When considering the costs elements in the Musa King case, Lord Justice Brooke said: “Something seems to have gone seriously wrong.” He was right. The world has gone mad when the cost of defending one article can equal the annual salaries of more than 100 journalists – enough to wipe out many publishers.
When the conditional fee arrangement (CFA) proposals were in their infancy, Lord Bingham said (in Callery v Gray): “I would not wish to discount either the risk of abuse or the need to check any practices which may undermine the fairness of the new funding regime. This should operate so as to promote access to justice but not so as to confer disproportionate benefits on legal practitioners or impose unfair burdens on defendants.” There is an in-built conflict between lawyer and client in CFAs. The trouble is, there is no incentive for claimants to challenge fees, the uplift, the insurance setup or case management, as they will not be footing the bill.
Fortunately, libel and costs judges are now recognising the threat to freedom of expression posed by inadequate CFA rules. Indeed, the system in practice is still fundamentally flawed.
In one ongoing case, Associated Newspapers obtained the first costs-capping order in a libel action. At the allocation questionnaire stage, the claimant lawyers predicted that their base costs would be £558,000 plus VAT. When added to a claim for a substantial CFA uplift, total claimant costs would have approached £1m. Costs have thus been capped by agreement at £447,500 plus VAT. Some progress – but with little chance of recovering costs, Associated will, even if successful, face a large six-figure bill.
In Associated’s Miller case, a senior policeman sued over an article suggesting his handling of the Hamilton rape investigation was incompetent. He was represented on a CFA and supported by the Police Federation. Four days before trial, we received a letter confirming that, if successful, Miller would be looking to us to pay his £3.3m litigation bill. We won the case and in awarding indemnity costs to the newspaper the judge recognised “the enormous risk on costs” we had faced in spite of our “best efforts to settle”.
We need a rethink. To reduce the chilling effect of CFA media litigation there should be a special scale of costs recoverable from the losing party which would not lump ‘Article 10’ litigation in with multimillion-pound commercial, shipping and property disputes.
Recoverable costs should be set at a level that would ensure access to competent advice and justice exists, but no more. Equality of arms and/or the need to get vindication does not mean a claimant should have access to the most expensive lawyers. This would also address the ‘postcode lottery’ resulting in solicitors charging wildly differing rates based on their postcodes – libel is not ‘City’ work.
Partners and QCs would have a choice in CFA cases: to accept ‘scale’ rates (recoverable from defendants, subject to uplift), or turn it down and let the claim-ant choose a competent lawyer who will work on that basis.
Market forces would ensure there were firms keen to do this work. Some already practise in this area and others would move in. Libel litigation is long overdue for demystification. And specialist juniors at the libel bar would at last have the opportunity to fight cases all the way to trial instead of just having a supporting role until they are in their 40s.
These changes would help redress the balance. As Adrienne Page QC put it in Associated’s submission in its costs-capping case: “There is a strong public interest to be taken into account – namely that media defendants should not adopt self-imposed censorship on inherently risky investigative journalism purely because of the disproportionate cost of defending their journalism from impecunious claimants.”
Hopefully the fact that Sharon Stone is now suing the Daily Mail on a CFA will bring some added urgency to reform.
Harvey Kass, legal director, Associated Newspapers