Costs in Daily Mirror win were disproportionate; pro-Jackson lobbyists vindicated

You have got to hand it to supermodel Naomi Campbell. When not sashaying down the catwalk or hurling objects at unwitting staff, she has an unnerving habit of finding herself in the centre of political storms.

Only a couple of months ago, she was a reluctant witness in a war crimes tribunal springing from her alleged acceptance of blood diamonds from ex-Liberian dictator Charles Taylor. Now she has strutted into the spotlight again – as the focus of landmark legal ruling that has been described by experts as “staggeringly important” for liability insurers and one that could herald the end of success fees.

Judges at the European Court of Human Rights ruled that Campbell’s costs following her successful suit against the Daily Mirror were disproportionate, dealing a massive blow to conditional fee agreements (CFAs).

The case is set to mount pressure on the government to fully implement Lord Justice Jackson’s proposals to abolish success fees and ATE premiums after the consultation on the report concludes in February.

Success fee too high

In 2004, the supermodel sued the Daily Mirror for breach of privacy after it published details about her drug addiction therapy including pictures of her outside Narcotics Anonymous. She won her case but the Court of Appeal reversed this judgment. Campbell appealed to the House of Lords, which upheld the original judgment.

The supermodel employed lawyers on a 'no win, no fee' conditional fee basis. Consequently, while Campbell was awarded only £3,500, her legal costs totalled £1.1m, including a lawyer’s success fees of £280,000.

Under the CFA arrangement, the Daily Mirror’s publishers MGN were liable for these costs. The publisher appealed to the House of Lords, on the basis that the success fee was too high and breached its right to freedom of expression.

CFAs not for supermodels

The House of Lords dismissed the appeal and the publisher appealed to the European Court of Human Rights. Judges upheld the House of Lords ruling that the Daily Mirror had breached privacy laws but ruled that Campbell’s legal costs were disproportionate.

Further, they criticised the culture of easily available conditional fee agreements. The judges pointed out that CFAs had been created as a replacement for legal aid, providing access to justice for people who would not otherwise be able to afford a lawyer, and that this clearly did not apply to the supermodel.

Jackson Review supported

Berryman Lace Mawer partner Tim Smith points out that the case will hit law firms that have successfully used CFAs in defamation law suits. “The government has already announced a review of the substantive law of defamation. It seems highly likely that it will now take action on the funding of defamation claims," he says.

Undoubtedly, the case is a huge boost to the pro-Jackson lobby. Beachcroft head of strategic litigation Andrew Parker says: “The Campbell judgment is a landmark in the battle against recoverable success fees and ATE premiums.

"For the first time, a court has said that the logic of recoverable success fees is fundamentally flawed and has declared them to be in violation of the defendant's rights. It is time to end recoverability in all cases.”

However, he warned against the government taking a kneejerk reaction to the case, pointing out that it should wait until the consultation on the Jackson Review proposals was completed next month before making a final decision on abolishing success fees.