Media CFAs: the Dowlers sound off for justice – Steven Heffer

The BBC, the Guardian and some other newspapers reported last week that the family of Milly Dowler had said that planned changes  to “no win, no fee” cases would have stopped them seeking compensation from News International. 

In letters to the Prime Minister and Deputy Prime Minister the Dowlers had urged David Cameron not to take “rights away from ordinary people so that large companies could print whatever they like”.

The Government’s response was that its plans are intended to prevent “spurious cases”.  The BBC reported that a Government spokesman said “we are absolutely committed to ensuring that people can access the justice system, regardless of their financial situation, which is why we are committed to maintaining “no win no fee” arrangements”.  If only this was so.

The proposals by the MoJ to abolish the recovery by successful claimants of the success fees on “no win no fee” libel and privacy cases and the recovery of “After The Event” (“ATE”) insurance premiums represents a damaging and dangerous attack on access to justice for the ordinary citizen of modest means.

The reforms will shift the balance of power to an even greater extent in favour of large media corporations as against the individual.  Fewer lawyers will be able to take the risk of acting on ‘no win, no fee’ agreements. The ATE insurance market in this area of the law will disappear.

Instead of the loser paying as now, the successful claimant will have to fund a significant proportion of his or her own costs out of any damages – and contrary to common perception damages in libel and privacy cases are generally very modest.  The absence of ATE insurance will prevent most claimants from taking action against the media, unless they are willing to risk their home and face bankruptcy, in the event the case is lost.  This suits the tabloid press, because there is unlikely to be a remedy for the ordinary individual – a great saving to media corporations but at great cost and a terrible injustice to the public. Libel and privacy claims will once again become the preserve of the very rich.

The reforms are contained in the Legal Aid, Sentencing and Punishment of Offenders Bill 2011, which is in committee stage in the House of Commons and is in danger of being passed without proper scrutiny or real debate. Most MPs do not appreciate the implications of the changes for their constituents, conditioned as they are by the incessant media contention that the libel and privacy laws are the plaything of undeserving celebrities and footballers.

The changes are being pushed through at a time when the behaviour of the tabloid press is under unprecedented scrutiny (the Leveson Inquiry) focussing on allegations of phone hacking and other press abuses.

Winners and Losers

For many years now, ordinary individuals have had access to the courts (free of charge, and at no cost to the state) in publication and other proceedings, through the use of Conditional Fee Agreements (“CFAs”).

There are numerous examples of individuals who have benefitted from the availability of CFAs. These include:

• Most of the claimants in the current phone hacking litigation
• The parents of Milly Dowler;
• Kate and Gerry McCann.
• Families of soldiers killed on active service and 7/7 bombing victims, whose phones may have been hacked at a time when they were grieving for their loss

None of these individuals would have had access to the courts before the Access to Justice Act 1999 which encouraged the use of CFAs to relieve the state of the burden of providing legal aid funding.  Very few of this type of claimant will be able to benefit from CFA’s if the changes go through.  Legal Aid has never been available for libel and privacy claims.

Alternative Approach

Journalist Simon Singh commented in his blog in January 2011

“the good thing about CFAs is that they enable defendants and claimants in libel cases to fight on when normally lack of funds might force them to back down.  The bad thing about CFAs is that (by doubling the stakes) claimants can use them to effectively bully defendants into backing down”.

Few lawyers, if any, would now argue for the retention of the 100% success fee.  Most accept that the success fees should be reduced to a maximum of 50%. Most lawyers already operate under staged CFA arrangements where the media defendant has the option of settling early with only a very modest uplift in the claimant lawyer’s costs.  None of this has been taken into account by the MOJ.  There is a simple solution which will preserve access to justice and reduce costs for defendants.  This will also mean that both claimants and defendants will be able to continue to have access to the courts in privacy and libel cases.

As long ago as 2008 an MOJ consultation suggested that a solution to the issues raised by CFAs would be the widespread adoption of the Theobalds Park plus agreement, based on a deal struck between Carter Ruck and News International. It set out staged lawyers success fees depending when the two sides settle the dispute and giving the defendant a period of grace to make an offer to settle.

Recently, three costs judges in the Senior Court Costs Office commented:

“…The CFA has undergone many changes and improvements since implementation. Having taken a decade for these to have been achieved, now is not the time to make radical changes which give no guarantee that access to justice at reduced cost will be delivered”.

Opposition to the Bill from the Law Society and Bar Council has been ignored by the MoJ.  According to recent newspaper reports the Minister piloting the proposals has personal investments in companies which could benefit from the new provisions.  It is not known if there is any truth in the allegation, but it is another worrying factor.

Sound off for Justice

Des Hudson Chief Executive of the Law Society, commenting on the letter from the Dowler family, said

“…they have succeeded in making it clear to the Prime Minister that it is ordinary families with terrible life challenges that will be impacted the most.  They will be the losers.  As a society we need to protect them and their access to justice.  The only winners from the Government’s proposed changes…will be insurance companies and large corporations, that will now have to pay out hundreds of millions of Pounds less when they commit negligence or other wrongs, such as illegal phone tapping.  The losers will be victims of wrongdoing, who will in future be simply too intimidated by the financial risks to seeking redress”.

The Law Society has now launched a new website and a public campaign promoting alternative reforms:  www.soundoffforjustice.org

But for CFAs many cases of media abuse (the phone-hacking scandal being the major and current example) would not have been exposed.  Some newspapers have a habit of dragging out cases for years to deter individuals from pursuing claims, taking advantage of the vast disparity in resources between the Press and the claimant.  In the phone-hacking scandal it took the News of the World four years to admit the scandal was not limited to just one rogue reporter.  It did so only when it was faced with overwhelming evidence obtained through civil court action largely funded by lawyers acting for clients under CFAs.

Lawyers acting under CFAs currently provide the only effective form of regulation against press abuses for the individual of modest means, i.e for holding to account serious abuses by the press of their considerable power.

Many argue that CFAs and the availability of ATE insurance must be preserved in media cases and the Legal Aid Bill must be amended.    So far  the Government shows no sign of changing course.  Is it too much to hope that there will be full debate in the House of Lords and a change of heart or defeat of the proposals?

 Steven Heffer, Chair, Lawyers for Media Standards (and Head of the Defamation and Reputation Management team at Collyer Bristow LLP).