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Ending legal aid for millionaire defendants

17 January 2012. Published by Adam Craggs, Partner

Readers may not be aware of an extraordinary anomaly in our criminal justice system which has led to a significant drain on the legal aid fund.

The former Director of Public Prosecutions, Lord MacDonald QC, is trying to address this issue.

The Proceeds of Crime Act

The point arises under the Proceeds of Crime Act 2002 ('POCA').

If a criminal investigation has been commenced in England or Wales and there is reasonable cause to believe that the suspect has benefitted from his criminal conduct, under section 40 of POCA,  the Crown can apply for a restraint order.  A restraint order, once made, will prohibit any specified person from dealing with property held by him.  There are a few exceptions to this, the most significant being that funds restrained can be released for a defendant's "reasonable living expenses" and also his "reasonable legal expenses" – see section 41(3) of POCA.

It is important to remember that a person subject to a restraint order will not have been found guilty of any crime and may not even have been charged with a criminal offence.  A restraint order is a preliminary step taken by the Crown in circumstances where there is a concern that a person may dissipate his assets.  A restraint order is an effective method of 'freezing' a person's assets at an early stage in the criminal process.

In the past, the Crown would release monies to meet a person's reasonable living expenses and to pay his reasonable legal expenses.  This enabled a person to instruct lawyers of his choice and to pay their fees himself.  However, a few years ago, the legislation was introduced which prevented reasonable legal expenses from being met from restrained funds.  This legislation is to be found in section 41(4) and (5) of POCA.  A person subject to a restraint order must now rely on legal aid.

So what's the problem?

There are two problems with this legislation.  Firstly, it deprives a person of the freedom to choose the lawyer of his choice.  Many specialist criminal lawyers who have the necessary expertise to properly advise a person who faces allegations of tax fraud are not available on legal aid.  This restriction raises issues under the Human Rights Act 1998.  Secondly, this legislation means that persons who are subject to a restraint order (who are often wealthy individuals) are entitled to have their legal costs paid for by the taxpayer in circumstances where they would otherwise pay such costs themselves.  It is worth reminding ourselves that there are current proposals to cut £350 million from the legal aid budget, which will remove or restrict legal aid in areas such as clinical negligence, personal injury and family law.  These changes are likely to hit the vulnerable and disadvantaged in our society.

Ministers have hitherto claimed that the system is justified because legal aid payments can be recouped following conviction.  In fact, in many cases this does not happen.   The overall result is that the general taxpaying public is subsidising those who should and can pay their own legal costs.

Lord MacDonald's proposals

Lord MacDonald has tabled an amendment to the Legal Aid, Sentencing and Punishment Bill, which is presently before the House of Lords, with a view to removing this anomaly.  It is to be hoped that he is successful.

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