Dark clouds loom on the horizon above our criminal justice system following Justice Secretary, Kenneth Clark’s, announcements in June as part of his Legal Aid, Sentencing and Punishment of Offenders Bill.
Defence costs orders in criminal cases for innocent businesses wrongly accused of offences, even very serious ones such as Corporate Manslaughter, are to be scrapped from next year (2012).
This means that the state are able to bring all their resources to bear to secure a conviction (and our criminal justice system has a history of convicting the innocent) but the innocent must pay to prove their innocence and will no longer be reimbursed for doing so, in the case of corporate bodies.
In the case of individuals, defence costs orders are also being abolished completely for the most serious offences and for more minor offences will be limited. In practice, even where a defence costs order might be available for an individual they will be lucky to recover half of their costs.
Sean Joyce, regulatory partner at North West law firm Stephensons Solicitors LLP, says: “Most of us, at some point in our lives, have been wrongly accused of something. Even when wrongly accused of something innocuous or trivial it can invoke a feeling of indignance. If it’s something serious then it can be an affront to our principles of natural justice. Most of us would probably say that we are generally law abiding citizens and feel safe in the knowledge that because we respect a certain moral standard we are insulated from any sort of criminal accusations. That is, until it happens to us, a member of our family or a friend, at which point, people become outraged at the injustice of the system.
“When it comes to businesses there are even a whole range of criminal offences that carry strict or absolute liability which means your business can find itself in hot water as a result of a genuine mistake, omission or simply unfortunate circumstances that could happen to anyone of us at any time. There but for the grace of God go the rest of us.
“The problem is that criminal offences, even those carrying strict or absolute liability, carry the most draconian of punishments. Businesses face unlimited fines, hefty costs and compensation awards and, in the case of “at fault” directors and senior managers within those businesses, there is even the potential of prison sentences.
“For many, the conviction in itself is a serious slight on their character. It can lead to regulatory or disciplinary action being taken with an industry or professional regulator, it may have to be disclosed in tenders affecting prospects of success, and the case might be reported in the media attracting significant adverse publicity for your business, from which it might never recover. All of this is very bad news.
“That’s why any person or business wrongly accused of a criminal offence has no option but to fight tooth and nail to prove their innocence. Early professional and legal advice is crucial. Based on my 15 years experience of defending criminal and regulatory investigations and prosecutions by a whole host of government and regulatory bodies, I know that by providing what can often be short advice at the outset, it can have the effect of preventing a prosecution from ever getting off the ground or at least limiting the damage if it does.
“If a case does go to court then the costs of proving your innocence can start to mount up. In addition to your own legal costs you may have to shell out for expert reports and other disbursements.
“Until now I have always been able to console the innocent with the reassurance that when they eventually prove their innocence in court they are entitled to a reimbursement of most, if not all, of the expenses incurred throughout the legal process.
“But with defence costs orders being scrapped, the government’s justification for this is that businesses are expected to take out additional insurance to guard against the threat of a criminal or regulatory investigation or prosecution and can, therefore, ask their insurers to pay their legal fees. Currently most businesses insure themselves against civil liability and employment tribunals but relatively few insure themselves against criminal offences.
“The business community must now consider what effect a criminal prosecution could have on their business. If it is not properly defended it can result in a conviction and for some this would sound the death knell for their business.
“The insurance industry relies on the standard “reasonable prospects of success” clause in most legal expense insurance policies in the knowledge that successfully litigated cases will often cost them nothing. In Kenneth Clarke’s new world of criminal costs, this is no longer the case.”
Notes to editors
Stephensons’ Crime department is recommended by the Legal 500, which says the firm ‘has strength in depth in relation to general crime’.
The firm has 30 partners and around 350 staff in offices across Greater Manchester and Merseyside.
For more information, visit www.stephensons.co.uk.
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Stephensons Solicitors LLP
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