The story behind no win no fee and defamation claims
The recent controversy about Cherie Blair using a no win no fee firm for her libel case in the courts has highlighted what is perceived as the latest abuse of the system which was created to provide access to justice ten years ago. This article aims to highlight the relationship between no win no fee arrangements (otherwise known as conditional fee agreements) and defamation claims.
The main complaint about Cherie Blair using a conditional fee agreement in her specific case is that, as a relatively wealthy individual, she is in effect abusing the CFA system in order to force the magazine or newspaper into settling claims. Defamation/libel by its nature has always had the reputation of a tort that has been left to claimants who are wealthy as the cases often run into millions. The introduction of 'no win, no fee' agreements, or conditional fee agreements (CFAs), under the Conditional Fee Agreements Regulations 2000 enabled those who would otherwise be unable to fund the substantial costs involved in defamation claims to bring an action.
In cases where a wealthy individual (especially a celebrity) takes a media defendant to court, these media defendants find themselves paying up to settle the claim rather than losing what could be a very large amount at trial. The criticism is that they are fenced into paying out because of this even when the claim against them may be frivolous.
Defamation essentially takes places where a false statement is made about a person (or a company) that damages their reputation. The statement can be either in a permanent form (libel) or a transient form (slander). A company also has a reputation and contrary to popular belief can also be defamed.
Another problem that often comes to fruition in defamation cases is the costs subsequent to proceedings. Under a CFA, lawyers are paid nothing if they lose, but are allowed to claim a 'success fee' in addition to their basic fee if they win because of the risk incurred in taking the claim. The level of the success fee is the main concern, with defamation lawyers more often than not claiming the full 100% uplift, which doubles their usual fees. If a claimant obtains 'after the event' insurance (ie, against the cost of losing and having to pay the other side's costs), an unsuccessful defendant will also have to pay a substantial insurance premium on top of the success fee.
The problem that is currently plaguing defamation cases of late is that of celebrities using the CFA system to prevent the media from publishing anything controversial or critical about them, thus stifling freedom of expression. Moreover, a small publisher could well find itself out of business if it loses a CFA-funded case.
Updated on 6/20/2008