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News Corp. Must Pay Legal Fees for Phone Hacker Mulcaire; Coulson Loses

Rupert Murdoch’s News Corp. is required to pay the legal fees of Glenn Mulcaire, the British private detective at the center of the phone-hacking scandal at its now-defunct News of the World tabloid, a U.K. judge ruled.

Mulcaire, 41, had a valid contract to have his fees and potential damages paid by the company in exchange for his cooperation in dozens of civil lawsuits, a judge ruled today in London. In a separate judgment today, former News of the World editor Andy Coulson lost a similar suit to have his fees covered by the company as he faces a criminal phone-hacking probe.

Mulcaire “always said he was acting on the instruction” of the company “and he clearly needs legal representation to deal with the numerous cases,” his lawyer, Sarah Webb, said in an e-mailed statement. The ruling will probably result in News Corp. (NWSA)’s News International unit paying another 750,000 pounds ($1.2 million) in legal fees, she said.

News Corp., based in New York, shut the News of the World in July to contain damage from the five-year-old scandal, which triggered a judge-led inquiry into the ethics of the U.K. press. Police probes into phone hacking, computer hacking and police bribery by journalists have led to the arrests of at least 21 people, including Coulson in July, Mulcaire earlier this month and a 52-year-old female police officer detained today.

Related Allegations

Coulson, who quit as editor in 2007 after Mulcaire pleaded guilty to phone hacking, may appeal today’s ruling, his lawyer Jo Rickards said in a statement. The decision is inconsistent with the ruling in Mulcaire’s case, she said.

“Mr. Coulson’s severance agreement included an explicit clause specifying that News International would meet the legal costs arising from his defense of proceedings resulting from his role as editor of News of the World,” Rickards said. “The allegations against him clearly relate to that role.”

Coulson resigned in January as U.K. Prime Minister David Cameron’s press chief as the phone-hacking scandal widened and has denied wrongdoing. In the ruling today, Judge Alan Supperstone said his severance deal could only apply to job duties that weren’t illegal.

Mulcaire, who started working for the tabloid in 2002, was previously arrested in 2006 and jailed for six months for intercepting phone messages for members of the British royal family and five celebrities. He and the company have been sued 70 times by victims since then.

300,000 Pounds

News International has paid Mulcaire more than 300,000 pounds in legal fees in relation to the first 38 cases. With dozens of lawsuits still pending, News Corp. stopped the payments in July after lawmakers suggested to Murdoch and his son James the company was buying his silence.

Webb, Mulcaire’s lawyer, said at a trial earlier this month that her client requested a separate 750,000-pound payment from the company in June 2010 in exchange for providing the identity of reporters who instructed him to hack phones. The company didn’t pay the sum, and he never named names.

Daisy Dunlop, a spokeswoman for News Corp.’s U.K. unit, declined to comment. The company had argued the agreement with Mulcaire wasn’t binding and that he had stopped assisting them by refusing to name the journalists involved in hacking.

To contact the reporter on this story: 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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