Conditional Fee Agreement Defamation

Success fees are used in conditional pricing agreements, also known as “no Win, No Fee” agreements. A success fee is essentially an “increase” in the fees that law firms usually charge for their legal services. The ability to assert this “increase in power” if the case is successful allows law firms to reduce the risk that they will not be paid if a case is lost. Known data protection disputes, such as News of the World`s “Phone Hacking” claims, have been concluded on “no profit, no fees” agreements. The government`s much-anticipated changes to the financing of defamation and data protection claims will come into effect on April 6, 2019. Applicants can no longer recover from the defendants the costs of success under the conditional fee agreements (FCE). Given the impact of private retention, clients may be much more reluctant to defame and protect data, as well as with lawyers who are only too aware of the significant risks of acting within the framework of a CFA. As a result, the availability of CFAs for these victims may inevitably dry up after April 6, 2019. It is known CFA successful work, it makes it viable for lawyers on riskier cases and/or complex work to take over, as lawyers are able to compensate for these claims with strong claims that are more likely to succeed. However, with the removal of success fees, the incentive to take riskier and more complex cases becomes much less effective and, as such, the work of victims of defamation or privacy violations could face a potential obstacle, and potential clients may be required to make private deposits if they were previously able to enter into CFA agreements without a win.

In May 2012, the government announced that CFA success fees and ATE insurance premiums would continue to be reimbursed as part of the insolvency proceedings until April 2015, as these cases “generate significant revenue for the taxpayer and other creditors and promote good business practices.” This exception was maintained until April 2016. Until April 6, 2019, there was also an exception for defamation proceedings. The reform was announced in November 2018 in a statement by David Gauke, the Chancellor of the Lordship and Minister of Justice. In his statement, Mr. Gauke said that one of the reasons for the reform was to “continue to control the cost of these cases.” The government`s response to the 2013 consultation – “Protecting the Costs of Defamation and Data Protection Claims: Government Proposals” – was also published, which further explains the reasons for the government`s implementation of this cost reform. The amendment follows significant lobbying by the media, which clearly benefited from such a rule change. The government has announced that, as of April 6, 2019, success costs will no longer be recovered by opponents of defamation and data protection. Here is the Ministerial Statement by Chancellor and Minister of Justice David Gauke.

This reform aims to: control the costs of defamation and data protection cases and to implement the government`s legal obligations in mgN/UK [2011] in which the European Court of Human Rights has concluded that the obligation for the defendant to pay the applicant a 100% success fee under a CFA was disproportionate and that the CFA regulations were contrary to Article 10 (Freedom of Expression) of the European Convention on Human Rights.