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Lawyers at Allen & Overy say they are delighted but puzzled at the decision by the Church of Scientology to admit that it had defamed a former member.
The church agreed in the High Court to pay u55,000 in damages and costs, after a three-year legal battle.
It admitted that a leaflet it distributed about ex-church member Bonnie Woods in 1993, which published her picture with the caption, "Hate Campaigner Comes to Town", was defamatory.
But Ian Thomas, in charge of the case for Allen & Overy, could not understand why the church said, when it admitted liability, that it "bore in mind that Bonnie Woods would have been completely unable to pay the enormous costs of trial if the Church had won", because Allen & Overy acted for Woods on a pro bono basis until May, when it switched to a conditional fee arrangement.
She had also been declared bankrupt in 1995. Since that time there had been no change in her financial situation.
Thomas says: "Bonnie was unable to pay the costs from the beginning. That is why we were charging her nothing.
"I don't understand why the Scientologists are using this as a reason to admit liability now."
Peter Hodkin, senior partner at Hodkin & Co, the Church of Scientology's lawyers, based in East Grinstead, Sussex, says: "The distribution was about 40 copies - not very much. I am happy with this decision."