While Nadine Dorries has settled her claim for libel against Damian McBride (with Damian having to pay legal costs including for Guidos time spent serving him with the papers) she has not yet settled her claims against HM Government.
She has until April to commence proceedings, just in time for the whole Smeargate saga to be replayed during the general election campaign. Sources not a million miles away from the Treasury Solicitor are concerned that while they can argue McBride acted outside the scope of his role, ultimately whether HMG is liable or not will be decided by a jury. Juries in libel claims can be unpredictable, given the public revulsion with Smeargate and the general unpopularity of McBrides former boss, Gordon Brown, you can see why the Treasury Solictors might be worried.
The witness box would likely hear evidence from Gordon plus former and current Downing Street co-workers; Liam Byrne, Tom Watson, Sir Gus ODonnell as well as Damian himself. Can you imagine the Prime Mentalist giving evidence on oath? Stammering and squirming with his inability to answer a straight question. He is bad at PMQs, imagine what he would be like under cross examination