Press standard, privacy and libel - Culture, Media and Sport Committee Contents

Examination of Witnesses (Question Numbers 496-499)


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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