THE government must beware of knee-jerk impetuosity as it signals that it will outlaw fighting funds of the sort which backed the disgraced Neil Hamilton's ill-fated libel action against Mohamed Al Fayed.

For while it is unjust for a litigant's anonymous supporters to be able to withdraw their financial pledges if the action fails, leaving the costs of the case unpaid, it is wrong that the law should ban the right of anyone to help people who resort to law to claim they have been defamed.

In the hugely-expensive case involving the now-ruined Mr Hamilton the judge was perfectly right to make an unprecedented order for those who contributed to the loser's fighting fund, said to have reached £500,000, to be named so that they could be pursued by Mr Al Fayed's lawyers.

It is a digression that this is now being tested by the organiser of the fund risking being in contempt of court by refusing to disclose the list of secret donors, for the principle remains that you cannot back a horse on credit and expect to keep your stake if it loses.

If the government wants to confirm this with legislation to cover libel-case fighting funds, it will do no harm.

But if goes further and outlaws the funds, it may dangerously deny the right to justice to many who are wronged and are prevented from seeking redress because they cannot afford to, particularly when their opponent is rich and powerful.

Justice in libel actions has always been tempered by them generally being the preserve of the rich or reckless who dare face the risks of the huge - often absurd - damages or costs that can ensue, particularly in high-profile cases like that which has brought Mr Hamilton's ruin.

The resort of a fighting fund does at least tip the balance back to help the less well-off "little man".

The only adjustment the law needs to make is for those who partake in the funds to be fully liable to lose their contribution if their party loses the action - an ethic that the judge's order in this case correctly upholds.

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