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Conditional Fee Agreements

Volume 506: debated on Wednesday 3 March 2010

Further to my written ministerial statement on 19 January 2010, Official Report, column 14WS, I have published today the Government’s response to the consultation paper entitled “Controlling Costs in Defamation Proceedings—Reducing Conditional Fee Agreement Success Fees”. As the response sets out, the Government have decided to proceed with the proposal to reduce the maximum success fee which can be claimed in Conditional Fee Agreements (CFAs) in defamation cases to 10 per cent. I have laid an affirmative order before Parliament today to achieve that.

Our consultation paper sought views on the Government’s interim proposal to reduce the maximum CFA success fee in defamation cases while we consider Sir Rupert Jackson’s substantial report, “Review of Civil Litigation Costs”, published on 14 January, for longer-term reform.

As the consultation paper recognised, high legal costs in defamation cases—particularly in defending claims brought under a CFA with 100 per cent. success fees—may have a harmful effect on freedom of expression. This affects not only the media, but also scientific and academic debate.

The consultation closed on 16 February. A total of 57 responses were received, including from legal professionals and their representative organisations, members of the judiciary, media organisations and from legal insurance groups. More than half (53 per cent.) of those who responded supported the proposal to reduce the maximum CFA success fee in defamation cases to 10 per cent. The response paper summarises the responses received and the Government’s conclusions.

Since that consultation closed, the Culture Media and Sport Committee has published the report of their inquiry into press freedom, libel and privacy (on 24 February 2010). The Committee agrees with our proposal that the impact of success fees on defendants should be capped at 10 per cent. However, the Committee considers that recoverability—rather than the success fee itself—should be capped at 10 per cent.

The Government are actively assessing the implications of Sir Rupert’s recommendations, and will announce how they are to be taken forward in due course. The Government are also considering the Committee’s report and will respond to the Committee’s recommendations shortly. However, in the meantime we are minded to implement the proposal to reduce the maximum CFA success fee in defamation cases to 10 per cent. immediately as an interim measure so that the specific concerns around high costs in defamation cases can be addressed urgently.

I have therefore today laid the Conditional Fee Agreements (Amendment) Order 2010 before Parliament so that the success fee reduction can come into force as soon as possible subject to parliamentary approval. The order will apply to CFAs in respect of defamation cases entered into after the date on which the order comes into force.

Copies of the response paper will be placed in the Libraries of both Houses and on the Department’s website at: www.justice.gov.uk.