Rich suspected criminals whose assets are frozen ‘should no longer receive legal aid’

Partner Brian Swan examines recent proposals by the Law Commission to stop rich suspected criminals from receiving legal aid and discusses how this proposal seeks to reverse the position implemented by the Proceeds of Crime Act 2002.

Brian’s article was published in Lawyer Monthly, 27 February 2021, and can be found here. It was also published in the March Issue and can be found here on page 26.

‘Rich crooks net vast legal aid sums’. Although this headline sounds distinctly tabloid, this is a BBC News story from November 2012 which still appears online. More than eight years later, the Law Commission seems set to try and remedy the position that led to this BBC report by changing the rules for legal aid being funded by frozen assets.

But first, the BBC story – a joint-investigation between BBC Inside Out and the London Evening Standard – found that nearly 50 defendants with more than £1m in illegally obtained assets had received legal aid, averaging £300,000 a head. The BBC reported as follows: “Dozens of super-rich criminals – some worth tens of millions – have received vast sums in legal aid despite their illicit fortunes, an investigation has revealed. Rich criminals receive legal aid because their assets have been frozen. But there is evidence many of these crooks remain wealthy despite the asset-freezes.”

The idea that ‘rich crooks’ should be entitled to receive such ‘vast sums in legal aid despite their illicit fortunes’ to fund their criminal defence costs remains a complete anathema, both to lawyers and to the general public.

Offering a more broadsheet assessment of the problem in January 2013, Lord Judge, the then Lord Chief Justice, told the Lords Constitution Committee: “We are talking about people with big money. One of the things that is completely daft is where somebody perceived to have big money is charged, there is almost always an application to the court to prevent him dissipating his assets. Very sensible, but one of the conditions which is always sought and granted includes the dissipation of assets by paying for his own legal advisers.”

He added: “There should be an order which says so much of these assets can be used for the purposes of your defence. That is the answer. That is not very difficult.”

Although not very difficult, according to Lord Judge, it has still taken many years for the Law Commission finally to address the problem under broad terms of reference from the Home Office. Work formally commenced on the project in November 2018, and in September 2020, a 744-page consultation document was published, Confiscation of the proceeds of crime after conviction

In proposing a comprehensive overhaul of the current system, the consultation states that ‘consideration of reform was timely, if not overdue’. It confirms that ‘there are significant problems with the current regime’ adding that ‘academics, practitioners, financial investigators and many other groups of stakeholders have questioned whether the current strategy meets its objectives’.

The value of outstanding confiscation orders is a clear indicator of the scale of the challenge: in 2019, the total exceeded £2bn. In terms of rich defendants with frozen assets, the consultation suggests that some of this money should be used to pay their defence costs rather than them being funded by legal aid.

Such a change will ‘save the state from having to supply legal aid to defendants who have sufficient means to pay legal fees’, according to the Commission’s consultation document, and ‘redress any public perception about the use of legal aid where it may seem to be unnecessary.

The potential risk of ‘reckless dissipation of restrained assets in legal fees’ which have been frozen pending confiscation, is also addressed in the consultation, which suggests that this can be prevented by judicial monitoring of the amount of money which is released in order to pay for suspects’ legal costs. The consultation concludes: ‘The submission and approval of a costs budget by the judge would protect against unreasonable dissipation.

The Proceeds of Crime Act 2002 (POCA) is, of course, the contentious piece of legislation at the heart of the consultation’s reform proposals. The Commission is seeking to reverse the position which was implemented by POCA in respect of defendants funding their legal costs with their restrained funds.

Prior to POCA’s enactment, the situation was different. Under previous legislation – the Drug Trafficking Act 1994 and the Criminal Justice Act 1999 – a person who was made subject to a Restraint Order was permitted to fund his case from his restrained funds. The advent of POCA prohibited a defendant from funding his criminal case if he was made subject to a Restraint Order.

Right from the outset, this prohibition was subject to widespread criticism, not least from the legal profession. Numerous lawyers have argued that it is completely at odds with the principle of being “presumed innocent until proven guilty”, as Sir William Garrow first noted in 1791 during the course of an Old Bailey trial.

There is an obvious contradiction between the idea that you are innocent until proven guilty by a Court of Law, while at the same time, you are not able to use your assets to contest the charges against you because the Court believes that you are guilty. Proof of the latter is that those assets need to be preserved so that they can be made subject to a confiscation order once you are convicted.

The revolutionary change that POCA brought about shifted the emphasis on what the confiscation regime was designed to achieve. Historically, it was used to strip a defendant’s ill-gotten gains, whereas the new focus centred instead on maximising the recovery of assets for the State.

Under POCA, a defendant who had privately funded his case (whether he was made subject to a Restraint Order or not) could recover all or some of his costs in the event that he was acquitted of all or some of the charges which he faced. Should a defence costs order be made in favour of a successful defendant, his legal costs would then be reimbursed from the public purse.

There is also a long-established principle in every area of the law that costs follow the event. Schedule 7 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO significantly amended this principle, completely preventing the recovery of legal costs by a successful defendant in the Crown Court). This has since been slightly amended, enabling a defendant who was refused legal aid in the Crown Court to recover legal costs limited to legal aid rates under a defence costs order.

There can be little doubt that the Law Commission’s proposed changes, as outlined in its consultation document, would be very much welcomed by the legal profession. In having to provide legal aid funding for cases where defendants have the means to pay their own costs, these changes fully acknowledge that it would create significant savings for the public purse. They would also redress the obvious conflict with the current position in relation to the presumption of innocence, but still ensure that the spirit of the confiscation regime remains intact, which is to strip a convicted defendant of the proceeds of their crime.

The consultation process ended in December. Lawyers now eagerly await the next stage, policy development, before a Law Commission report is finally published later this year. Given the strong sentiment of the consultation, its conclusions are anticipated to meet lawyers’ expectations. Hopefully, what it recommends in terms of rectifying the shortcomings of POCA will be fully implemented through subsequent legislation.