Shock and Flaw – is Leveson workable?

Born of an inquiry into a scandal-hit industry and mired in controversy – the cross-party deal on press regulation promises to be the biggest shake-up of the media law landscape for decades. Legal Business asks if a workable deal can emerge from the headlines.

 

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‘We do not talk about ethics or morals because it’s a very fine line and everybody’s ethics are different.’
– Richard Desmond, owner of the Daily Express and the Daily Star, the Leveson inquiry, September 2011

 

‘For the first time, we would have crossed the Rubicon of writing elements of press regulation into the law of the land. We should, I believe, be wary of any legislation that has the potential to infringe free speech and a free press.’
– Prime minister David Cameron in response to the Leveson recommendations, November 2012

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When Lord Justice Leveson faced the glare of reporters and cameras in November to unveil his 2,000-page report on the culture, practices and ethics of the press, it was already inevitable that his recommendations for a sweeping overhaul of media regulation would generate controversy.

For the seventh time in less than 70 years, a report had been commissioned by the government to deal with press behaviour – the catalyst for which had been public outcry as it emerged in 2011 that one of the phones that had been hacked by News of the World journalists belonged to murdered teenager Milly Dowler.

Within hours of the Leveson report being issued on 29 November 2012, an intense debate was ignited among politicians and the press about the shape of reform. On one side, advocating stronger press regulation, were Labour and the Liberal Democrats, much of public opinion and campaign groups like Hacked Off. On the other, the Conservative Party and much of the national print media strongly opposed Leveson’s model of tougher self-regulation backed by statutory recognition. Critics – unswayed by considerable evidence of abuse by the tabloid press aired during the Leveson inquiry – stridently argued that the proposed model constituted political interference in the press.

The wrangling was to continue for months leading to brinksmanship, a controversial attempt to insert Leveson-style reforms into the Defamation Bill and, bizarrely, an announcement in March by prime minister David Cameron that the Conservatives had pulled out of all-party talks on implementing the reforms. Only days later, on 18 March in the early hours of the morning, it was announced that a deal had indeed been done as the Conservatives moved to avoid an embarrassing Parliamentary defeat.

In a tortuous attempt to bridge the divide between the rival factions, the government announced that a new press regulator would be formed to replace the discredited Press Complaints Commission (PCC). This self-regulatory body would need to be vetted by a new ‘recognition panel’ created by a Royal Charter.

The ‘recognition panel’ is designed to ensure that the new self-regulatory body supposedly to be created by the newspaper industry achieves minimum standards of independence and rigour. The measure of using a Royal Charter, an instrument used to recognise bodies like the BBC and the Bank of England, rather than primary law is billed as a compromise aimed at addressing fears that politicians were meddling in the press. The new regime should pave the way for the creation of a new accredited regulator with the power to impose fines of up to £1m and direct the nature and extent of corrections and apologies. The deal also includes provisions to introduce a new regime of legal cost incentives, which will be used as a carrot to get media bodies to sign up to the new regulatory regime.

The agreement instantly triggered more controversy, not just the expected outrage among the press – who were quick to claim that it represented a return to state licensing of newspapers – but also among some hardened media lawyers.

‘A grubby deal’ concluded The Telegraph; the Mirror saw it as ‘Revenge of the politicians’; while the Daily Mail denounced it simply as a ‘shambles’. Even Financial Times editor Lionel Barber, one of the most sympathetic senior figures on Fleet Street towards tougher regulation, dubbed the political fix a ‘horse traders’ ball’.

However this plays out – and it is far from certain that the deal on press regulation will materialise in anything like the current proposals – the attempt to shake up press regulation will affect a media law landscape already facing major upheaval. Driving
those changes are a number of factors, including the new Defamation Bill, ongoing reform of civil litigation costs, the evolving debate over privacy law, dramatic changes in the media industry itself and the rise of the reputation manager in place of the traditional libel lawyer.
 

Red herrings and Rubicons

Assessing the reforms that have emerged from the cross-party deal, by far the most fury has been focused on the issue of statutory recognition of press regulation, which critics warn constitutes handing politicians influence over the media. Some even maintain this ends 300 years of press freedom, taking us back to the 17th century when newspapers needed a state licence (the regime was abolished in the 1690s).

Arguably, governments then had more effective means of pressuring newspapers and limiting their potential audience through a stamp duty tax that was not abolished until the 1850s. The tax was heavy enough to put the cost of a newspaper out of the reach of much of the population and its abolition paved the way for the modern mass print media.

Controversy over the spectre of state involvement in the press has hung over the inquiry since it was launched in the summer of 2011, with Leveson himself arguing some form of legislative recognition ‘cannot reasonably or fairly be characterised as statutory regulation of the press’.

Anger over the deal was further inflamed by the provision inserted into the Enterprise and Regulatory Reform Bill in March to protect future Royal Charters that relate to industries being changed by the government without Parliamentary approval. This means it would require a two-thirds majority in the House of Commons to change the charter. This has been viewed in one of two ways depending on viewpoint: on one hand, the recognition body will be protected from being easily ignored or phased out. On the other, Parliament could effectively redraw the body’s powers to grant new powers to curb the press.

In practice, the Parliamentary arithmetic means it would be difficult for a future government to amend the charter to the detriment of the press.

Matrix Chambers’ Hugh Tomlinson QC, the chairman of campaign group Hacked Off and an adviser to phone-hacking victims including Sienna Miller and John Prescott, unsurprisingly views claims of government interference as ‘a lot of inaccurate nonsense’. He adds: ‘They have no role in it at all. The whole system is designed to exclude them.’

David Engel, a partner at Addleshaw Goddard in media crisis management, privacy and defamation issues, agrees, maintaining fears of statutory underpinning are misplaced. ‘This has to an extent been misrepresented by the press lobby who talk about a “press law”, when no such thing is proposed. Lord Justice Leveson’s point was always that the system of self-regulation should be independent both of the politicians and the media industry. I can’t see why the papers have a problem with that.’

Certainly the more overblown claims are hard to sustain since the cross-party deal is so arm’s-length from political control it is hard to see how a government could use the structure to influence the media much one way or another (in comparison, the government clearly has far more influence over the BBC as it wields direct power to alter its funding).

Supporters also argue that some form of external back-stop is essential to avoid a re-run of the PCC, which newspapers could refuse to comply with and had very limited powers of investigation and censure.

Claims of the press being controlled by the government also skirt over the basic reality that governments have always had many means of influencing national media – via carrots such as preferential briefings, placed exclusives and access to ministers. Seasoned watchers of the UK press would conclude there have been centuries of tactical skirmishes between politicians and a London media that has been, by the standards of Western democracies, irreverent and anti-establishment. It is hard to see much in the current Leveson deal to change that non-servile dynamic.

However, even if there has been a degree of hyperventilated comment over the dangers of state diktat, there is still unease among some specialists in media law about the path that such reforms involve starting down.

‘Leveson said statutory underpinning was not the case: I understand he said that, but I respectfully disagree. It’s a form of regulation defined by Parliament,’ says David Banks, a veteran journalist and co-author of McNae’s Essential Law for Journalists. He adds: ‘Even at arm’s length, at the end of the day, there’s a politician’s finger on the button. A Royal Charter can’t be changed – anyone with basic knowledge of the British constitution knows that’s nonsense. They can repeal that statute and fiddle with it as much as they want to.’

Niri Shan, head of intellectual property and media and entertainment at Taylor Wessing, is likewise uneasy. ‘There’s a lot of fudging of the issue going on. Whether it’s technically statutory underpinning or not, it gives Parliament a degree of control that I’m not comfortable with.’

Engel counters: ‘The press have painted Lord Justice Leveson as King Herod ordering the slaughter of the innocents of Fleet Street. That’s nonsense. While in future the red tops may not have the same latitude to pursue salacious stories, proper investigative journalism will not be impacted by any of this.’

Ultimately it appears that the single issue that has hogged the headlines is, in practical terms, something of a red herring. Whether the cross-party deal on media regulation works in practice will likely have little to do with the curious legislative nature of the new regime.

Much of the discussion also avoids considerable evidence that it is elected politicians who are likely to be cowed by the press as opposed to the other way around. There was considerable cynicism regarding Leveson’s findings on the relationship between politicians and the media, which the report described as a picture of ‘robust good health’.

Taylor Hampton’s Mark Lewis is much less diplomatic. Lewis – who has acted for a string of individuals over phone-hacking claims, including the family of Milly Dowler, and himself has had his phone hacked – comments: ‘All parties in government pandered to the press. Whether it was Rupert Murdoch going through the back door of Number 10 to see David Cameron as his first visitor as prime minister; or Tony Blair being made godfather to [Murdoch’s] child; or Ed Miliband at his pyjama party – all the politicians let papers control policy.’

Lewis adds: ‘What the press is looking to preserve is no regulation. All government and opposition parties have tried to work out a way to implement a system that enables a press that is free from state interference.’

Given that sections of the media with a solid record of public interest journalism – among them The Guardian, The Independent and the Financial Times – have backed the need for tougher regulation of the press, albeit with reservations about the Leveson package, it is hard to escape the conclusion that much of the charge of state interference is a cover for sections of the tabloid media that simply don’t want effective regulation in any form.
 

The costs equation

If claims of state control have been overblown, there is more ambivalence among media lawyers about the issue of exemplary damages and the cost implications of the Royal Charter. If a newspaper does not sign up to the new self-regulatory body and is found to infringe on the civil law rights of a claimant, it could face exemplary damages and adverse cost awards.

The measure – following Leveson’s core incentive to make newspapers opt into the new self-regulatory model – certainly has its supporters. Carter-Ruck solicitor Rebecca Toman says: ‘It can only be a good thing. [Exemplary damages] will only be awarded in the minority of cases, [and] those cases where the behaviour has been so completely reckless and/or outrageous that only this level of damages would go some way to make amends. If a publisher has behaved this way, why should they not pay the price to their victim?’

But there are also fears that this is not the right way to incentivise the press to sign up to the new regulator.

Keith Mathieson, a partner at RPC, who has previously acted on behalf of newspapers, is ‘dead against the imposition of exemplary damages’, referring to it as a ‘historical anomaly’. He adds: ‘It is simply wrong to introduce a punitive element into the civil law.’

‘There’s a lot of noise in the papers as to what [exemplary damages] means,’ says Alan Watts, a partner in dispute resolution at Herbert Smith Freehills (HSF). ‘The whole issue is about whether all the main newspapers are going to sign up to it with [this] hanging over their heads.’

The Guardian’s director of editorial legal services, Gill Phillips, argues that the issue was not properly discussed during the Leveson inquiry and the inquiry relied on an old Law Commission report produced before the Human Rights Act’s introduction. She adds: ‘Most worryingly, [it] singles out a small section of society for penalty rather then applying a standard of conduct to all members of society.’

While Phillips believes few are likely to behave so badly as to face such sanctions, she warns that such a ‘sword of Damocles’ could have a ‘chilling’ effect on the media.

The threat of punitive damages has also led some lawyers to argue that the regime will be wide open to challenge in the European Court of Human Rights on the basis that such a measure breaches article 10 – the right to freedom of expression.

A joint opinion commissioned by the newspaper industry by three senior silks, Lord Pannick QC, Antony White QC and Desmond Browne QC, has already been obtained concluding that exemplary damages in this form are likely incompatible with human rights obligations.

However, for all the unease regarding punitive damages, many lawyers and media observers are far more concerned about the practical threat of adverse cost orders for media groups that fail to sign up to the new regulator.

Under the provisions on costs inserted in the Crime and Courts Bill, ‘relevant publishers’ who have not signed up to the new regulator face the possibility of shouldering costs of claimants, even when they successfully defend a claim.

The fears regarding this are obvious: that the dice will be loaded in favour of claimants and smaller publishers wanting to stay outside the regulatory system will be forced to settle early rather than face huge cost risks contesting marginal claims. This concern has been heightened due to widespread concern that the Royal Charter currently adopts a broad definition of ‘relevant publisher’ that could easily hit bloggers and specialist publications rather than the large media groups whose abuses triggered the Leveson inquiry in the first place.

Concerns about how costs would affect smaller publishers tap into a wider criticism of the Leveson inquiry and the resulting deal: that both spent too little time considering the role of online publishing. There will be much focus on proposals issued by the Department for Culture, Media and Sport on 19 April designed to ensure small blogs and specialist publications are exempted from the additional cost liability under the deal. The provisions aim to exempt publishers with fewer than ten employees and annual turnover of less than £2m.

Fears of free speech at independent publishers being ‘chilled’ certainly seem more substantive than complaints of state control over powerful and well-funded media groups.
 

Low cost, medium concern

If there is unease regarding the way in which Leveson’s cost proposals have been implemented, there is more support for the concept of ushering in a low-cost arbitration system to deal with complaints. In theory such a model could finally address the cost issues that plague the debate around libel law, which tends to favour rich claimants or powerful media companies against weaker opponents.

The proposal for a new arbitration scheme – which could either be run by the new approved media body or alongside it – could significantly boost access to justice for individuals of limited means. The scheme is expected to handle a wide range of complaints, including corrections, defamation and breach of privacy issues.

The arbitration scheme has received little publicity compared to other areas of the cross-party deal – perhaps because so much of how it would operate remains unclear – but potentially it has far more practical impact on the professional work of libel lawyers and working journalists.

An effective system would likely mean that far more individuals turn to arbitration rather than the courts to deal with defamation – a development that would have huge implications for libel lawyers already struggling to adapt to a world in which traditional media work has dwindled.

However, for media organisations there remain substantial concerns regarding how such a scheme would work and be funded.

Graham Shear, a partner at Berwin Leighton Paisner, who himself became embroiled in the News of the World hacking scandal, filing a breach of privacy claim against the now-defunct newspaper, envisages ‘a sensible system’ that will oust ‘baseless claims’ quickly. They ‘can largely be dealt with on a summary basis and actually should not be expensive because if it’s not more than an attempt to waste time and money, it can be dispatched pretty quickly’, he says.

The Guardian’s Phillips, despite being generally supportive of the need for tougher media regulation, is wary of the practical challenges of making such an arbitration scheme work.

‘Is it to be free to use by claimants? How will it be funded? And how do you ensure that it only deals with substantial breaches of the civil law, and doesn’t get bogged down with what are really ethical issues under the Editor’s Code?’ she asks.

Other lawyers question how the model would work with arbitrators who will assume an inquisitorial role instead of the traditional adversarial role for settling disputes in court.

Carter-Ruck’s Toman says arbitration works well in commercial disputes but wonders whether it could make ‘the leap’ into the defamation world ‘where victims want public vindication’. She doubts whether the resources will be provided for an arbitrator to decide on disputed facts. ‘Complaints where facts are disputed may end up going nowhere,’ she says. ‘However, if the arbitration system can be tailored to specifically cater for our field, I can see no reason why it should not work.’
 

Good theatre, poor policy?

For all the intricate policy and legal debate regarding the detail and policy of media regulation, many of the doubts regarding the cross-party deal on regulation come back to the chaotic and reactive way in which the inquiry itself was set up. Without much in the way of political consensus or agreement in the media or legal circles, the coalition government was pressured into launching an inquiry that it did not want.

The Leveson inquiry itself went a long way towards bringing the scale of press abuses to light and the tabloid press gained little sympathy. However, many who remain sympathetic to the need for tougher press regulation are still uncomfortable with elements of the inquiry, which gave the political classes and the police a relatively easy ride.

The fractious context has meant there has been little industry consensus in the media, a point evidenced by the range of rival reform packages that have been put forward.

Such lack of consensus has only been heightened by the public wrangling before and after the cross-party deal.

As RPC’s Mathieson comments: ‘Everyone is baffled about why Hacked Off had such an influence on proceedings.’ HSF’s Alan Watts picks up the point: ‘That looked terrible. If you’re going to do that, why not include the newspapers too? Bowing to the pressure of well-known celebrities and pandering to them instead of what’s supposed to be objective was horribly mishandled.’

None of this bodes well for how a complex regime of self-regulation, which requires cross-industry support and phased implementation, will be rolled out. In contrast, the Irish system of press regulation, which Leveson is most often compared to, was reached after protracted talks with the industry.

However strong the case for tougher media regulation is – and most neutral observers would say it is strong – the Leveson saga in many ways looks an unsatisfactory way to make important public policy.

Leveson may have been effective investigation and theatre, but what has emerged from it in terms of reforming policy is stuffed with loose ends. As such many sides have been reduced to debating ‘what Leveson intended’, as if the view of one judge, however senior, can be a substitute for achieving industry and political consensus.

‘The inquiry is shot with weakness because of the misunderstanding of the nature of publication,’ says Banks.

RPC’s Mathieson shares the doubts of many lawyers about how deliverable the package will be. ‘The Royal Charter and current legislation are unworkable at the moment on the basis that certain publications say they won’t sign up to the scheme. If more publishers say that, it won’t work at all.’

An additional problem with the cross-party deal is that it impacts on an industry facing huge upheaval to its business model and comes at a time when media law is already undergoing significant changes under the Defamation Bill (see box below) and impending cost reform.

Many lawyers highlight what is happening under the Jackson review of civil costs, which since April has stopped success fees and associated insurance policies being passed onto the losing party in personal injury claims. Such reforms are – somewhat controversially – expected to be ultimately extended to defamation cases, but the position on final implementation is currently unclear.

‘The Jackson reforms are not yet hitting defamation and other media claims – the existing conditional fee agreement regime still applies to claims until a new cost regime has been devised,’ says RPC’s Mathieson. ‘The government is still thinking about what to do – it’s very much up in the air. There are real issues about access to justice in this. The old regime was not working. It was leading to very large and disproportionate costs being incurred. We need some solution that’s cost-effective and resolves disputes efficiently.’

‘Anything that reduces the obscene costs of legal actions has got to be a good thing for publishers,’ says Banks.

Unfashionable as it may be to say it, with so many variables in play, it is hard to have huge confidence that the attempt to rip up policy on media regulation in the wake of the Leveson inquiry will produce effective reform. Ultimately, it is entirely possible to be a strong advocate of tougher and more effective media regulation without believing that Leveson’s blueprint and its political progeny is a practical solution.

As Banks concludes: ‘A better funded regulator is a good idea, one that is capable of conducting investigations to prevent gross abuse. We could do with an ethical regulator but not a legal one.’ LB

sarah.downey@legalease.co.uk