Straw proposes reducing success fees in defamation cases
19 January 2010
Success fees that lawyers can charge for winning defamation cases in no-win, no-fee agreements should be reduced from 100% to 10%, Justice Secretary Jack Straw announced today.
The proposal aims to prevent court costs in defamation cases spiralling out of control, deterring journalists and writers from publishing articles which are in the public interest, or forcing them to settle rather than defend defamation actions. The proposal will now be subject to a consultation period of four weeks.
Justice Secretary Jack Straw said:
‘Freedom of expression and investigative journalism are fundamental protections to the democracy of this country. I have recently announced a review of the law of libel, with a working group to consider whether the law of libel, including the law relating to libel tourism, in England and Wales needs reform, and if so to make recommendations as to solutions.
‘I am, however, aware of the growing concern about the high legal costs in defamation and some other publication cases brought under conditional fee agreements. Lawyers need to recover their costs and be rewarded for their efforts and the risks they undertake when providing people with access to justice in “no win, no fee” cases. But evidence suggests that the regular doubling of fees that currently takes place is simply not justified and the balance of costs between claimant and defendant needs to be reconsidered.
‘Sir Rupert Jackson’s comprehensive review of costs in the civil courts, which was published last week, proposed a broad range of recommendations for reform. I welcome that substantial and detailed report and I look forward to considering the proposals in detail. But the case for an urgent interim measure for dealing with success fees in defamation cases has become clear; that is why I am publishing this important consultation paper today.’
The current law allows lawyers to double their fees under conditional fee agreements (‘no-win, no-fee’) by claiming a success fee of up to 100% on top of their usual fee. This is payable by the losing party in addition to the ‘After The Event’ insurance premium. Success fees cover the costs of cases which lawyers lose on a ‘no win, no fee’ agreement. However, the success rate of defamation actions does not justify such a generous success fee.
The proposal is the latest step in the Ministry of Justice’s programme to make sure costs are reasonable and proportionate in some publication proceedings including defamation cases. In October 2009, the ministry introduced:
- Mandatory early notice of After the Event insurance – so that a defendant would have a clear idea of the potential cost, if he lost, of covering the winning lawyer’s premium for insuring himself against losing (which is chargeable to a losing defendant, alongside the success fee).
- A 42-day cooling-off period during which if the defendant admits liability and makes an offer leading to a settlement, the After the Event insurance premium is not payable.
- A mandatory cost budgeting pilot for defamation proceedings, aimed at ensuring that costs are proportionate and within the agreed budget, with close judicial supervision.
Notes to editors
- The consultation paper on controlling costs in defamation proceedings.
- Conditional Fee Agreements were first made enforceable under the Courts and Legal Services Act 1990 (as amended by the Access to Justice Act 1999).
- ‘Success fee’ is the uplift lawyers can charge under Conditional Fee Agreements in the cases they win, on top of their usual fee. Under the current arrangements the success fee can be up to 100% of the lawyer’s base costs. Changes introduced under the Access to Justice Act made success fees a recoverable item (along with After the Event insurance premiums) from the losing side.
- ‘Publication proceedings’ means proceedings for defamation, malicious falsehood or breach of confidence involving publication to the public at large.
- Lord Justice Jackson’s report on civil litigation costs.
- For more information, please contact the Ministry of Justice press office on 020 3334 3536.
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