The deadline has just expired for submissions to the MoJ regarding the Controlling costs in defamation proceedings consultation.  The Consultation Paper relies upon the following premise: because statistics compiled by the Media Lawyers’ Associaton show that in 2008 claimants won 90% of defamation claims the maximum success fee in all defamation CFAs, whether to assist a claimant or a defendant, ought to be 10%.   William Bennett, a defamation barrister at 5RB, points out why the reliance on these statistics has caused the consultation to proceed on a false basis.

Suppose that I toss a coin 100 times and get 50 heads and 50 tails.  From this experience I will know that if I toss the coin another 100 times that I will get the same or an almost identical result.  This is because the facts on the first 100 tosses are the same as the facts on the second 100 tosses: I will use the same coin (although it could be any two-sided coin).

On the other hand, no two defamation claims are the same.

Suppose that in 2009 100 defamation claims had gone to trial and that the verdict in 90 of those trials had been in favour of the defendant.  If a claimant were defamed in January 2010 one could not objectively conclude that, by reason of what happened in a series of unconnected cases in 2009, he or she would only have a 10% chance of winning at trial.  Similarly, it would not follow that in 2010 90% of cases would be resolved in the favour of defendants.  All of the 2010 cases would be different from the 2009 cases.

Further suppose that the sole issue in all of the 100 defamation claims was the defence of justification i.e. the issue was whether or not the allegation complained of was substantially true and there were only two possible outcomes (ignoring the chance of a hung jury): either the allegation was substantially true (in which case there would be a finding for the defendant) or it was not (in which case there would be a finding for the claimant).  Again, one could not predict what was going to happen in 2010 in trials in which the only issue was going to be justification by analysing what happened in 2009.

Consider the following scenario.  On 1 January 2010 Monica Brown is defamed by a national newspaper, which accuses her of defrauding the DSS by claiming unemployment benefit which she was not entitled to.  She was due to start a new job on 1 February but her prospective employer has withdrawn the offer of work as a result of having read the defamatory article.  The prospect of finding work again in the town in which she lives looks bleak unless she can vindicate her reputation.

Monica finds a local solicitor willing to take on her case under a CFA (she could not possibly pay privately for such services).  The solicitor writes to the newspaper refuting the allegation and asks it to publish an apology.  The newspaper replies in strident terms that the allegation is true and that it will defend it at trial.

The solicitor arranges a conference with a specialist defamation barrister who is one of the few who will accept cases on a CFA basis.  Monica appears to be credible.  She says that the person who acted as the newspaper’s source set her up as part of a vindictive campaign against her.  People who give stories to newspapers often do so because they are being paid for the information or they are motivated by some form of animus towards the person they are informing on.  However, this does not necessarily mean that the information which they give is false.  The barrister has encountered many a client who has lied to him without the truth being uncovered until much later in the litigation.  On the other hand, the newspaper’s informant could be lying; who knows.

How does the barrister assess the risk of taking on the case?  On the face of it, someone like Monica deserves a chance to vindicate her reputation.  This is not a trivial libel.

At this point of the claim, the best the barrister can do is to assess the chances of success at trial as being 50%.  Nothing which occurred in 2009 in a series of unconnected cases would cause him to conclude that the fact that claimants only won 10% of cases in 2009 meant that the chances of winning Monica’s case were less than 50%.  Not for one second will he conclude that because defendants won 90% of cases in 2009 that Monica therefore has a 10% chance of success; it will not even feature in his consideration of whether she will win at trial or not.  Similarly, if claimants had won 90% of cases in the previous year he would not therefore advise Monica that she had a 90% chance of success: this statistic will be irrelevant in assessing whether the newspaper will be able to prove that the allegation that Monica had defrauded the DSS was substantially true.

As all juries are advised, the verdict will turn on the evidence and nothing but the evidence in that particular case.  The evidence in each case will be different.

It is interesting to note that if one accepts the analysis relied upon in the Consultation Paper, no defendant would be represented under a CFA because no lawyer in his right mind would take on a case in which (by reason of the MLA statistics) he only had a 10% chance of success, particularly if he were only to receive a 10% success fee for taking on a case with a 90% chance of failure.

The illogicality of the reasoning deployed in the Consultation Paper can be further demonstrated as follows: it assumes that defendants lose 90% of cases and that therefore success fees ought to be 10% regardless of whether the lawyer acting on a CFA is doing so on behalf of a claimant or a defendant.  Suppose that a lawyer acts on a CFA basis for defendants in 10 cases.  On the Consultation Paper’s reasoning he will win 1 of those cases and under the Paper’s proposal will receive a 10% uplift for the risk he has taken. So, if his base fees for those 10 cases were £5,000 on each occasion, having conducted £50,000 of work he would only be paid £5,500 or, put another way, he would have lost £44,500 (89%).

Assume a lawyer acted on CFAs for 10 different defendants and on each occasion incurred £5,000 worth of fees.  If defendants only do win 10% of cases, the lawyer would only win one of those cases.  This would earn him £5,000 in base fees but in order to recover a further £45,000 in order to be “costs neutral” he would have to charge a success fee of 900%.  This would cause him to recover £5,000 in base fees and £45,000 in a success fee on his one successful case.  Thus, applying the logic of the MoJ Consultation Paper, no lawyer would take on a CFA case for a defendant unless he could charge a 900% success fee and yet the proposal is that success fees be capped, regardless of whether a claimant or defendant is being represented under a CFA, at 10%.  If the Consultation Process wants to proceed on the basis that claimants win 90% of cases as justifying a reduction of the success fee to 10% in cases where claimants are assisted by means of a CFA, it follows that it must also propose that defendants who are assisted by means of a CFA ought to be able to claim as much as 900% in success fees.  (I am not advocating this but it does show why the justification for a maximum 10% success fee is flawed.)