Defamation: lawyers can still claim 100% uplift even if clients could have provided funding

Claimant defamation solicitors working under conditional fee agreements (CFAs) have this week welcomed a House of Lords ruling that means that they can still ask for high success fees even if they have not quizzed clients over their financial circumstances.


Ruling last week in Campbell v MGN Ltd [2005] UKHL 61, the House of Lords said irrespective of a client's financial circumstances and despite concerns about freedom of expression, they should be able to pursue a case under a CFA, and that solicitors should still be able to claim up to 100% success fees even if their clients could have funded the case through other methods.


The appeal over costs arose after supermodel Naomi Campbell's solicitors, London firm Schillings, acted under a CFA and charged a 100% success fee, amounting to almost £300,000. Ms Campbell received just £3,500 in damages. The defendants argued that rich clients were taking advantage of CFA legislation designed to provide access to justice for people who could not otherwise afford it, and that success fees should be disallowed in those cases.


However, although the court appreciated that there was a potential 'blackmailing effect' with the use of CFAs in the absence of after-the-event insurance, and there were worries that publications could become fearful about printing information, Lord Hoffmann said there was no obligation on solicitors to pry into the financial affairs of their clients before entering into CFAs.


He argued: '[It] would be most unfair for the success fee to be afterwards disallowed on the ground that the client had sufficient means'.


Lord Hoffmann added: 'I think it would not matter even if she demonstrably had the means to pay'.


The Lords said it was for Parliament to iron out existing problems when it came to costs, balancing them with the rights to freedom of expression and access to justice.


Schillings' senior partner, Keith Schilling, said that although he did not think the current CFA system was perfect, it was sometimes the only way of proceeding against a wealthy defendant.