Claimant libel lawyers hit back at media demands for CFA caps

Hollywood actress Sharon Stone has used it. Supermodel Naomi Campbell has had it. Hell, even hypnotist Paul McKenna has utilised it.

The stars' use of it, however, has left many libel lawyers fighting among themselves. So what is 'it'? Conditional fee arrangements (CFAs) in publication proceedings.

Twenty two media groups have joined forces to lobby the Government for a cap on the exponential costs in libel cases, as The Lawyer reported last week (28 January). The idea, however, has not been welcomed by the claimant corner.

Keith Schilling, senior partner at media firm Schillings, which uses CFAs, says cost-capping would hamper what is in the public interest, as less well-off claimants will not be able to pursue claims.

"Surely, if libels aren't resolved as claimants can't bring them forward due to capped CFAs, then the public will be fed misinformation that can't be clarified and that's not in their interest," says Schilling.

The media groups say they are not concerned about CFAs for the less well-off, but where CFAs are used by those who can afford lawyers.

In a supporting proposal to the joint submission, Harvey Kass, legal director of Daily Mail publisher Associated Newspapers, moots the idea that the rich should not have access to them.

Kass's submission states: "For example, Associated Newspapers considers it outrageous that the multi-millionaire actress Sharon Stone should have brought a libel action against Associated Newspapers on a conditional fee arrangement when she could have well afforded her lawyer's fees."

Schilling says Kass's argument is a dead one as the House of Lords turned it down in the Campbell case, where his firm acted on a CFA. "The media's only way to get any changes on this is now through Parliament or Europe."

The supermodel received £3,500 in damages and costs of £594,470 were sought by Schillings for the two-day hearing in the Lords - almost 170 times the award. Schillings partner Rob Christie-Miller says the argument that libel costs are disproportionate to damages figures is misleading. "Claimants aren't pursuing cases because they want damages, it's to protect their reputation or privacy, and this isn't readily quantifiable," he says.

The row between claimant and defendant lawyers in libel cases has kicked off as the Ministry of Justice (MoJ) is proposing that the Civil Procedure Rules (CPR) should be amended.

The current CFA regime sees newspapers and broadcasters paying out up to 100 per cent success fees and normal fees if they lose, as well as a claimant's after-the-event (ATE) insurance, which on average is around £68,250 for £100,000 cover.

The MoJ believes the rules should be updated in line with the terms of a private agreement between The Times and media law firm Carter-Ruck. Here the percentage of success fee depends on where in the proceedings a case concludes. But it does not tackle the huge ATE premiums.

Reynolds Porter Chamberlain media partner Jaron Lewis, the author of the joint submission, explains that costs can be higher under CFAs because claimants have no interest in the rates their lawyers charge, or the amount of work that they do. "Clients who pay for their lawyers keep these things in check; clients using CFAs don't," he says.

Lewis uses Schillings as an example of what the defendant has to pay out if it loses. The submission reveals: "If a 100 per cent success fee is applied to Schillings' partner rate of £600 per hour, costs would be £1,200 per hour plus VAT: over £23 per minute."

Lewis says such costs could put small media organisations out of business, so the only real solution is capping. "What's been suggested is that any prospective costs should be managed by the judges, with a specified amount that should be spent before the case takes place being set out."

Christie-Miller argues that this is a dangerous path to follow. "If cost-capping starts in libel it could lead to a waste of court time as there will be more interim hearings," he says. "There's also the potential that capping could spill over into other litigation arenas - and that would raise more than one eyebrow."

Clearly, claimant and defendant lawyers are not going to agree on the best way to use CFAs. It seems the MoJ will have to come to the rescue.