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March 1, 2006

Select Committee reports on CFAs

Category: News

Limited recommendations for no-win no-fee funded litigation


The Select Committee on Constitutional Affairs has published its much anticipated Report on the use of CFAs in defamation actions. 


However, despite significant lobbying by the media, the Report does not suggest a radical overhaul of the current system. Instead, it makes a number of limited suggestions about how the CFA system could be made fairer by the greater use of costs caps on CFA-funded parties and by adjusting risk assessments, and therefore uplifts for lawyers acting on CFAs, as cases develop. The committee concluded:


“It is not easy to design a system whereby a claimant without funds is allowed access to justice without exposing the defendant to the chance that he will not recover the costs of the action if the claimant is unsuccessful. Given the power of the press, it is right that people should have a remedy when have been defamed; and because of the high level of costs inherent in bringing a claim it is likely that those with modest means will continue to have to rely on CFAs.”


In evidence to the Committee the Lord Chief Justice acknowledged, whilst accepting some of the unfairness inherent in the current system for defendants facing a CFA-funded claimant, that: “Defamation actions are quite speculative and if you are giving an uplift that reflects the risk, it may be quite considerable.”


The Lord Chief Justice also suggested that a solution to the problem of a winning defendant not being able to recover its costs from a CFA-funded impecunious claimant is not likely to be found by obliging CFA-funded claimants to take out ATE policies.  If such a policy were bought by a claimant, who then won the action, the defendant would be liable for the significant cost of the policy.


The Report is likely to lead to an increase in applications for cost capping orders in CFA cases after the Committee recommended that the courts “need to ensure that appropriate case management takes account of proportionality, preferably before the costs are actually incurred.”


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