Is No-Win-No-Fee Destroying The Law Of Libel?

Libel actions have recently hit the news with critics fuming at the allegedly handsome payouts to lawyers thanks to ‘no win, no fee’ deals. Do the critics have a point or is no win, no fee simply providing the access to justice envisaged when Conditional Fee Arrangements(CFA’s) were first introduced?

In defense of using no win no fee for libel actions, CFA’s have helped provide the means for a person to bring a claim in a field where newspapers and magazines carry the financial clout and using the scheme redresses the balance. That was the intention of Lord Woolf's Access to Justice Reforms in the first place.

The Department of Constitutional Affairs (DCA) is re-visiting the whole system in an attempt to address concerns that libel lawyers are bringing in inflated ‘success fees’ and hiking their legal fees in the process. Under a CFA, if a claimant lawyer loses a claim, he does not get paid, but if he wins, he is paid a bonus, known as a "success fee." This has in turn led to allegedly typical scenarios where if a London libel lawyers’ charges £400 an hour, a 100% success fee can easily lead to a charging rate of almost £1,000 an hour.

With this in mind, critics have accused libel lawyers of encouraging the more dubious libel claims knowing full well that the success fees will earn them more than just a tidy profit. The Law Society has devised a way to calculate the amount of the success fee. If the prospects of success are 100%, the success fee is 0%; if they are estimated at around 80%, it is 23%; and if there is a 50% chance of winning, the success fee is 100%. Critics argue that libel law in particular is heavily biased in favour of claimants with a low burden of proof to overcome. With that in mind, the amount of the success fee is not deemed to really equate with the risk of the case.

Another problem is that there may be claimants who could afford to pay their lawyers standard rates but they are entering into CFAs instead, enabling their lawyers to earn up to double the costs if they win the case. It could be suggested that having a client who cannot afford to pay inclines lawyers to charge more than they would otherwise.

Yet critics underestimate the checks and balances inherent in the legal system which can counteract such worries. For instance, if a dubious claim does get as far as court, the Civil Procedure Rules and the Defamation Act 1996 both contain provisions that permit a defendant to make an early application to the court to dismiss such a claim. Furthermore, there is no point in bringing a dubious claim because if a claimant loses he is liable for his opponent’s costs, which will be substantial at the end of a contested action. Quite a cost for a spurious claim.

Saurav is an author of several articles pertaining to No Win No Fee, Compensation Claims, Personal Injury Claims and other legal articles.