No Access to Justice?
26 Feb 2010
The Ministry of Justice has carried out a consultation on controlling costs in defamation proceedings, specifically addressing the use of conditional fee arrangement success fees in this area.
Solicitors are sometimes prepared to enter into conditional fee arrangements (“CFA”) with their clients whereby if the case is not successful, the client is not required to pay for the services provided. Where the case is successful, legal costs are recovered from the opposing party. Clearly there is a risk in offering such arrangements to clients and to counteract this, solicitors are permitted to charge a ‘success fee’ on top of their costs. A success fee of up to 100% may be charged in defamation cases. The logic behind 100% success fees is that if a solicitor takes on two cases, both of which have a 50% chance of succeeding, then the probability is that he will win one, thus recovering his fees, and lose the other, thus being paid nothing. The 100% success fee charged on the winning case offsets the loss the solicitor suffers in not being paid for the losing case.
Currently, successful claimants can recover the success fee from the defendant on top of their legal costs.
The Ministry of Justice Consultation recommends that the maximum success fee chargeable by solicitors under a CFA in defamation proceedings should be reduced to 10%. This is because, it is alleged, claimants in defamation proceedings typically have a higher than 50% chance of success, yet the maximum fee of 100% is routinely charged by many lawyers. If a solicitor charges a 100% success fee, but regularly wins more than 50% of his cases, then he will make a profit, which is not what was envisaged by the legislation.
The Law Society, the group representing solicitors, has published a response to the Consultation expressing its concerns about the proposals. In particular, it considers that there is no evidence that lawyers make any excess profit from charging 100% success fees. Whereas a 100% success fee is charged on the assumption that lawyers typically win one in every two defamation cases, a 10% success fee assumes that lawyers win ten out of every eleven cases. The Law Society’s response states that there is simply no evidence to suggest that ten out of eleven defamation claims are successful.
The Law Society’s biggest concern is that lawyers will no longer take on defamation cases on the basis of conditional fee arrangements unless the probability of winning is very high. In the absence of the availability of legal aid in this area (except in exceptional circumstances) there is a concern that the proposals will have a detrimental effect on access to justice for claimants.
In addition to the Law Society, solicitors’ firms who specialise in representing claimants in defamation cases have formed a group called “Lawyers for Media Standards”. Made up of more than ten firms including Collyer Bristow and Russel Jones & Walker, the group plans to bring judicial review proceedings to challenge the proposals. Judicial review is a type of court proceedings in which a judge reviews the lawfulness of a decision or action taken by a public body.
The Ministry of Justice will publish a response to the consultation within three months. For more information on the consultation, see www.justice.gov.uk/consultations/consultations.htm.
Other News Articles:
31 Aug 2010
Our monthly charity law bulletin
Read More...
9 Aug 2010
Read More...
6 Aug 2010
Our monthly employment law update
Read More...
5 Aug 2010
Read More...
