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Proposed Limitation of Success Fees in Defamation Cases

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On 19 January 2010, the Ministry of Justice (MOJ) launched a 4 week consultation in relation to success fees in defamation cases, which can be claimed if a matter is funded under a conditional fee agreement.

On 19 January 2010, the Ministry of Justice (MOJ) launched a 4 week consultation in relation to success fees in defamation cases, which can be claimed if a matter is funded under a conditional fee agreement.

Costs in defamation proceedings have been a talking point for some time and resulted in a consultation by the MOJ in February last year. 

The consultation paper proposes limiting the uplift charged by lawyers for winning defamation cases to 10% of their fee.  Currently, lawyers can charge a success fee of up to 100% which is simply added to their basic charges.  Such fees are often payable in defamation cases in addition to after the event (ATE) insurance premiums.

The MOJ's position is that such high costs act as a deterrent to journalists and writers from publishing articles as they fear the costs consequences of both preparing the articles and then potentially defending them.

When Jack Straw announced the consultation he said the following:

"the case for an urgent interim measure for dealing with success fees in defamation cases has become clear.  Freedom of expression and investigative journalism are fundamental protections to the democracy of this country".

He also added:

"lawyers need to recover their costs and be rewarded for their efforts and the risk they undertake when providing people with access to justice in no win no fee cases.  The evidence suggests that the regular doubling of fees that currently takes place is simply not justified and the balance of costs between Claimant and Defendant needs to be reconsidered".

Clearly the comments by Jack Straw indicate that the proposed limitation of success fees to 10% will be imposed in the near future.

The Law Society recently spoke in relation to the consultation.  Their opinion was that reducing the maximum success fee to 10% would potentially abolish conditional fee agreements for defamation cases and would therefore affect access to justice.

The consultation closed on 16 February 2010 and the response to the same is eagerly awaited.

If you would like further information about any of the matters raised in this article then please contact Andrew McAulay (a.mcaulay@clarionsolicitors.com) or our Costs and Litigation Funding Department.

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