These are interesting legal times for journalists, publishers, and lawyers, and true to form, there has been yet another major development – but this time, the change is very much in favour of freedom of expression.
On 3 March, Justice Secretary Jack Straw announced that the Success Fees which lawyers can charge when they represent libel claimants under ‘no win no fee’ agreements, are to be capped at a maximum of 10pc.
But first, a quick recap, to put this announcement in context. For the last ten years or so, claimants and their lawyers have been able to enter into no win no fee agreements, which enable the lawyers to supplement their basic hourly rates by up to 100pc, supposedly to cover the risk of losing the case – the so-called Success Fee.
For certain well known firms of solicitors in central London, this meant that they were able to claim costs at up to £800 or £900 per hour, or even more. Nice work if you can get it, I suppose!
But here’s the catch – the claimants themselves never have to pay any legal costs, let alone costs calculated at these eye-watering rates. The bill is always passed on to the publisher. As Lord Justice Jackson said in his recently published review of litigation costs, the present system is “the most bizarre and expensive system that it is possible to devise.” Couldn’t have put it better myself.
Anyway, whilst Jackson’s proposals for costs reform are being pondered by those in authority, the mMinister’s announcement that success fees are to be capped at a maximum of 10pc is to be welcomed as a major, interim, reform.
The Ministry of Justice says that a new draft order has already been laid before Parliament, so all being well, the new regulations will come into force at the beginning of April.
The effect on the legal costs will be dramatic, obviously. As our friends in the US say, you do the math.
So why is all this important for journos and publishers? Answer: the chilling effect of libel costs on freedom of expression, particularly on the regional press, has long been known, so anything which reduces this unfair and unjust burden has to be welcomed.
I think the Justice Secretary himself summed up the significance of his interim decision when said this last week:
“Reducing the success fees charged by lawyers in no-win, no-fee defamation cases will help level the playing field so that scientists, journalists and writers can continue to publish articles which are in the public interest without incurring such disproportionate legal bills. This is particularly important for protecting the future of our regional media, who have small budgets but play a large role in our democracy.”
His words about protecting the regional media will be sure to strike a chord with everyone connected with the regional press.
And finally, here’s an interesting footnote.
In their report of 24 February into standards, privacy and libel, the Culture Media and Sport Select Committee said that they were not in favour of capping success fees at 10pc. Instead, they propose leaving it to the claimant and the lawyer to agree whatever success fee they like, but limit the amount that may be recovered from the losing party to 10pc of the success fee. Payment of the balance would have to be agreed between claimant and lawyer.
I’m not in favour of this as a long term reform, even though there would be no practical difference for the media. My view is that the whole concept of success fees is wrong, and they are unnecessary. But the principle of claimants having to accept some financial responsibility for their actions is surely only fair and just.
And if the Select Committee’s proposal were ever to be implemented, who wouldn’t want to be present when that difficult discussion between claimant and lawyer took place!