Lawyers Briefing Notes

Mon, 21 Feb 2011

Success Fees – An Infringement of Human Rights?

On 18 January 2011 the European Court of Human Rights (ECHR) in handing down its judgment in MGN Limited v The United Kingdom (Application No. 39401/04) placed a large question mark over the future of success fees.

In this high profile case, supermodel Naomi Campbell claimed damages for breach of confidence from the owners of the Mirror newspaper, after details of her treatment for drug addiction were published nationwide.

Concerning the competing interests of the claimant’s right to privacy and the newspapers right to Freedom of Expression under Article 10 of the European Convention on Human Rights, the case reached the House of Lords and after the claimant submitted a costs bill totalling £1,086,295.47 including a success fees of 95% and 100%, MGN appealed to the ECHR that it should not be liable to pay success fees because such a liability was so disproportionate as to infringe the right to freedom of expression.

Success fees were introduced to enable successful lawyers to use those additional fees to fund other cases thereby maintaining access to justice without relying on public funds. The ECHR was called upon to consider whether requiring a party to pay a success fee was a necessary and proportionate response in a democratic society to achieve that aim and secondly whether a fair balance had been struck between the freedom of expression and the individual’s right to access the courts under Article 6. Acknowledging the wide margin of appreciation available to Parliament on implementing economic policies and the balance to be struck with the rights of the individual, the ECHR repeated that if ‘such general measures produce an individual and excessive burden, the requisite balance would not be found’.

Unanimously, the ECHR held that there had been a violation of Article 10 of the Convention as regards the success fee payable by MGN. It was perhaps an easy decision for the ECHR considering the 95% and 100% uplift sought by the claimant’s lawyers and the wealth of criticisms or ‘flaws’ as they are described in Lord Justice Jackson’s Review of Civil Litigation Costs.

The ECHR referred extensively to the review and the Ministry of Justices acknowledgment that ‘as a result of recoverable success fees, the costs burden in civil litigation was excessive and, in particular, that the balance had swung too far in favour of claimant’s and against the interests of defendants’.

Whilst the case concerned a publication claim in which the ECHR was mindful that the claimant was not in a class of people excluded from access to justice because of her financial means, the question, is whether the decision of the ECHR will have wider implications in other types of case in particular on the application of Article 6 and the right to a fair hearing?

When we consider the ‘blackmail’ or ‘ransom’ effect as highlighted by Lord Justice Jackson whereby the costs burden on opposing parties was so excessive that often a party was driven to settle early despite good prospect of success, it is difficult to envisage the judiciary confining MGN to its facts.

Would it exclude people from access to justice? The claimant lawyers looking to recover a success fee will argue that the effect would be to remove the incentive to take a case on. However, like any claim in whatever area of law, if the claim has merit then this scenario should not arise. Moreover, it will act as an effective measure to prevent claimant lawyers conducting claims that have little or no merit, which, was one of the underlying concerns behind the need for reform.

A challenge to the successes fee falling outside of MGN is eagerly awaited by all.