Halliwells’ Colin Gibbons on why cuts to legal fees in libel cases are wrong

LAST week, the MoJ dealt a blow to defamation cases pursued under “Conditional Fee Agreements” (CFAs) when it announced it would reduce success fees from a maximum of 100% to 10%.

Legislation needed to implement the change has already been laid before Parliament and, subject to approval, is likely to come into force in April – applying to any new defamation CFA agreements entered into after that.

Defamation is a balancing act between the freedom of speech and the right of individuals to defend their reputation, and this measure means individuals are less able to do so.

Success fees are a relatively new concept in English law and have succeeded in helping commercial litigants lower the cost and risk of legal proceedings – attractive for businesses in today’s economic climate. If the case is unsuccessful, then the lawyer doesn’t receive a fee at all. If the claim is successful, the lawyer receives his usual fees plus an extra fee reflecting that success.

The success fee could be up to 100% and is subject to judicial scrutiny at the end of the case, depending on what risk factors existed at the outset.

By limiting success fees to 10%, the Government is unlikely to persuade lawyers to take these cases on a CFA agreement as the potential reward won’t balance against the risks of losing. The MoJ has given in to the demands of pressure groups too easily.