Examination of Witnesses (Question Numbers
496-499)
MR PAUL
DACRE AND
MR ROBIN
ESSER
23 APRIL 2009
Chairman: Good morning. This is the seventh
session of the Committee's inquiry into Press Standards, Privacy
and Libel, and we are pleased to welcome this morning to give
evidence Paul Dacre, Editor-in-Chief of the Daily Mail
and also Chairman of the Code Committee of the PCC, and Robin
Esser, the Executive Managing Editor of the Daily Mail.
Q496 Philip Davies: You,
Mr Dacre, in your speech to the Society of Editors last year,
identified a "chilling" effect on the media caused by
conditional fee arrangements, and those of us who believe very
much in the freedom of the press and believe that the freedom
of the press is the best of the democracy that we have, would
be very concerned by what you said when you said that: "The
result is that today, newspapers—even wealthy ones like
the Mail—think long and hard before contesting actions,
even if they know they are in the right, for fear of the ruinous
financial implications." Are there any specific examples
you can give where CFAs specifically have been the cause of you
ducking out of actions where you feel that you are in the right?
Mr Dacre: Before I answer that
question, could I just say what the real chilling effect on journalism
at the moment is? I have been a journalist for 40 years, and I
have never known chillier times for newspapers. The industry is
in a truly parlous state, particularly the provincial newspaper
industry; there is a very serious question whether many provincial
newspapers are going to survive in the future. That has huge and
dire implications for local democracy and that is why I welcome
this Committee's initiative to look into this very, very real
and pressing problem, and the sooner and bolder you are the better
in my view. I read yesterday that 80% of American newspapers are
going to be gone within the next 18 months—80%. The situation
is not nearly so gloomy for the national press in Britain. Unfortunately
many are losing substantial sums and their future viability must
be under question. I am sorry to disappoint you, the Mail
is still making an honest shilling, but be under no misapprehensions,
there are very chill winds blowing through the printed media industry.
Now, to answer your question, could I put a little context to
it first? Forgive me if I am telling you what you all know. There
is undoubtedly a chilling effect on the press at the moment. There
is a combination of two thoroughly well-intentioned pieces of
legislation, the first is obviously CFAs and the second, which
I think we are going to talk about later, is the Human Rights
Act. Individually they are pretty damaging to the press: together
they present a lethal weapon in crushing press freedom. As I say,
it was a thoroughly well-intentioned piece; it is absolutely right
that poor people should have access to the law and this was, on
the surface, a sensible way of providing them with it. Unfortunately
when it was introduced it was immediately grabbed by a few law
firms who used unscrupulous methods to exploit it. They did this,
as you know, by charging very, very high fees and taking inordinately
long to settle otherwise simple complaints, with the result that
newspapers were having to pay enormous sums of money. It is a
scandalous situation—that is not my word; that is the word
that Jack Straw used to describe the CFA system. Can I first,
before answering your question whether I can think of any way
in which it has influenced us, give you an example of one that
did affect us? I did refer to it in my speech but several members
of the Committee may not be aware of it. Just to explain again
how CFA works, as many of you know the bills can be almost infinite.
With lawyers entitled to success fees of up to 100% on their actual
bills. This gives them a positive financial incentive to take
relatively straightforward cases worth just a few thousand pounds
and run them as long as possible. We then have the CFA claimants
being able to take out after-the-event insurance. I do not know
whether you are aware how that works but it protects them. If
they win the paper has to pay the claimant's premium. If they
lose—and this is the cynicism of it all—the insurer
rarely enforces the charge because the claimant invariably cannot
afford to pay. So let me now give you an example of my Group's
involvement in this. One of your colleagues, Martyn Jones, an
MP, sued the Mail on Sunday over their claim that he had
sworn at a Commons official. These figures I think are very interesting.
The Mail on Sunday believed it had rock solid witnesses
and decided to fight the case. In the event they lost and they
were ordered to pay £5,000 in damages, a relatively footling
sum. The MP's lawyers claimed costs of £387,855—solicitors'
costs of £68,000 plus success fees, and the barrister's fees
as well. Anyway, the total with VAT and ATE insurance came to
£520,000. Everything had been doubled up with the success
fees and that was for damages being awarded of £5,000. Can
I think of specific examples where it has provided a chilling
effect? I am afraid I cannot think of a specific example apart
from telling you that every day—every day—we are not
going quite as far as we used to and we are settling things even
at the expense of paying disproportionately high damages not to
go to court. Now, if Schillings & Co are listening we will
still fight the ones we feel passionate about. The ones before
which we automatically thought would go to court, maybe not us
but certainly other newspapers would be paying the damages, probably
disproportionate damages not to fight them. The problem is the
provincial press. They do not have the money to do any of this
and, therefore, they dare not print anything that puts them in
that situation. The money we can lose in one case could bankrupt
a provincial newspaper chain, and that is no exaggeration in the
present time.
Q497 Philip Davies: Have we got to
the stage where there are certain people who are so wealthy and
so potentially litigious that even a paper as successful as the
Daily Mail would not take them on because of the potential
consequences?
Mr Dacre: I cannot give you an
answer; I doubt that for the Daily Mail. The Daily Mail
is a very successful and strong paper. If I say we are not going
to take them on I am going to give this Committee a green light
for every lawyer to think they can get away with it. No, I think
if we passionately felt we were in the right we still would, but
there are several newspapers in Fleet Street that are not only
not making money but losing substantial sums of money, so the
kind of money we are talking about here could double their losses.
Q498 Philip Davies: Sure. I think
many of us share your concern about CFAs, I think I described
them as a racket in one of our previous sessions, but how would
you alter them so that they did not have these potentially crippling
consequences for the press but still maintain some access to justice
for people who were not wealthy who were maligned by a paper?
Mr Dacre: Who incidentally, in
our experience, are still using the PCC more for instant and absolutely
free redress. 20% of the cases the PCC deals with are on the subject
of privacy. Just before I answer that question, I would also like
to say that this racket, to use your own word, is having a chilling
effect internationally. It is now well known that London's legal
system is so claimant friendly and has so little weight attached
by judges to freedom of expression with so much money to be made
that London is the libel capital of the world. You know this from
other evidence you have had. I would suggest this is a matter
of shame to the British legal system and the British judiciary.
Our costs here are obscene, I can use no other word, in privacy
and defamation cases. Oxford University has just done research
which has shown that it is eight times more expensive than the
next most expensive European jurisdiction to conduct a libel or
a defamation case in London—eight times more. What to do?
Well, you know, the first thing would be to look at some kind
of capping on these rackety and absurd fees. At the moment there
are no controls. The lawyer is free to charge as much as he likes,
spend as much time as he wants on it, and the client of course,
because of the very nature of it, has no interest in controlling
those costs; he does not have to pay. So I would make that a first
suggestion. Secondly, I would end the system of success fees,
this huge doubling of the fees. Interestingly Ireland have a CFA
system, and there is no success fee built into it, there is no
doubling of costs, and their lawyers seem very happy and indeed
I understand CFA works very well in Ireland. Thirdly, I would
look at after-the-event insurance. Again, I think that is a racket.
It is operated by only two firms. The premiums are extraordinarily
high and they need a very rigorous look at. Fourthly, I would
look at the hourly rates. Judges profess to be interested in this
but I do not think they really are. As you know, in a defamation
case they can be £650 an hour. Double that up, that is £1,300
an hour. I would look at the Human Rights Act but we are going
to discuss that again later. I would obviously encourage people
to go to the PCC where they get free and instant justice, and
I would lastly urge, and I do not want to be bumptious about this
but I think it is in their interests, the legal trade to clean
up their act. We have, I think, quite an effective system of self-regulation
in the media; we come under a lot of scrutiny, rightly; but I
do not for the life of me understand why a lawyer defending a
client's reputation should be paid four times more than a lawyer
defending a client from a life in prison. That is a ludicrous
imbalance and I hope the Committee would agree with that. Those
are the things I would propose, and I think that would still leave
ordinary people plenty of access to an otherwise admirable piece
of legislation.
Q499 Paul Farrelly: I want to ask
you your opinion. The word "racket" has been used and
the racket is not just isolated to the media and libel but applies
to the cost to the NHS of CFAs with ambulance-chasing lawyers.
Mr Dacre: Absolutely. And local
councils, yes.
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