A gap of nearly £18.3 million has opened up between the insurance cover held by the Duke of Sussex and his six co-claimants and the legal costs now being claimed against them, the High Court in London heard this week, in a dispute that highlights how quickly litigation costs can outrun a policy's limits. The claimants, who include Prince Harry, Doreen Lawrence and Sir Elton John, brought a privacy claim against Associated Newspapers Limited (ANL), publisher of the Daily Mail, alleging unlawful information gathering. Mr Justice Nicklin dismissed the claim in its entirety on July 7 2026, and a two-day costs hearing began this week to determine how the losing side should pay.
The court heard that the seven claimants held a combined £16.2 million in insurance cover against adverse costs, while ANL's reported legal spend over the four-year case and 11-week trial has reached £34.5 million - more than £18.6 million above its approved budget. ANL is seeking an interim payment of £9,950,624.37; the claimants have offered £8 million.
For brokers advising high-net-worth or litigation-exposed clients, the case is a live illustration of how a policy limit set at the outset of a dispute can become badly mismatched to reality once costs escalate through years of hearings, disclosure battles and a lengthy trial.
Barrister Antony White KC, representing ANL, told the court that the claimants' conduct justified indemnity costs rather than the standard basis, under which a losing party pays the winning side's costs without having to show they were proportionate. He argued the allegations were sweeping in scope, naming 77 journalists, editors and executives even though only 23 ultimately featured in the claims, with several allegations dropped during the trial without explanation. White characterised the litigation as an attempt to demonstrate that ANL had misled the Leveson Inquiry, using high-profile claimants to build pressure for a further stage of that inquiry, and suggested the case was intended as the first of a broader wave of claims against the publisher.
White also referenced the pointed statement issued by Prince Harry and Doreen Lawrence after the verdict, which criticised the judgment.
Nicholas Bacon KC, representing the claimants, pushed back against the indemnity basis in written submissions, arguing that ANL's spending reflected an unusually high and unconstrained approach to litigation costs that undermined the principle that costs should be proportionate. He said the claimants had entered the case in good faith and that, while their claims failed, the court had made no finding that they acted dishonestly or without genuine belief in their position. Bacon told the court ANL had raised its cost estimate without warning – having previously indicated a £20 million spend – leaving the claimants without adequate cover.
The distinction between standard and indemnity costs is likely to be closely watched by professional indemnity and litigation insurers well beyond this case, since it turns largely on how a court assesses a losing party's conduct during proceedings rather than simply the outcome. Bacon accused ANL of intending to "go for the jugular" at the costs hearing, arguing the publisher was seeking to extract the maximum possible award having already won on the substantive claim.
The proceedings – covered in detail by Insurance Business UK's ongoing coverage of professional indemnity and litigation risk – underline a recurring exposure for insurers underwriting legal expenses or after-the-event cover in high-profile, multi-claimant actions: budgets set years in advance rarely anticipate the scale of costs a long-running, heavily contested trial can generate. The hearing continues, with a ruling on the costs basis expected in the coming weeks.
