Robert Verkaik: No win, no fee ruling could be shot in the arm for libel courts

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Celebrities who first applauded Naomi Campbell for taking on the Daily Mirror for breaching her privacy might not be so happy with the outcome of her marathon legal battle.

Judges in Strasbourg yesterday dealt a serious financial blow to the rich and famous who frequently use the "chilling effect" of "no win, no fee" agreements to shut down criticism and intrusion of their private and public lives. Ministers must now alter the structure of these contracts so it is no longer possible for a very rich celebrity to win a relatively small amount of damages while racking up vast amounts in legal costs, paid by the defendant newspaper.

The concept of no win, no fee dreamt up by the Conservatives in the dog days of the Thatcher government, allowed Tony Blair, ably assisted by his Lord Chancellor Lord Irvine of Lairg, to remove legal aid funding while cutting millions from the Whitehall spending budget.

While they have meant many people have been able to win their case without having to pay a penny, lawyers, like other businessmen want to turn a quick profit. Instead of helping people with difficult cases, they naturally pick the low-hanging fruit while ignoring more difficult clients. The financial risk to the defendant has become so great that even defending a claim they might reasonably expect to win is no longer a sensible option.

It is no coincidence that since Campbell's case very few high-profile privacy and libel cases have gone to full trial. By stopping defendants from having to pay punitive success fees, newspapers might now fight their cases, rather than settle at the first opportunity. One outcome will mean the libel courts are back in business – which, of course, means more fees for our learned friends.

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