Blog: CFAs in libel claims come under fresh attack

By Philip Gray on Nov 18, 08 08:00 AM

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Last month a UN Report heavily criticized Conditional Fee Agreements (CFAs - commonly referred to as no-win no-fee arrangements) now the Editor-in-chief of the Daily Mail, Mr Paul Dacre has strongly voiced his concerns over the use of CFAs by "unscrupulous" lawyers whose "scandalous greed" ramps up costs in cases involving the media.

Mr Dacre told the Society of Editors conference in Bristol on Sunday night that the combination of the current libel laws and use of CFAs meant that even well-resourced media groups like his own, Associated Newspapers, feared the financial implications of contesting certain libel and privacy actions and added that it was beyond the means of local newspapers to contest even the most factually straight forward of claims.

Justice Secretary Jack Straw is also working on reform of the CFA system and newspapers and media organizations such as Associated Newspapers are arguing that the rules on CFAs should be changed to take account of their belief that CFAs were not designed for use in libel claims. He is set to unveil his proposals shortly which will reportedly include capping lawyers' fees.

In his speech on Sunday Mr Dacre commented on what he believes are very serious financial implications for newspapers as a result of the ruthless exploitation of CFAs by unscrupulous lawyers who were ramping up their costs in media cases even the most simple, clear-cut cases.

He also criticised "almost infinite" legal costs of lawyers' "success fees" which can increase their actual bills by 100 per cent, detering newspapers from contesting claims. He also criticised the ability of lawyers to claim legal costs of £100,000s in cases where the damages awarded to a claimant were just a few thousand pounds.

The result of which, Mr Dacre submitted, was that provincial and local press can no longer risk fighting claims and face going out of business.

Whilst I agree that the current legislation dealing with CFAs may, in certain circumstances, prejudice a defendant, I cannot accept his attack on lawyers who offer CFAs. Indeed his forthright blasting of "greedy" and "unscrupulous" lawyers contains so many flaws that it weakens his argument to a point where it is obvious that his sense of injustice stems more from the pain of tumbling newspapers sales than it does from a desire to promote freedom of speech and act as a moral guardian for the nation.

Firstly, a defendant only has to pay the success fee when they lose a case. If they lose the case ipso facto they have defamed the claimant and had no right to publish the allegation in the first place.

Since their introduction in 1995, lawyers offering CFAs have allowed many claimants who have been the subject of unfair and often savage attacks in the media to claim damages and public redress in circumstances where without the CFA they would have had no access to justice. It is only right, therefore, that solicitors should be able to claim an increase in their costs to offset the risk they take in not getting paid should the claim fail.

Secondly, Mr Dacre's argument that low damages means legal costs should also be low is ill-considered.

Defamation is a specialist area of law and is one of the few civil claims where the claimant is more often than not motivated by restoring their reputation through an apology or an undertaking from the defendant, than from desires for financial compensation. Low damages do not automatically mean little injury has been caused or that little time has been spent by lawyers preparing a case.

Mr Dacre may also want to reconsider his papers' choice of lawyers. There are a whole raft of tactics and applications a well-funded defendant can make in order to protect themselves on the issue of costs, which can at the same time, derail a claim.

Such action includes capping the claimant's costs, applying for security for costs and employing the still massively under utilised "Offer of Amends" procedure. Furthermore, since 2000 defendants can also utilise CFAs in the same way as claimants.

There is, however, one way in which I believe the libel laws could be improved so as to promote settlement and reduce legal costs. The one year period in which a claimant must start a libel claim following the publication of an alleged defamatory statement is too short. This rule often forces claimants to commence proceedings (and enter into CFAs) before a full and exhaustive attempt at pre-action settlement has been made. Furthermore, once proceedings are started and a trail date gets closer, the changes of settlement often decrease, as the parties can become entrenched as the costs on both sides increase.

I cannot therefore agree with the criticism Mr Dacre levels at lawyers who provide CFAs and I await the Justice Secretary's proposals on CFAs with great anticipation as I suspect all lawyer's who offer CFAs will.