Defamation Proceedings: Costs

Statement

The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bach)
My right honourable friend the Lord Chancellor and Secretary of State for Justice (Jack Straw) has today made the following Written Ministerial Statement:

Today I published a consultation paper entitled Controlling Costs in Defamation Proceedings—Reducing Conditional Fee Agreement Success Fees. The paper sets out the Government’s interim proposal to reduce the maximum success fee currently permissible under a conditional fee agreement in defamation proceedings, while it considers Sir Rupert Jackson’s Review of Civil Litigation Costs, published on 14 January, for longer term reform.

Conditional fee agreements (CFAs), a type of no-win no-fee agreements, were first made enforceable in 1995 to improve access to justice for consumers of legal services. Changes introduced in the Access to Justice Act 1999 further extended their use and attractiveness to claimants. However, in the light of experience over the past decade, it has become clear that—in publication proceedings in particular—the balance has swung too far in favour of the interests of claimants, and against the interests of defendants, for whom access to justice needs to be a reality too.

CFAs allow lawyers to take on a case on a no-win no-fee basis. This means that if the case is lost, the lawyer does not get paid. However if the case is successful, the lawyer can recover his costs as well as an additional uplift or success fee. The Conditional Fee Agreements Order 2000 currently prescribes the maximum success fee that lawyers can charge at 100 per cent in all categories of case including publication proceedings. That 100 per cent maximum was intended to allow lawyers to cover the costs of those cases which failed with a success fee from those which won. The consultation paper proposes that the maximum permitted success fee in defamation and some other publication proceedings in England and Wales be reduced to 10 per cent.

The Government have for some time been concerned about the impact of high legal costs in defamation proceedings, particularly the impact of 100 per cent success fees. The Government do not believe that the present maximum success fee for defamation proceedings is justifiable. Evidence shows that the success rate of defamation actions does not justify such a generous success fee. This view is supported by the conclusions of the Review of Civil Litigation Costs: Final Report, available at http://www.judiciary.gov.uk/about_judiciary/  cost-review/index.htm. The proposal in the consultation paper is intended to be an interim measure to complement changes introduced on 1 October 2009 designed to control the costs of individual cases, while the Government give detailed consideration to the recommendations from Sir Rupert Jackson. The proposal to reduce success fees would help reduce the costs further and limit the potential harmful effect that very high costs could have on the publication decisions of publishers.

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