UPDATE 1-News of the World faces rush of phone hack claims

* Lawyer says compensation could total 40 million pounds

* Risk of corporate criminal prosecution

* News International hopes to draw line under affair

* Reuters Breakingviews column on [ID:nN08229045]

(Adds Sienna Miller statement paragraphs 6-7)

By Tim Castle

LONDON, April 9 (Reuters) – Rupert Murdoch’s British news
arm faces a rush of fresh compensation claims and could be
exposed to criminal prosecution after admitting its role in a
long-running phone hacking scandal, lawyers said on Saturday.

“There will be a massive flood of people contacting lawyers,”
said lawyer Charlotte Harris of law firm Mishcon de Reya.

News International, parent company of Britain’s top-selling
News of the World tabloid, said on Friday it would admit
liability and pay compensation in eight cases — although many
more people believe they were targeted. [ID:nLDE7371L1]

The admission was an about-turn from the media group’s
previous denial that it knew journalists were hacking the phones
of the royal family, politicians, celebrities and sports stars,
blaming a handful of “rogue reporters” for the scandal.

Those who will receive an “unreserved apology” from the
group, part of Murdoch’s global media empire News Corp (NWSA.O: Quote, Profile, Research),
include actress Sienna Miller and politician Tessa Jowell.

Miller’s lawyer, Mark Thomson, said she would continue with
her action and had not accepted any offer of settlement.

“Her primary concern is to discover the whole truth and for
all those responsible to be held to account,” he said.

Mishcon de Reya’s Harris, acting for five of the 24
individuals with active court cases against the News of the
World, said some of her clients had been contacted by News
International and were considering their options.

“People (whose phones) have been intercepted, people who
have had their privacy infringed, on a case by case basis must
be given proper compensation,” Harris told Reuters.

Analysts said the media group’s move was an attempt to draw
a line under the affair and limit financial costs as News Corp
tries to push ahead with its planned $14 billion purchase of
British satellite pay-TV operator BSkyB (BSY.L: Quote, Profile, Research).

Settling all the cases could cost the group as much as 40
million pounds ($66 million), said media lawyer Rod Dadak, a
partner of law firm Lewis Silkin which represents a number of
potential phone hacking litigants.

News International has declined to comment on media reports
it has set aside half that amount, 20 million pounds, for
compensation payments.

“It’s a black hole. So 20 million pounds may be
substantially too little, it could be double that,” Dadak told
Reuters, noting that the media group has already made individual
settlements in the affair of up to a million pounds each.

Dadak said News International was now itself at risk of a
corporate criminal prosecution, including for potential offences
under Britain’s Regulation of Investigatory Powers act, which
covers illegal phone interception.

“This is Murdoch’s Watergate because the cat is out of the
bag. Two or three people have taken the rap but the powers that
be must have known or turned a blind eye to what was going on.
It couldn’t be more serious,” Dadak said.

Police have reopened an investigation into the hacking
scandal and earlier this week arrested two journalists, former
senior News of the World editor Ian Edmondson and a man
identified as the paper’s chief reporter Neville Thurlbeck.

Lawyer Mark Lewis of Taylor Hampton Solicitors, with four
active court cases against the tabloid, said the current
compensation claims were just the “tip of the iceberg.”

“Cases are coming forward all the time. My phone hasn’t
stopped ringing from both journalists and potential clients,” he
told Reuters.

“Anyone who has been in the News of the World, or knows
someone who has been in the News of the World, ought to find out
whether their phone was listened in to, because they are likely
to have a claim,” Lewis said.

The scandal dates back to 2005/6, when the tabloid’s royal
reporter and a private detective were arrested and jailed for
snooping on the voicemail messages of royal aides.
($1=.6103 pounds)

UPDATE 1-News of the World faces rush of phone hack claims