Will Naomi Campbell case change way civil justice is funded?

It seems court cases involving Naomi Campbell are hitting the headlines a lot these days.

But the legal community has paid closer scrutiny this week to a case in the European Court of Human Rights (ECHR) involving the supermodel which threatens to change radically the way litigation is funded in the UK.

Lawyers representing Mirror Group Newspapers successfully overturned an earlier ruling which had required MGN to pick up the lawyers’ success fee element in Ms Campbell’s £1million ‘no win, no fee’ legal bill.

In the earlier case, The Daily Mirror was ordered to pay £3,500 compensation to Miss Campbell for publishing “offensive and distressing” pictures of her back in 2001. But it also had to pay her costs, which included ‘success fees’ of more than £365,000 agreed by the model with her lawyers.

Success fees became recoverable following the introduction of conditional fee arrangements, commonly known as ‘no win, no fee’ agreements. The rules provide that a successful claimant can recover from the defendant the success fee payable to their lawyer under the ‘no win, no fee’ agreement. This often means legal costs payable by the defendant are many times greater than the actual compensation payable.

Though judges upheld Campbell’s claim for breach of her right to respect for her private life, the ECHR ruled that the £365,000 success fees were “disproportionate” and went against the newspaper’s right to freedom of expression.

The reason this case is so important is because of a recent report by Lord Justice Jackson into civil justice costs, in which he recommended success fees should be restricted to a maximum 25 per cent of the damages awarded to the claimant. Lord Justice Jackson also recommends that success fees should no longer be payable by the defendant, but paid from the claimant’s own compensation.

Indeed, in the Naomi Campbell case, the judges said the Ministry of Justice had already acknowledged the costs burden had become excessive and that “the balance had swung too far in favour of claimants and against the interests of defendants, particularly in defamation and privacy cases”.

The ruling in the Naomi Campbell case will put pressure on the Government to accept Lord Justice Jackson’s proposals, not only relating to privacy and defamation cases, but across the whole spectrum of civil disputes, and we may well be seeing a radical change to the way Civil Justice is funded during 2011.