You are here

Strasbourg ruling 'one more nail in the coffin' for libel success fees

24 January 2011

The ruling by the European Court of Human Rights in the Naomi Campbell privacy case has been described as “one more nail in the coffin” for excessive libel success fees.

The judgment, heavily influenced by Lord Justice Jackson’s criticisms of conditional fees, came in the same week that Jackson LJ demanded full implementation of his report in a letter to the Lord Chancellor, Ken Clarke.

The ECtHR agreed with Mirror Group Newspapers that having to pay £500,000 in base costs and success fees to the supermodel for breaching her confidentiality, following two appeals to the House of Lords, was a violation of freedom of expression (article 10).

However, only one of the seven Strasbourg judges believed the law lords’ conclusion that there had been a breach of confidentiality should be overturned.

David Hooper, partner at Reynolds Porter Chamberlain, said the judgment was a “very detailed examination of what has gone wrong with conditional fees and how astonishing costs have become”.

He said one view of the case was that Naomi Campbell had “pots of money” so there was no justification in allowing the very wealthy to run up enormous costs.

“I think it goes much further than that,” Hooper said.

“The judges are anticipating reforms to the system. They must be thinking that we will do something and, unless we do, we’ll be back in Europe again.

“The ruling will kick start the reform process and we will end up, I believe, with a very circumscribed conditional fee regime.”

Hooper added that the ruling was “one more nail in the coffin” for excessive success fees in libel actions.

Jonathan Coad, partner at Lewis Silkin, said that although the ECtHR ruling was unclear over whether the recoverability of success fees was objectionable per se, it would send a “shock wave” through law firms whose business models were based on conditional fees.

“The system will have to change or the government will face a plethora of litigation,” he said.

Coad said the press had launched a “pincer movement”, demanding reform of libel laws while attacking lawyers who used CFAs.

The ECtHR said that the Ministry of Justice had recognised that recoverable success fees had resulted in an “excessive” costs burden on defendants and the balance had “swung too far in favour of claimants”.

The court said that the MoJ had introduced new legislation to cut success fees to ten per cent of base costs in libel actions, but the measure had not been passed by parliament.

The present government had “not indicated whether this or any other legislation has since been proposed for adoption”.

The judges said the “depth and nature of the flaws in the system” accepted in important respects by the MoJ led it to conclude that current rules “exceeded even the broad margin of appreciation to be accorded to the state”.

“In such circumstances, the court considers that the requirement that the applicant pay success fees to the claimant was disproportionate having regard to the legitimate aims sought to be achieved and exceeded even the broad margin of appreciation accorded to the government in such matters.”

Categorised in:

Procedures Charities Landlord & Tenant