Success fees in jeopardy after Strasbourg ruling
The Daily Mirror newspaper’s freedom of expression was breached by a “success fee” it had to pay after it lost a privacy case brought by supermodel Naomi Campbell, the European Court of Human Rights (ECtHR) has held.
Ruling unanimously in MGN v UK (Application number 39401/04), the Court found that the “success fee”—the extra fee paid to Campbell’s lawyers in return for the risk involved in running a conditional fee arrangement (CFA) or “no win, no fee” case—was disproportionate.
The Mirror was ordered to pay £3,500 damages to Campbell in 2004 after the House of Lords ruled her right to privacy had been breached by a front-page story revealing her attendance at Narcotics Anonymous. Her legal costs came to more than £1m, including £288,468 base costs, £279,981.35 in success fees and £26,020 disbursements.
Kevin Bays, partner at Davenport Lyons, who advised Mirror Group Newspapers, says: “The decision simply confirms what the media has been saying for years—recoverable success fees are totally disproportionate and a violation of the right to freedom of speech.”
The Ministry of Justice is currently running a consultation on proposals to reform CFAs due to close on 14 February, recommending that damages be increased by 10% and lawyers claim a proportion of these, and that CFAs be scrapped.
However, Declan Cushley, partner at Browne Jacobson, who specialises in reputation management, says the decision should not be seen as an excuse for the government to abolish the current system of CFAs.
Cushley adds: “In this instance Miss Campbell is no ordinary UK citizen but a millionaire with the ability to pay her lawyers. The system was never designed to be abused by the super-rich in libel and defamation cases and so the decision of the ECtHR on the facts of this case is absolutely right. The legal profession needs to take a reasonable and sensible approach to how we approach these arrangements and if we don’t do so soon this essential aid ensuring that all have at least the opportunity to defend their position will be gone forever.”
