Lawyers explain why Parliament-backed press regulator would hit finances of regional newspapers

Government proposals to deal with complaints against newspapers through an arbitration system will put huge financial pressure on regional publishers, top media lawyers have warned.

In a submission to culture secretary Maria Miller and the Culture, Media and Sport select committee, the Newspaper Society has drawn on legal opinions that warn of the potential for complaints currently dealt with by the Press Complaints Commission to become legal claims.

The Royal Charter for press regulation drawn up by the three main parties in Westminster insists that a low-cost libel disputes arbitration service is part of a new press regulator.

Although the system is likely to be cheaper for defendants than going through the courts lawyers are concerned that the proposal will make the PCC, or its replacement, redundant as a means to settle complaints.

Simon Westrop, head of legal at Newsquest, said that local and regional newspapers receive many “low-level complaints on a daily basis” which can be dealt with “at limited cost”.

However, he added: “If an arbitration scheme becomes available which is virtually free to claimants and offers at least a chance of cash compensation, all of those complaints would be drafted wherever possible as ‘legal claims’ and submitted to that process. The deal would be too good for a complainant to ignore.”

For smaller newspapers, Westrop argued that settling dozens more smaller claims would impose a financial penalty far greater than under the present system where a paper would only deal with a handful of claims a year.

He continued:

The arbitration process may move cases out of the courts but it will lead to many more legal claims generally, within the arbitration scheme, though I suspect that is not what Lord Justice Leveson envisaged.

I would emphasise strongly that the legal costs and damages arising from the three or four libel claims that a regional newspaper group might actually pay out to settle in a bad year (probably only one over £10k damages) would be vastly outweighed by the legal costs and awards of damages of an arbitration service processing dozens of small claims annually for each group that would have otherwise been resolved by the PCC. And we will have to pay for that process even if the claim is thrown out.

Arbitration will make the PCC process (or its replacement) redundant. Who will settle for a correction when they smell cash?

Minor privacy claims in particular will mushroom, and have price tags attached, whereas now, they would be PCC matters.

Why does the Government want a pecuniary punishment instead of corrections and apologies? Make no mistake, that is what arbitration is all about.”

Westrop added that papers would be left in a ‘Catch-22’ situation over whether to sign up to an arbitration system. This is because a provision in the Crime and Courts Act 2013 means that publishers who stay outside the system will be liable to pay higher legal costs in cases going before the courts, regardless of the outcome.

The Newspaper Society, which represents local and regional newspapers, also included in its submission a letter from Tony Jaffa, head of media at law firm Foot Anstey.

Jaffa, who has acted for the four major regional publishers, said he was also concerned that the Government’s Royal Charter would lead to “a flood of legal claims against the regional press”.

He continued: “I have come to the view that complaints which hitherto would have been resolved by mutual agreement via the PCC, are very likely to be converted into legal claims. From a legal perspective, I do not think it will be difficult to achieve such conversions.”

Jaffa said that people will “pursue such claims irrespective of the actual merits” because they would “assume no personal financial risk”.

Jaffa also said it was wrong for the local and regional press to be tied in with the national media when it comes to a new system of regulation.

In his letter to the Newspaper Society, he said: ”It seems to me that campaigns for reform of ‘the press’ have little knowledge of the way in which regional and local publishers operate.”

The submission comes shortly after the Newspaper Society chair and Archant chief executive Adrian Jeakings expressed regret that the Government has not indicated that a separate regulatory regime could be set up for regional papers,

The Newspaper Society has already come out in support of an alternative Royal Charter, proposed by the Press Board of Finance and backed by the majority of newspapers.