect of recovery if successful.”

He added: “On the other
hand, if the defendant is unsuccessful it may be ordered to pay, quite
apart fromany damages, the cost of the claimant’s solicitors including
a substantial mark-up in respect of a success fee. The defendant’s
position is thus wholly unenviable.

“Faced with these
circumstances, there must be a temptation for media defendants to pay
up something to be rid of litigation for purely commercial reasons and
without regard to the true merits of any pleaded defence.”

according to newspaper lawyers, there is a danger of this happening.
They say that claimant lawyers are tacitly warning them that it would
be much cheaper to settle rather than run up huge fees with little
prospect of recovering them.

Executive director of the Society of
Editors, Bob Satchwell, says: “It’s possibly the single most worrying
legal issue around at the moment. It’s clearly potentially inhibiting
for papers with smaller budgets. Even those papers that have relatively
large budgets face absolutely outrageous bills.”

CFAs also apply
to privacy actions and it is a challenge over a bill in one of these
matters, that could lead to the law being changed.

Model Naomi
Campbell engaged Schillings on a CFA to take her appeal against the
Daily Mirror to the House of Lords, after the newspaper published
photos of her leaving a Narcotics Anonymous meeting.

She won and
was awarded damages of £3,500. The bill subsequently sent to Mirror
Group Newspapers for the two-day House of Lords hearing was £594,000.

bill was last week being contested in front of the Lords by MGN
lawyers, who argued that it had the effect of violating freedom of
speech as guaranteed by the Human Rights Act.

If they succeed,
the Lords has the power to hand down a ruling that could significantly
alter CFA rulesAt the same time the Department for Constitutional
Affairs is expected to report back on its CFA consultation paper in
July. This could also result in a change in the rules before the end of

Until then, the libel roulette wheel will keep spinning
and, newspapers argue, with the odds firmly stacked in favour of the
claimant lawyers.

Case study

2003 – 2005

Sara Cox versus Mirror Group Newspapers – June 2003

Radio One DJ Sara Cox won £30,000, and her husband £20,000, after
pictures of her sunbathing topless on her honeymoon were published in
The People. The payout was dwarfed by the costs bill from her lawyer,
engaged on a CFA, of £272,000.

Christopher Miller versus Associated Newspapers – April 2005

The former detective chief inspector sued the Daily Mail and Evening
Standard over articles which suggested he had failed in his duties over
the investigation of false sexual assault allegations made against Neil
and Christine Hamilton.

Associated fought the case to trial and won, leaving the Police
Federation to pick up their costs. Had it lost, Associated would have
to pay legal costs to the other side of £2.75m with the 100 per cent

Pedder and Dummer versus Associated Newspapers – July 2003

Two soldiers sued over allegations in the Daily Mail and Evening
Standard that they had an affair while serving in Oman. Their lawyers
took the case on nowin, no-fee and lost at trial. Associated was unable
to recover its own legal costs from the pair so has been left £500,000
out of pocket, even though the story was shown to be true.

Alin Turcu versus News Group Newspapers – May 2005

Romanian criminal and illegal immigrant Alin Turcu (real name Bogdan
Maris)n sued The Sun and News of the World over allegations that he was
part of a gang that sought to kidnap Victoria Beckham. He was
represented on a no-win, no-fee basis and the case went to trial, even
though Turcu was out of the country and did not even offer a statement
of evidence. News Group won but will have to pay its own costs of
£500,000 because Turcu has no money

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