13th July 2023
Recoverable Success Fees: What are they and is there an alternative?

In 2021, Bruno Lachaux, succeeded in his libel action against defendant newspapers, Independent Print Ltd and Evening Standards Ltd case, and was awarded £120,000 in damages.

Two years after the conclusion of this case, the UK Government has accepted that the success fees recovered by the claimant breached Article 10 ECHR (freedom of expression) and has agreed to pay the newspapers £502,000 in compensation for costs and expenses.

In this blog, Impress Regulatory Executive Tom Spencer considers the latest developments in the longstanding Lachaux v Independent Print Ltd and Evening Standards Ltd case, and the potential implications this could have for libel cases going forward.

What are recoverable success fees?

The Conditional Fee Arrangement (CFA) regime – also known as ‘no win no fee’ – allows someone involved in a legal challenge to enter into an agreement with their solicitor that they will only be required to pay legal fees should their claim be successful. If their claim succeeds and a subsequent liability for costs arises, the client pays their lawyer’s legal fees which can be recovered from the unsuccessful party. In addition, lawyers are allowed to charge clients a ‘success fee’ of up to 100%, according to the level of risk a case carries.

The success fee therefore offers a greater incentive for lawyers to accept a case with a 50/50 chance of success. The fee can also be recovered from the losing party. This raises the stakes of a publisher deciding to pursue a case in court, rather than attempting to resolve the dispute with the claimant from the outset.

The intention behind success fees was to ensure those who did not qualify for legal aid could fund their litigation. However, in 2019 the Government abolished recoverable success fees in defamation and privacy claims following concerns that it violated publishers’ freedom of expression. Despite the abolition, After The Event (ATE) insurance premiums are permitted in such cases, insuring a claimant against the risk of having to pay their opponent’s legal costs in the event of a lost claim. The Government described this approach as a ‘pragmatic way forward’, safeguarding access to justice. However, concerns have been raised that it may become increasingly challenging for claimants to fund claims to protect their privacy and reputation.

A recent history of recoverable success fees in libel cases

The debate surrounding the recovery of success fees in libel cases began when a breach of Article 10 was found by the ECHR in MGN Limited v United Kingdom [2011]. While the court conceded there was no violation in relation to damages awarded for breach of confidence (the defendant newspaper had disclosed details of a celebrity’s therapy for drug addiction), it concluded that the requirement to pay the 100% success fee under a CFA was excessive and disproportionately favoured the claimant. This decision influenced the Government’s abolition of CFA recoverable success fees for defamation and privacy cases on 6 April 2019.

The decision in MGN Limited also appears to have played a part in the Government’s recent intervention in the Lachaux case. The defendant publishers jointly lodged an application in the Court of Human Rights in December 2021, questioning whether the recoverability of the claimant’s success fees violated their rights under Article 10. However, before the case could proceed, a settlement was reached in which the publishers were paid £502,000 in compensation by the Government, and the application was struck out by the ECHR on 13 April 2023.

The view from Impress

The Government’s retrospective amendment to accrued rights in the aftermath of Lachaux reinforces the perception that the CFA costs system interferes with freedom of speech, resulting in disproportionate payment of legal costs to claimants.

Alternatively, it could be argued that this decision represents another step towards making it more difficult for claimants from poorer backgrounds to access justice in the face of wealthy, prominent media organisations. This would suggest that even in cases where the recovery of success fees is permitted (cases initiated pre-abolition of success fees in 2019), the Government could decide to award compensation to losing publishers without the need for thorough assessment by the ECHR on whether the recoverability of success fees did in fact violate the publisher’s rights.

It is important to note that claimants have competing rights under the convention. In the joint cases of Flood v Times Newspapers and Miller v Associated Newspapers [2017], the court acknowledged that while it would generally be seen as a breach of the publisher’s Article 10 rights to reimburse any success fee, there are some instances where denying these sums to a claimant may entail a greater interference with their rights and undermine the rule of law.

The court found that the cost order for payment of the success fee is a protected possession within Article 1 of Protocol No. 1 ECHR – Protection of property (A1P1), elaborating that the claimant may have a legitimate expectation that the accrued rights will not be retrospectively invalidated. While this right may not carry the same weight today, considering the abolition of success fees, there may also be instances where claimants can rely upon other competing rights, such as Article 6: Right to a fair trial or Article 8: Right to privacy.

The question remains whether any of these rights could have been cited by Mr Lachaux and potentially outweigh the defendant newspapers’ Article 10 rights. However, any such considerations to be made by the ECHR were cut short due to Government intervention. The Government position remains clear that recoverable success fees are incompatible with Article 10.

Is there an alternative?

Following Lachaux, it will be interesting to see how case law develops in relation to ordinary individuals looking to bring libel claims against large, profitable media organisations. If the Government decides to intervene in similar cases, compensating losing publishers where it is alleged that recoverable success fees are in violation of their Article 10 rights, it seems likely that a clear precedent will have been set.

Currently, following the abolition of recoverable success fees in 2019, the only cost protection for prospective claimants in libel cases (initiated post-2019) is ATE insurance premiums. It will be intriguing to note any future developments in creating an adequate alternative costs protection system advocated by the Leveson Report, particularly given the Government’s recent commitment to repeal Section 40 Crime and Courts Act 2013.

Impress will work with the Government, policy makers and other stakeholders to offer more affordable routes to justice for members of the public who are victimised by the press. Impress also crucially seeks to protect independently regulated, public interest journalism from the chilling effect of legal threats made by wealthy organisations and individuals who wish to avoid scrutiny. To do so, incentives should be created to use alternative dispute resolution (ADR) to settle a matter – Impress offers a low-cost arbitration service for bringing legal claims against its regulated publishers. If the Lachaux case is anything to go by, ADR would be the preferable option for both sides, and would discourage the pursual of costly and time-consuming litigation.

About Impress 

Impress is a champion for news that can be trusted. We are here to make sure news providers can publish with integrity; and the public can engage in an ever-changing media landscape with confidence. We set the highest regulatory standards for news, offer education to help people make informed choices and provide resolution when disputes arise. 

Media enquiries

Louie Chandler: louie@impressorg.com / 02033076778