No-win no-fee rules prompt rise in early libel settlements

The increasing use of no-win no-fee agreements in libel claims is forcing more news groups to settle before a verdict is reached, according to a new study.

The research, published today by legal information provider Sweet and Maxwell, found many publishers were reluctant to fight a defamation claim to the end, because of the costs associated with conditional fee agreements. Under CFAs lawyers acting for claimants claim their own fees plus up to 100 per cent extra from the publisher if they win.

The report found that of 61 per cent of reported libel cases in the UK between June 2007 and May this year resulted in a statement in open court – where the defendant acknowledges it made a mistake and settles early. This compares with 21 per cent – or 14 cases – in 2004/05.

Jaron Lewis, from City law firm Reynolds Porter Chamberlain, said CFAs – which provide access to justice on a no-win no-fee basis – had prompted publishers to think again before defending a lengthy, and costly, libel claim.

“The media is now much more used to interacting with its audience and dealing with complaints as they arise,” he said. “Also, media companies are now under more pressure than ever before to settle cases because of the potential costs of fighting a case through to trial.”

The research, based on the Sweet and Maxwell online archive of law reports and transcripts, found the total number of reported libel cases in the UK fell from 66 in 2004/05 to 59 last year.

But the number of celebrities suing British news groups for libel in the same period has almost doubled and now makes up a third of all claims, according to the report, which found 19 reported defamation cases involving celebrities in the year from June 2007 to May 2008 – up from 11 in 2004/05.

“This increase reflects a strong appetite among consumers for celebrity stories,” the report said. “Competition to deliver this coverage can lead to factual errors being made which then prompt defamation claims.”

Sweet and Maxwell said that another possible explanation for the increase in settlements is the fact that it is more difficult to use the Reynolds public interest defence when dealing with celebrity stories as opposed to articles about political figures.

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