Success Fees: newspaper contends little or no risk on assessment after main action is won

The House of Lords could hear a third instalment of the Naomi Campbell litigation after it was asked to rule that success fees should not apply to detailed assessments, or at least be heavily slashed.


In the latest attack on conditional fee agreements (CFAs) by media companies, the Gazette's sister publication, Litigation Funding, has learned that Mirror Group Newspapers (MGN) has petitioned the Lords for leave to appeal the decision of the judicial taxing officers in the wake of Campbell 2.


It calls for the highest court to overturn the Court of Appeal's ruling in U v Liverpool City Council [2005] EWCA Civ 475 in so far as it held that a court is obliged to allow a success fee at the same rate for work done after a 'win' has been achieved as before.


Ms Campbell's solicitors, London firm Schillings, claimed a 95% success fee on their base profit costs of almost £90,000 in conducting Campbell 2, which related to the costs of the underlying action. The success fee was claimed under the same CFA as that which Schillings entered into with Ms Campbell for the purposes of Campbell 1.


The taxing officers held they were bound by the decision in U v Liverpool to allow the same success fee.


The petition, drafted by London firm Davenport Lyons, contended that Schillings faced no, or no substantial, risk in Campbell 2, 'since they had earned the contractual right to be paid for all work done under the CFA by having "won" Campbell 1'. This led to a 'windfall benefit', it argued, and said the court should allow either no success fee or a far lower one - no more than 20%.


MGN head of legal Marcus Partington said: 'I have always been of the view that the CFA system in this country - with success fees recoverable from defendants - is contrary to article 10 (freedom of expression). This latest decision is further proof of how the system is designed to "punish" losing defendants, which is why we are seeking leave.'


Schillings partner Gideon Benaim said: 'It is well-established case law that cost assessments form part of the main action and therefore we see no reason why success fees should be treated any differently once the substantive action is over. Additionally, costs litigation involving CFAs is generally hard fought and risky, a factor which is no doubt taken into account when conducting risk assessments at the outset.'