Driving a hard bargain

The UK's Financial Services Authority is pushing hard to be able to plea bargain with those who might be willing to provide the evidence it needs to prosecute financial crimes such as insider dealing. The plea bargaining powers are embedded in the Coroners and Justice Bill which may soon be on the statute books.

Plea bargaining is moving from the US to the British legal system. It facilitates the detection of crime by offering immunity from prosecution to 'whistleblowers' who assist in bringing the organisers of serious crime to justice.

Cautious attitude

English law has historically had a cautious attitude to the notion of plea bargaining: first, on the basis that it is contrary to basic principles of fairness to allow one person to escape full punishment simply because he tells on another; and secondly because it creates messy trials as the defendant will argue that the whistleblower is motivated not by the desire to tell the truth but because he/she wants to strike an immunity deal with the prosecutor.

In fact, some form of plea bargaining does routinely take place. In the context of regulatory offences (where the penalties are often light and where, because the defendant is a company, imprisonment is not an option) there will often be discussions about the charges to which the defendant would be minded to plead guilty and an attempt to strike an agreement over the relevant facts that should be presented to the court for the purposes of sentencing. Even in more serious cases informal discussions about the appropriateness of the charges take place but, importantly, only after charges have been brought by which time the vast majority of the very substantial investigative costs have already been incurred. These discussions are rarely recorded as there is no real legal basis that underpins them. Discussions tend to be tentative and prosecutors, fearful of creating material that will have to be disclosed to the defence, rarely take the initiative.

Insider dealing

Insider dealing is currently the FSA's hot issue. On 30 March 2009 two individuals, Messrs McQuoid and Melbourne, received prison sentences as a result of their convictions at Southwark Crown Court for insider dealing. The next day the FSA announced that it had arrested two people in connection with another insider dealing investigation. But in insider dealing cases the FSA faces the difficulty that it all too often lacks direct evidence of the communication of inside information and must rely on the circumstantial inferences to be drawn from the timeliness of trading, contact between insider and trader and the inordinate profits made.

It would obviously suit the FSA if one of the parties to the crime had an incentive to blow the whistle on the others at an early stage, thus giving the FSA the direct evidence it all too often lacks. The difficulty is the seriousness of the charges. In insider dealing or serious fraud cases a substantial custodial sentence will be the court's default sentencing option. Not guilty pleas invariably follow and, even in what might seem to be a simple case, the costs of establishing guilt in a complex case to the appropriate standard will be enormous.

The international outlook

The international perspective provides further evidence in support of the need to introduce formalised plea bargaining. In England and Wales only 66 per cent of criminal defendants plead guilty before trial. Ten per cent of the rest wait until the first day of the trial until they admit their guilt. In the US and Canada the plea rates are much higher.

Interestingly, although Canada has a well established plea bargaining practice its Criminal Code does not explicitly recognise it. In the US plea discussions '“ sometimes very early on in an investigation '“ are regarded as key skills of the criminal lawyer. Across Europe the tendency seems to be toward more formal frameworks for early discussions with suspects over plea.

It is likely that if the proposals are implemented then the prosecutor and the person suspected of the offence may discuss and reach an agreement over the basis of plea. Crucially, it is envisaged that this will take place before charge; in fact for real advantages agreement would happen early in the criminal investigation before substantial costs have been incurred. The court will not participate in those discussions, and it will be presumed that nothing said in those discussions will be used against the suspect. In any event all discussions will be properly documented. Where the suspect indicates a willingness to plead guilty to certain charges, a plea agreement will be entered into and this will specify what charges the prosecutor is minded to bring and what sentence or sentencing range is considered appropriate.

Plea bargaining will certainly present challenges for defence lawyers. What advice should be given to clients? When should discussions be initiated? How should a person be protected in circumstances where a plea discussion does not lead to a plea agreement? Used creatively early plea discussions may well radically alter the current attitudes to both prosecuting and defending complex financial crime cases.