European court holds "success fees" violate civil rights

An international court, charged with deciding cases in which freedom of expression violations are alleged, ruled earlier this week that attorneys should be prohibited from collecting “success fees” from unsuccessful libel and privacy defendants.

The European Court of Human Rights’ judgment in the case, MGN v. UK, indicated that publishers, journalists and bloggers facing lawsuits in the United Kingdom will no longer be responsible for paying plaintiffs’ hearing and solicitor fees in the event the court rules in favor of the plaintiff.

The European Court of Human Rights was established in 1959 to rule on alleged violations of the civil and political rights guaranteed by the European Convention on Human Rights. The convention is an international treaty under which the member states of the Council of Europe promise to secure fundamental rights, including the rights to life, a fair hearing and freedom of religion, to the countries' citizens, as well as non-citizens living within their borders, according to the court’s website. Individuals and organizations can apply directly to the court.

The ruling comes as the United Kingdom’s Ministry of Justice and other groups have brought attention to conditional fee agreements, or CFAs, in the U.K. Like contingency fee agreements in the United States, CFAs allow claimants’ lawyers in libel and privacy cases to undertake representation on a no-win, no-fee arrangement. The decision may have an impact on the future of these arrangements in the U.K., where the average cost of defending libel cases is 140 times the European average, according to a 2008 study by the University of Oxford's Programme in Comparative Media Law and Policy.

“Conditional fee agreements have resulted in crippling costs for publishers and stop many of them from publishing controversial stories at all,” Gugulethu Moyo, executive director of the Media Legal Defence Initiative, one of the media advocacy organizations that intervened in the case, said in a news release. “Today’s ruling should move the U.K. government to enact urgent reforms to English libel and privacy laws . . . to change the rules on costs."

In the underlying case, Campbell v. MGN, supermodel Naomi Campbell sued MGN Limited, the publisher of the U.K. daily national newspaper the Daily Mirror, for breach of confidentiality under the Data Protection Act of 1998 and related offenses.

The U.K.'s House of Lords ruled in favor of Campbell, after which her attorneys served MGN with three bills for a total sum of about £1.1 million, or more than $1.7 million. MGN appealed the breach of confidence ruling and the cost of success fees to the House of Lords. It said the sum was disproportionate to the £3,500 in damages awarded to Campbell and violated its right to freedom of expression under Article 10 of the Convention on Human Rights.

The House of Lords dismissed the appeal, though Lord Hoffman pointed out that the case resembled the 2005 case of Turcu v. News Group Newspapers Ltd., the decision for which noted that high success fees have a “chilling effect,” or “ransom factor,” because publishers are more willing to settle cases even when the defense has merit.

MGN appealed the decision to the European Court of Human Rights, which found that the success fees Campbell served MGN Limited were indeed “disproportionate,” and in breach of the publisher’s right to freedom of expression.

"The Court considers, and it was not seriously disputed by the Government, that the requirement to pay these success fees, as an unsuccessful defendant in breach of confidence proceedings, constituted an interference with the applicant's right to freedom of expression guaranteed by Article 10 of the Convention," the ruling said.

The European Convention says that the court's decisions are binding on member states, indicating that the British government will have to disallow CFAs in cases that implicate the rights of free expression.