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Out-Law News 2 min. read

Government proposes slashing libel lawyers' success fees


The Government plans to slash the success fees that no-win no-fee lawyers can claim in libel cases. The proposed action is part of the Ministry of Justice's reform of libel law.

The current law allows lawyers to double their fees under conditional fee agreements (‘no-win, no-fee’ deals) by claiming a 'success fee' of up to 100% on top of their usual fee. This is payable by the losing party subject to the court's approval.

The Ministry of Justice has proposed capping those success fees at 10% of the normal fee in a bid to encourage journalists and publishers to defend their stories in the courts.

"It is of course important that people are able to sue publishers if they have been defamed, but I believe that the balance has now swung too far against publishers – including, for example, scientists and academics," said Justice Minister Jack Straw.

"Freedom of expression and investigative journalism are fundamental protections to the democracy of this country," he said. "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."

Straw said that he was "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," he said. "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."

The Ministry of Justice said that high success fees deterred journalists and publishers from publishing stories in the first place, or from defending them rather than settling disputes out of court.

A report into the cost of civil court action was published last week by Lord Justice Jackson, but Straw said that the issue of libel costs required an "urgent interim measure".

The Government has begun a four-week consultation process on its plans.

The Ministry of Justice has previously introduced other measures aimed at reducing libel costs. These include a stipulation that a defendant in an action does not have to pay the other party's 'after the event' insurance premiums if it admits liability within a 42-day 'cooling off' period; and compulsory notice of those insurance premiums, which the loser in a case also has to pay. The ‘after the event’ insurance market developed to protect claimants against having to pay the opponent’s costs if the case is unsuccessful.

Lord Justice Jackson proposed that the winners of libel trials pay the success fee, which should be capped at 25%. In return they would receive a 10% increase in damages.

"[The proposed changes] will allow us to protect access to justice for those who are defamed, while reducing the unreasonable and disproportionate impact of costs on defendants," said Straw. "It will also allow to consider how best to achieve [Lord Justice Jackson's] long term objectives for dealing with [no-win no-fee] costs in the future."

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