On 29 November 2018, the Government published its response to the 2013 consultation on costs protection in defamation and privacy claims. In particular, the written statement by the Lord Chancellor and Secretary of State for Justice summarizes the amendments to costs provisions, raising access to justice concerns.
In short, the Government has decided to implement s.44 of the Legal Aid, Sentencing and Punishment of Offenders (LAPSO) Act 2012, making claimant lawyers success fees under conditional fee agreements (“CFAs”) unrecoverable from defendants in defamation and privacy cases commencing 6 April 2019. The consolation is that after-the-event insurance (“ATE”) fees remain recoverable. This article considers how these changes perpetuate imperfect solutions that harm access to justice.
What are success fees and why is their recoverability an issue in these cases?
As some readers will no doubt be aware, CFAs or “no win no fee” agreements are entered into between a client (typically the claimant) and their solicitors. CFAs state that clients will only be liable for their solicitor’s costs in the event their claim is successful. This shifts a significant burden of risk onto the solicitor- in the event the case is unsuccessful they will not be paid at all for their work. As such it is common practice for CFAs to only be granted in cases which are estimated to have over a 90% chance of success, the proverbial “slam dunk”.
For taking on the financial risk of a client’s case solicitors will charge a success fee- this is an uplift on the legal costs they charged, usually from 20-100%. This percentage will vary depending upon the complexity of the case, the point in proceedings and estimated work. This success fee was normally recoverable from defendants in many cases, as part of any settlement or costs order.
However, the case of Campbell before the European Court of Human Rights (“ECHR”) (the background for which can be found here), found that success fees would not be recoverable if they were disproportionately high, such that it interferes with the other party’s article 10 right to freedom of expression. This case was cited by the Government in support of its proposals and only applies narrowly to defamation and privacy claims against the press. In the case, Miss Campbell’s solicitors and counsel entered into CFAs with a 95% and 100% success fee respectively. The success fee, in this case, amounted to £279,981.35 (essentially doubling the legal fees charged), which included two appeals to the House of Lords.
This post originally appeared on The Privacy Perspective Blog and is reproduced with permission and thanks
There are, I believe, a number of errors in this piece but I will confine myself to correcting the clear factual mistake in the last sentence.
It was the original 2 day appeal to the House of Lords in 2004 which generated the claim for a success fee of £279,981.35 and not “two appeals to the House of Lords”. The next appeal generated another – hefty – success fee (as well as considerable base costs) on top of the £279,981.35. Paragraphs 56 and 76 of the ECtHR judgment make it clear.