Peter Carter-Ruck and Partners is set to see its fees slashed after coming under intense pressure from national newspapers concerning excessive costs in libel actions.
The Court of Appeal has also rounded on the use of conditional fee arrangements (CFAs) generally, and criticised correspondence sent by Carter-Ruck to The Sunday Telegraph concerning a case the firm is bringing on behalf of political activist Adam Musa King.
Both events indicate a potential sea change in the approach to the level of success fees in defamation cases funded through CFAs.
Newspapers are concerned that Carter-Ruck is seeking to bill media organisations as much as £750 an hour for a partner, including its 100 per cent ‘success fee’, on cases it wins, even though they may be low-risk and involve straightforward publication errors.
“We must be satisfied that the success fee reflects the risk that’s being taken. Too often there seems to be little or no risk and a 100 per cent success fee [is sought],” The Times’ legal manager Alastair Brett told The Lawyer.
Carter-Ruck has expressed its willingness to agree a protocol with all the major national newspapers governing the level of success fees it charges on cases funded by CFAs. The firm has denied that any protocol will result in a reduction in its revenues.
Carter-Ruck and other claimant media firms are rewarded for taking the risk of ‘no win, no fee’ cases, with the chance to increase lawyers’ hourly rates by up to 100 per cent on those that they win.
In the Musa King appeal, which was heard two weeks ago, Lord Justice Brooke and Lord Justice Parker criticised Carter-Ruck’s correspondence and the use of CFAs in general.
Concerning CFAs, Parker LJ said: “The effect of CFA cases is to take the client out of the equation – there’s no concern if costs are getting out of hand.”
The Court of Appeal took issue with Carter-Ruck’s 10-page letter before action, sent to The Sunday Telegraph at the outset of the case. Brooke LJ objected to the disproportionate length of the letter, saying: “What’s going on? What would Lord Woolf say?”
About another letter, Brooke LJ said: “Lord Woolf would have had an absolute fit if he had seen this letter. I’m not going to refer it to him, because he has other things to do.” Parker LJ then remarked: “You could make the same comment about the letter before action.”
Carter-Ruck partner Nigel Tait accepted that the Court of Appeal had been critical of the firm’s correspondence, but refused to comment on whether that criticism was justified.
Carter-Ruck received a hefty blow from the courts last month when, in a case brought on a CFA against The Sun for taxi driver David Gazeley, a judge reduced the firm’s costs from the £91,799 it had asked for to just £32,633.
“The costs judge thought it was not reasonable for [Gazeley] to instruct a London solicitor, and we’ve filed an appeal,” said Tait.
Carter-Ruck partner Alasdair Pepper has suggested a scheme broadly similar to that already used in road traffic accident cases, where matters which settle quickly command lower success fees than those cases which go to trial.
“We’re very happy to come to an agreement over this,” said Tait.
The firm declined to comment on the Musa King case before judgment is issued.