The UK’s News of the World was ordered by the High Court to pay £60,000 in damages and £450,000 in legal fees to world motor sport boss Max Mosley last month. Mr Justice Eady ruled that there had been ‘no genuine basis’ for the newspaper’s suggestions about Mr Mosley's consensual sexual activities and that Mosley could expect a degree of privacy. The paper was also reproached earlier in the year for failing to check the details of claims made by the former nanny of model Katie Price and her reality-TV-star husband Peter Andre before going to print. Meanwhile, former Atomic Kitten star, Kerry Katona, successfully took the Mail on Sunday to court after it alleged that she had previously worked as a prostitute.
These cases clearly have newspapers worried. Colin Myler, Editor of the News of the World, responded to the Mosely ruling by claiming: "Our press is less free today after another judgement based on privacy emanating from Europe." He said English judges were being asked to apply very general laws which had been introduced by judges in Strasbourg ‘who are unfriendly to freedom of expression’. He claimed this new legislation was causing the British media to be ‘strangled by stealth’.
According to Alan Boyce, who heads up online news operation Adfero, the News of the World’s fatal flaw was not reporting on Mr Mosley's private life but doing so without the sufficient journalistic rigour that would have safeguarded it against legal ramifications.
"I don't think the Max Mosley ruling changes very much - the News of the World lost because it made claims it couldn't back up," says Boyce. However, he did concede that the Human Rights Act requires judges to take into account both the right to freedom of expression and an individual's entitlement to privacy.
Whether or not newspapers feel less free as a result of the ruling, how can media companies prepare against claims? Any responsible media organisation will have insurance to protect it against claims resulting from errors or negligence, including claims for defamation, says Boyce. “If you don't have insurance, you can end up paying for everything. That can be extremely harmful to a business, often not so much because of the damages – although these seem to vary wildly – but because of the costs."
Professional indemnity insurance (PII) can will cover companies against claims resulting from errors or negligence and for media companies this will typically include for defamation claims.
Laura True, at specialist insurance underwriter Beazley, notes that when faced with a significant claim, PII plays a part in ensuring businesses can continue to trade, providing much needed services to the industry. She explains that: "In this regard PII not only provides the insured with protection, but is also benefiting commercial businesses and individuals by contributing to economic stability."
Financial services industry regulator in the UK, the Financial Services Authority, adds that this kind of cover can play a part in helping firms to maintain adequate financial resources, providing additional protection against the risk of insolvency in the event of excessive claims.
Media outlets are also warned to take out the right type of cover, True advises. The cost of litigation and the risk of an adverse decision means that companies should have appropriate levels of insurance.: "Purchasing a policy that does not address all areas of exposure can result in uncovered legal defence costs and settlements, and may restrict the nature and scope of the media company's mission and compromise the public's ability to receive important information."
Policies should include intellectual property, where the law can often be complex and where there can be plenty of scope for litigation. An insurer will assess a firm's risk profile on the basis of the types of products that it sells and the legal exposure it has. Firms may want to conduct a past-business review independently in order to quantify their own risk exposure, advises the FSA. Insurers will then balance this information with the total income of the firm, the required limit of indemnity and excess being sought.
Celebrities will always be making the headlines, so the question is are media outlets taking the steps to prepare themselves against claims?
