Last week the Daily Mirror won its appeal against Naomi Campbell and the supermodel lost £750,000 in legal fees and a whole lot of face. But the real losers in this case have been media lawyers.
Why? Because Campbell's originally successful claim in the High Court looked set to establish a law of privacy – seen as a long-overdue development after a basic right to privacy was enshrined in the 1998 Human Rights Act. The development of a privacy law would have opened up a new – and potentially highly lucrative – area for media lawyers, allowing celebrities and public figures to sue media organisations for so much more than merely libel.
Campbell had originally sued the paper in February 2001 for snapping her outside a Narcotics Anonymous meeting in Chelsea and revealing her as a drug addict. Unlike in defamation, the defence of justification or of telling the truth was not enough. The High Court ruled that the Daily Mirror should not have delved into her personal medical “data” by revealing her attendance at Narcotics Anonymous.
Worryingly for the press, and for the taxpayers who pay for the courts to hear cases such as Campbell's, this first judgment gave celebrities and public figures carte blanche to sue media organisations for printing stories that, although true, they simply did not want to see in the press.
“The media… should respect information about aspects or details of the private lives of celebrities and public figures, which they legitimately choose to keep private, especially 'sensitive' data,” said Mr Justice Morland in the High Court.
One of the questions that the Court of Appeal had to answer was whether it is legitimate for a celebrity to want to keep any unsavoury information about themselves private. In the event, the Court of Appeal has stood up against press manipulation. It has thus avoided a situation where celebrities and their PRs would have a new weapon to scare newspapers into withholding uncomfortable truths with the threat of costly litigation over obscure data protection issues.
This state of affairs would have been wonderful for media lawyers, who would then be able to persuade celebrities to make them a permanent member of their public relations coterie.
Despite its profile, media law is currently not a lucrative area. Newspapers are libelling public figures a lot less than they did in the 1980s and early 1990s, as their budgets often will not stretch to costly litigation. But a lot of news stories, particularly in the tabloids, still rely on the invasion of someone's privacy.
After Campbell's High Court victory, claimant and defendant lawyers alike thought – and were perhaps hoping – that the floodgates would open on a lucrative slew of privacy cases.
A cursory look through the media pages of the broadsheets in recent weeks and months will show all number of media lawyers touting themselves as 'privacy experts'.
The real privacy experts are 4-5 Gray's Inn Square barrister Richard Spearman QC and Keith Schilling, senior partner of Campbell's law firm and niche media boutique Schillings, which has so far handled more privacy litigation for public figures than any other firm.
But Campbell's was the first privacy case to go to trial, and here even Schillings found it difficult to persuade the courts that they should punish newspapers for revealing true facts about celebrities that prove detrimental to their images – not least because he was up against Spearman.
While successful at the High Court, the Court of Appeal came to a very different conclusion. The judgment sends a message to celebrities to leave the law out of PR and to go back to punishing newspapers for writing true, if nasty, stories by giving exclusives to Heat magazine.
According to Mark Bateman at Davenport Lyons, which represented the Daily Mirror, in this judgment the courts are saying to celebrities: “Don't use us to protect your dirty laundry from getting an airing in public.”
While refused leave to appeal, Schillings is now petitioning for Campbell's case to go to the House of Lords.
And Schillings still has a healthy number of privacy claims, including Sara Cox's case against The Sunday People, just waiting to leap out of its bottom drawer.
The question that remains about the Campbell appeal judgment for lawyers in the privacy camp is: was it anti-privacy or just anti-Campbell? Campbell is a supermodel who has built up her own public profile, a self-confessed drug addict whose case rested on the Daily Mirror revealing details of her therapy, and someone who the court found to have lied about her addiction.
All hats off to Schillings for turning this complicated set of circumstances into a trailblazing privacy case. If only Jane Asher could have sued a newspaper on privacy grounds for snapping her baking cakes in her bikini.
Film Finance Episode II?
Credit derivatives. One bank lends money to a client and then gets another bank, a group of banks or an insurer, to underwrite the risk. This sort of opening statement usually prompts a sudden attack of narcolepsy in the non-finance lawyer, but any litigator with a sideline in insurance should wake up.
Credit derivatives are potentially the biggest, most embarrassing insurance boob since film finance. And with this kind of shame, there just has to be a claim.
Like film finance, credit derivatives are something investment banks do which insurers tend to dabble in at their peril.
With one bank lending money to its client and packaging the risk off to a third party, a credit derivatives transaction can look just like an insurance deal. So many insurers became involved with them in the late 1990s that they now account for 33 per cent of protection selling in the multitrillion-pound credit derivatives sector.
Swiss reinsurer Converium has warned that the industry's foray into exotic investment banking deals – a major feature of the late 1990s – is likely to cost the already blighted insurers billions.
Inside the equity bubble, insurers were having so much fun scampering around with the investment bankers that a lot of them failed to check the risks they were underwriting on credit derivatives.
The market was soft and insurers simply had to write a larger volume of premiums, perhaps without performing the requisite stringent due diligence.
The economy is now so depressed that many borrowers are likely to default on their payments; and insurers, who have been hit harder than most, will try to wriggle out of the credit derivatives risks they took on.
The fights will start because, while the banks think the insurers have guaranteed their loans, the insurers will only accept paying out on certain risks.
The banks are so worried that a Bank of America report has already identified the detrimental effect insurers are going to have on the credit derivatives sector.
According to litigators, monoline insurers that operate exclusively in financial services will probably pay up when these deals go wrong.
But for many composite insurers, credit derivatives are not a core activity and lawyers are predicting that risking being sued by a bank could be easier for them to stomach than stumping up lots of cash.
To litigators, insurers trying to play with the investment banks and then attempting to slither out of their agreements is film finance all over again.
Talking on the record, finance lawyers who may have drafted these insurance-banking agreements argue that the current situation is unlikely to turn into a film finance-style bunfight. Perhaps not yet. Many film finance contracts from the early 1990s only started being disputed a few years ago. However, it is an open secret that insurance litigators are now preparing for the credit derivatives bonanza that will undoubtedly emerge in time.