A group of 22 organisations is lobbying the government for radical change in the regime controlling the Conditional Fee Agreement system under which lawyers bring libel claims against media groups on a no-win, no-fee basis, it has emerged.
The disclosure came as David Price, of Fleet Street-based law firm David Price Solicitors and Advocates, discussed the workings of and reasons for the Conditional Fee Agreement (CFA) system at the IBC Defamation Conference in London on March 11.
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The CFA system allows lawyers to bring libel cases against media organisations, on behalf of claimants who otherwise could not afford to sue, on a no-win, no-fee basis.
If the case succeeds, the defendant pays the claimant’s costs. But the defendant also then has to pay the solicitors a “success fee” which can be as much as their normal fee – meaning that the solicitor charges up to double his normal fees, taking the charges to as much as £900 per hour for a partner in a law firm.
The success fee, Price said, was intended to compensate the solicitor for cases he had taken on and lost under the CFA system.
In addition, a losing defendant might also face a hefty charge for After the Event (ATE) insurance taken out by a claimant to pay the defendant’s costs if the claim fails.
Price said the media did not like the CFA system because it cost them a lot of money, allowed people who could not otherwise afford to do so to sue for defamation, and because the costs rose the closer a defendant came to winning.
A defendant with a respectable justification defence who just lost a case at trial would face a much bigger bill for the claimant’s costs because the risks were higher, therefore the insurance premium and the success fee were also higher.
“So you end up paying more on the cases where you have a better defence and you end up paying less on the cases where you have got no defence whatsoever,” he said.
There were steps they could take to control costs – they could litigate proportionately, and ask the court for cost-caps in libel cases.
But Harvey Kass, legal director at Associated Newspapers, described the CFA system as “obscene”.
Associated Newspapers, he said, was one of a group of 22 organisations now lobbying the government for radical change in the system.
“The situation we are facing at the moment – the only word for it is obscene,” he said.
“You are talking about Associated Newspapers and News International – you think of the dozens of smaller publishers that cannot afford to defend claims that deserve to be defended.
“We are looking for a radical reform of the CFA system that will make defending cases more affordable. There are a number of ways of doing that – a rigorous cost-capping regime is one way.
“We are in an age where claimant lawyers are expecting to recover £700-£800 an hour. Cases that last three days on simple differences of fact can cost the best part of £1 million, bigger cases can cost many millions.”
Kass stressed: “I passionately believe in access to justice as much as I believe in Article 10 freedom of expression issues.
“We are in a situation where there is absolutely no incentive for a client to negotiate these mammoth fees with the CFA lawyer because the client is never going to be responsible for them – it is a completely false market.
“There are lots of people I believe advised by specialist counsel who would undertake this sort of work for dramatically reduced fees and still making very reasonable livings.
“You only have to look to the world’s second-greatest libel forum, which is Ireland, to see that practically every case is brought, in our experience anyway, by a different firm – advised by specialist counsel, the cases are run professionally.”
Among other things, there was a need to restrict the base costs of a case, and for more cost-capping to keep costs down, he added.
Cathryn Smith, a partner with West Country law firm Foot Anstey, which represents a large number of regional and local newspapers, said the focus was often on the national press – but that CFAs were also having a serious impact in the regions.
“The practical impact on the regional press is that I cannot remember a case where the regional press have taken the matter to trial on a CFA in the last five-plus years,” she said.
“The impact upon their willingness to continue to do investigative work is really very marked, and so the current system is having a real impact upon that freedom of expression – it must be changed.
“They don’t have as deep pockets as Associated et al have. It really does have a negative effect upon what we see in our papers day to day.”