Specialist media and technology insurer Hiscox has criticised some claimant law firms for manipulating and inflating costs in defamation and privacy cases.
Responding to the Government consultation on costs in civil litigation, the insurer says that ‘After The Event’ (ATE) insurance policies can be used to inflate costs and ‘may not offer any real costs protection to defendants’.
‘Some claimant law firms use significant staged but deferred ATE premiums to add to costs so as to force through settlements where defendants have good and real defences but can’t run the risk of paying enormous costs if they lose,’ the insurer says. ‘Claimant lawyers can get away with using this tactic because the claimant policyholder usually has no direct interest in the cost or terms of the policy and will never have to pay the premiums.’
Ian Birdsey, Media and Technology Claims Manager at Hiscox, comments: “The broken system in place means that defendants in defamation and privacy claims may well suffer the disadvantages of paying for ATE policies when they lose without any of the expected benefits when they win.”
The specialist insurer, which notes that over half of all media claims it has handled since 2003 have been defamation and privacy, supports Lord Justice Jackson’s proposals to end recoverability of ATE premiums.
It also supports ending the recoverability of conditional fee agreements (CFAs), commonly known as success fees. The principle of recoverability is flawed by the effect it has of separating claimants from an interest in controlling their lawyers’ costs, says Hiscox.
“We have no doubt that without CFA success fees being recoverable, claimants would seek better control of their legal costs and this ‘weapon’, which at present tilts the playing field against defendants, would not be available to claimant lawyers,” says Ian Birdsey.
Suzanne Kemble, Head of Media & Entertainment at Hiscox, added: “With these reforms, our clients in the media and technology industries would be far better able to pursue their defence in the courts and achieve justice.”
Source : Hiscox press Release
