Sienna Miller May Need More Than Cash to Settle News Corp. Phone-Hack Case

Money alone may not be enough for actress Sienna Miller and the more than 20 other celebrities and politicians suing Rupert Murdoch’s News of the World newspaper over phone hacking to end their search for the truth.

Lawyers met with Judge Geoffrey Vos in London today for the first time since News Corp. (NWS)’s U.K. unit apologized to victims last week. The unit, News International, has set up a fund of as much as 20 million pounds ($33 million) to compensate victims, according to a person familiar with the case, who declined to comment because the offers are confidential.

“If your phone was hacked and I made an offer to you of 100,000 pounds, but I’m not going to tell you how many times your phone was hacked, or what actually happened -- are you going to bother to accept it?” said Mark Lewis, a London lawyer who represents at least at least two people, including publicist Nicola Phillips, who have sued News Corp. (NWSA) over phone hacking.

News Corp.’s News International unit offered to settle the cases after two journalists linked to the paper were arrested by police investigating phone hacking. Another reporter at the paper, James Weatherup, was arrested yesterday, the person said. The scandal dates back to 2007 when a former editor and a private investigator were jailed for accessing voice-mail messages on members of the royal household’s mobile phones.

Since offering to settle last week, News of the World has written to 17 of the 20-plus claimants, News International spokeswoman Daisy Dunlop said in a telephone interview. She declined to comment further.

‘Most Important Question’

Justice Vos asked lawyers at today’s hearing to select as many as five test cases by next month so that he can rule on liability and damages for guidance in the remaining litigation.

“The most important question really is: what happened, and what are the damages?” Vos said. “Otherwise we will be going on forever. Some people may want that, but I don’t.”

News International has written to eight people, including Miller, sports agent Sky Andrew and lawmaker Tessa Jowell, offering to settle. It asked another nine, including soccer player Paul Gascoigne, actress Leslie Ash and jockey Kieren Fallon, to provide more evidence to facilitate a settlement.

“News International quite rightly want to shut this thing down, but everyone wants to get to the bottom of what the hell’s been going on,” said Gerald Shamash, Gascoigne’s lawyer. Shamash, an attorney at Steel & Shamash, also represents David Mills, Jowell’s ex-husband, who has filed his own hacking suit.

Settlement Risks

Declining a settlement has risks for the plaintiffs that may mean most will accept the cash after some initial bluster, said Duncan Lamont, a media lawyer at Charles Russell in London. Under U.K. law, by turning down a settlement, they may become liable for News International’s court costs if the ultimate award from a judge is less than the settlement offer.

“The other side is now at risk of costs if they make a genuine, good, offer to settle,” Lamont said. “I would think that, quite quickly, within maybe two months, the majority of cases will conclude.”

The scandal hasn’t caused a drop in circulation at News of The World, which sells about 2.8 million copies a month, said Chris Goodall, a media analyst at Enders Analysis. At a time when revenue is falling for the whole industry, the newspaper’s distribution fell 7 percent in the last year, compared with 10 percent at The Guardian, which broke the story about the hacking scandal.

‘Drip’ for Months

“This is going to drip for many months yet, it’s hard to see this having any easy conclusion,” Goodall said. “The very clever idea of giving people a lot of money, more than they’d get in the courts, is not going to stop the continued police action.”

Former News of the World Editor Andy Coulson resigned as Prime Minister David Cameron’s head of communications in January over claims the practice took place while he was at the newspaper.

“Nobody will be surprised when it eventually comes out -- which it probably will -- that those higher up must have known what was going on and if they didn’t they turned a blind eye and were reckless,” Rod Dadak, who leads the defamation practice at Lewis Silkin LLP, said in a phone interview.

News of the World is a Sunday tabloid that won a national press award for “Scoop of the Year” for its coverage of corruption in Pakistani cricket, but is better known for its coverage of celebrity news.

Beckham, Mosley Stories

Neville Thurlbeck, the paper’s chief reporter who was arrested earlier this month in the phone hacking probe, broke stories about the marital infidelity of celebrities including soccer player David Beckham and former Formula One President Max Mosley.

Mosley, who was the subject of a story about taking part in a Nazi-themed orgy, won a record 60,000-pound award from the paper in a trial over privacy violations. He later testified to the House of Commons in the phone hacking probe. Thurlbeck declined to comment in an e-mail and referred questions to the newspaper’s public relations staff.

Some News of the World reporters “employ whatever technique suits them” to find private information, said Dominic Crossley, Mosley’s lawyer. “Thurlbeck is by no means unique at the News of the World, but he is a case-in-point and he remains their most senior journalist.”

To contact the reporters on this story: James Lumley in London at jlumley1@bloomberg.net Erik Larson in London at elarson4@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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