Recoverable CFAs and ATE premiums should be abolished, says insurer

Hiscox has called for the end of conditional fee agreements (CFAs) in the wake of last week’s ruling in the Naomi Campbell case by the European Court of Human Rights.

Hiscox's UK and International TMT Claims Manager, Ian Birdsey, said: "[The Naomi Campbell case] adds another nail to the coffin of recoverable success fees in defamation cases, but conditional fee agreements (CFAs) in their present form are not yet dead. They should be.

"How can justice be served when costs are wildly disproportionate to damages? Naomi Campbell was awarded £3,500 by Mirror Group Newspapers but costs were around £1m.

"This is not the worst example. In Fiddes vs Channel Four, a recent high-profile libel claim where Hiscox insured the defendants who were accused of libel by a former bodyguard of Michael Jackson, the parties' base costs alone were in the millions of pounds when the case settled at the eleventh hour."

He continued: "Two things need to be done to bring sanity back to defamation cases. Recoverable CFAs and premiums for After-the-Event (ATE) insurance should be abolished, as the Government is considering in its present consultation on the costs of civil litigation.

"Beyond this, the forthcoming Defamation Bill should require judges to manage cases and costs at an early stage in proceedings. It’s too late for parties' cases to be narrowed at the pre-trial review – by then, the money has been spent. More rigorous case and costs management is required from the first case management conference."

For more, read our subscriber exclusive: Naomi Campbell case deals blow to CFAs.