The Government must take urgent action to deal with the “scandal” of high success fees charged by lawyers working on “no win, no fee” defamation actions, Lord Lester told the House of Lords yesterday.
The Liberal Democrat peer asked if the Government intended to use powers under the Courts and Legal Services Act to reduce the maximum success fee chargeable in conditional fee agreement cases.
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Lord Lester spoke after Justice Minister Lord McNally said the Government would determine the next steps on defamation success fees after considering recommendations made by Sir Rupert Jackson in his report on costs in civil litigation.
Lester told the Lords: “I urge the Minister and his colleagues not to wait for consideration of the vast Jackson report before taking urgent action to deal with what I think is a scandal, where some fellow members of my profession charge inordinate fees through the conditional fee agreement so that the costs far outweigh any damages that NGOs (non-governmental organisations), individuals or the press may have to pay.
“That is a very urgent matter.”
Lawyers operating on a CFA are able to charge a success fee when they win a case, often doubling normal rates.
Media organisations have argued this raises costs dramatically and has a chilling effect on freedom of expression.
Legislation drawn up by former Justice Secretary Jack Straw to drastically curb the success fees charged in “no win, no fee” CFA cases was caught up in the Election wash-up and failed to make it into law.
Straw had carried out a fast-track consultation on cutting success fees by 90 per cent but the changes, which needed parliamentary approval, were delayed when they were voted down at the committee stage.
Lord Lester yesterday paid tribute to Lord Bach, a Justice Minister in the previous government, and Straw for “beginning to focus on the abuses created by conditional fee agreements with 100 per cent success fees”.
Lord McNally said the matter of success fees would be treated with urgency.
Lord Pannick, also a QC, told Peers that he was acting for Mirror Group Newspapers, which was taking a case in the European Court of Human Rights over the success fees in the case of Naomi Campbell and her privacy complaint.
He asked Lord McNally to confirm “that a very large proportion of success fees are paid in defamation cases brought by claimants who are sufficiently wealthy themselves to pay a proper professional fee for their action.”
He added: “Therefore, success fees make no contribution whatsoever to proper access to justice.”
Lord McNally replied: “This defamation area produces great scandals, and I think that the balance of Lord Justice Jackson’s report will point us in the direction of urgent action.”
He added: “I think there should be a limit on success fees or, as the noble Lord, Lord Pannick, suggested, that the success fee should be borne by the successful claimant.”
The way the CFA regime had developed had produced “a number of abuses and anomalies”, McNally said.
“I think that right across the House, there is a general feeling that there are abuses in the conditional fee system.
“We have to get the balance right between the access to justice that conditional fees give and some of the anomalies and, indeed, abuses that have grown up in practice. We will do so after consideration of Jackson, but with all due urgency.”
Lord Lester currently has a draft Defamation Bill before parliament proposing to toughen up libel defences with the introduction of a statutory defence of responsible publication on matters of public interest as one of several new measures.