They may have been designed as a ‘shield’to give ordinary people access, but in defamation cases conditional fee agreements have become ‘a sword’to beat publishers with, according to a leading libel lawyer.
David Hooper, a partner at law firm Reynolds Porter Chamberlain, called CFAs a ‘hideous creation’that had created an unfair system.f
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He told last week’s Press Gazette and Press Association media law conference: ‘We all talk about Article 10 [of the Human Rights Act, freedom of speech] but costs are becoming a real factor on what gets written.
‘ It’s also relevant to the question of when cases get settled because of the enormous legal costs. Many unmeritorious claims get taken off because of the high level of costs.
‘The CFA system, worthy as it sounds, proves in practice not to be a shield for those who otherwise wouldn’t have access to justice but has become increasingly a sword used by claimants to say ‘the costs are going to be so enormous, you’d better do what I’m saying’.
When representing a client on a CFA, lawyers can charge a 100 per cent uplift in their fees, which has seen some receive up to £1,200 an hour, said Hooper. ‘That’s £20 a minute before VAT. Nice work if you can get it.”
Hooper argued that whereas before CFAs libel cases may have been settled or not on the merit of the claim and a publisher’s ability and confidence to defend it, ‘cases now really revolve around costs”. To this is added a ‘conflict of interests’between claimants and their solicitors, who may argue to prolong a libel case to extract more money from the defendant, Hooper said.
After the event (ATE) insurance was brought in to provide some protection for publishers in the event that a defendant fights and loses a case but can’t afford legal costs. But ATE was just ‘lipstick on the gorilla’for Hooper, who said the standard limit of £100,000 of cover – with rare extensions to £250,000 – was ‘really not sufficient’for many cases.
Hooper cited a case where someone sued the Daily Mail for £5,000, ‘though his costs came in at a rather tasty £387,855″. He said the TV hypnotist Paul McKenna sued for £55,000 in damages but his case ran up costs of ‘more than £800,000″.
He also criticised the practice of celebrities such as Ashley Cole and Naomi Campbell suing on a CFA, despite their clear ability to pay the fee outright.
‘You get very wealthy people taking out CFAs because that puts pressure on the media, and you also find increasing pressure that these utterly bent insurance policies are taken out right at the outset with an initial premium of £6,000 to £8,000, adding to the bill,’he said.