Damages-Based Agreements Regulations 2010

My Lords, unlike the noble Lord, Lord Martin, the profession I follow means that I have spent much of my life sitting in a court. I declare an interest in that I am working on a matter subject to a conditional fee agreement, but not in the field of libel. The Liberal Democrats have been, and are, at the forefront of the campaign for a reform of the law and procedures relating to defamation. The crippling costs associated with libel cases in the United Kingdom—which are said in one study to be 140 times higher than in some mainland European countries—are a prime example of where reform is needed. How has this come about? We on these Benches have always expressed grave reservations about conditional fee agreements in principle. The assessment of the risks is in the hands of the solicitor concerned—he determines the uplift—and, as we have heard from the Minister, 100 per cent was supposed to be the limit but has become the norm, particularly in libel cases. In July 1998, I initiated a debate in this House on the order that was then introduced and pointed out that the limit on the uplift, the success fee, had grown from an initial 5 per cent, to 20 per cent and then to 100 per cent. The Lord Chancellor, the noble and learned Lord, Lord Irvine, was not then prepared to introduce a cap to that uplift which could in some way be tied to the damages that were recovered. At that time, we thought that was a sensible way of going forward. On the Access to Justice Bill, in which both I and my noble friend Lord Goodhart were involved from these Benches, I said: ""I do not believe that it is a healthy state of affairs; nor do I believe that the legal profession should be treated as a business that should carry the risks of litigation because of the obvious conflicts of interest".—[Official Report, 21/1/99; col. 788.]" Those conflicts are bound to arise when the lawyer does not get paid unless he is successful. Since then, large firms with bulk cases have been able to carry the risk but, in order to get those bulk cases, a wholly new industry has emerged—that of claims farmers, who obtain instructions without ever meeting a client and sell them on to firms of solicitors who are prepared to do things in bulk. Costs have escalated and distorted what the Government hoped would be a route to increasing access to justice, although at that time in 1998 we thought it was a potential for harm. One of the consequences has been an undoubted chilling on press freedom. The evidence given to the Culture, Media and Sports Committee on 5 May last by the editor of Private Eye is worth quoting. He looked at it from the point of view of a defendant and said: ""If someone comes and says, ‘We are suing you, and not only that, we have a CFA, which means that we can just make it up. It will be any figure that comes into our head, double it, double it again, and you pay all of it’, that makes you think twice about running a piece"." Similarly, evidence given to that committee on behalf of regional newspapers pointed out that regional newspapers cannot risk defamation actions at all. The solution that the Government have hit upon is utterly unthinking. It is not the recommendation of the Culture, Media and Sport Select Committee. As has been asked, where did the 10 per cent come from? It makes it impossible for the ordinary citizen to protect his reputation or defend himself against unmeritorious claims. That uplift—the cap of 10 per cent—really takes us back to the old days, when legal aid was not available in defamation cases and the libel courts were the playground of the rich or the extremely poor, who had nothing to lose by bringing actions of that sort. As the noble Lord, Lord Henley, has mentioned, we have received many submissions from various people. I refer to a letter sent from Dominic Crossley of Collyer Bristow, solicitors for claimants in libel cases, in which he says: ""It is my view as a practitioner in this field (although not one that relies heavily upon CFA’s) that the proposal to reduce uplift on costs from 100% to 10% will have a detrimental effect upon access to justice in media cases and only the wealthy will be able to sue for libel. The proposal is being rushed through without proper consultation or the possibility of alternatives to 10% or 100% being properly considered. Personally I think a simple alternative is very easily achievable"." On the other side of the coin, Mr David Price of David Price Solicitors & Advocates gave written evidence to the Culture, Media and Sport Select Committee in which he said: ""I hope that any reforms to CFA will not hinder representation to defendants … it is commercially very risky to do defendant work. If your reforms"—" he means the Government’s reforms— ""make it both risky and unremunerative the result is likely that we will have to stop acting for defendants which will mean that many will have no access to justice (no doubt legal aid is out of the question) and in some cases will go bankrupt even though what they have said is true/comment or privileged, just because they cannot afford to fight"." He made this further point: ""Most of our defendant clients are not the very poor. They are ordinary people who find themselves dragged into a defamation claim over something that they have said or written, which may well be substantially true or privileged. They may have some equity in their home but in practical terms cannot justify the huge expense of funding the defence of a High Court defamation or privacy claim"." So both claimants and defendants are hit by this artificial reduction of the success fee down to 10 per cent. It means that people will not have access to justice, again, as in the old days, unless they also have access to very large funds. Why have the Government picked up the one tiny part of reform that actually benefits most of the big media corporations? Why have they done that, and at this time? Freedom of speech we will defend, but freedom of speech can sometimes be lazy journalism, as what we have heard from the noble Lord, Lord Martin, indicates: telephones ring late at night on a Friday to prevent any injunction from the courts or advice being obtained, and sometimes those telephones do not ring at all. Lazy journalism is defended by the media as free speech. That is not right. Why were there four weeks’ consultation only, and not the three months that normal government procedures require? Why was there a refusal to give time to the Law Society and the Bar Council to make further representations and give stronger views to the Government? Why was there no consideration of alternatives? These failures, this rush, were reflected in the response of the Merits of Statutory Instruments Committee, which said in paragraph 17 of its report: ""We regret that insufficient time has been allowed to produce a solution based on more robust evidence or on which there is broad agreement, and that might seem more likely to achieve the policy objective without the potential side effects discussed in the correspondence"." Why has this been done? We are entitled to a response from the Government. As I have said, Liberal Democrats want wholesale reform. We want, for example, to prevent large companies suing private individuals for libel unless damage is proved, together with malice or recklessness. We want a single-publication rule, as opposed to the multi-publication rule that exists, based on a 19th-century case involving the Duke of Brunswick and a 17 year-old paper that his agent saw. We want to protect free speech by providing a statutory defence for responsible journalism, together with a widening of the defence of fair comment, and we do not want libel tourism to continue. The Lord Chancellor promised on 23 March active consideration of some of these issues. I would be glad to hear that position reiterated today by the Minister. We are very much in sympathy with the amendment moved by the noble Lord, Lord Martin. We on these Benches have found in the past few weeks that regret amendments carry very little weight, but if we were to have put down a fatal amendment, we would be going back to the status quo, which is worse than this very small step that the Government are taking to deal with these abuses. A 35 per cent cap is proposed for the damages-based agreement. Will that be the cap when the Government are involved? Is it right that the Government should put a cap on damages-based agreements in employment cases, when they are so very often the subject of the case? Your Lordships will realise that we on these Benches think that this proposal is ill timed and ill considered, and that the Government should withdraw it and not put it to the vote tonight.