Criminal costs

The erosion of costs recovery in criminal cases could have profound effects, even to the extent of innocent parties pleading guilty to avoid substantial legal bills. Mark Skinner and Luke Blackburn detail developments.

Following the publication of a Ministry of Justice consultation paper in June 2009, we are on the cusp of a very significant change to the criminal costs regime. Awards of costs from central funds in criminal cases are scheduled to be pegged to legal aid rates — and these changes are set to take effect imminently, on 31 October 2009.

The implications are severe for all innocent individuals and companies wrongly accused of a crime — and the impact on insurers will be significant. At present, successful defendants are entitled to recover 'reasonable' costs pursuant to the Prosecution of Offences Act 1985 and Criminal Cases (General) Regulations 1986. Experience in two successful Crown Court defences this year has resulted in an approximate 90% cost recovery.

The government's own research, which accompanies the Ministry of Justice paper, suggests that an average privately funded Crown Court case costs approximately £19 500. The average cost of a legal-aided Crown Court case is estimated at £2800. Based on those figures, the individual, company or insurer will be left paying a balance of approximately £16 700 in a successfully defended case.


Interest of justice

Accordingly, insurers will be faced with reassessing premiums in relation to policies that cover criminal prosecution costs, withdrawing from cover of this nature or stomaching the additional claim spend. The option to employ firms with a Legal Services Commission contract may seem unattractive, as those with criminal accreditation are most unlikely to have the complementary insurance and civil expertise that insurers require for the case to be dealt with in a joined-up fashion where large injury claims are likely to follow.

Many individuals and companies will simply want the best-quality advice available when their livelihood and reputations are at stake. Sadly, legal aid rates simply do not permit a high-quality and thorough service. For instance, the outcome of criminal proceedings in road traffic accident cases can impact significantly on civil cases, which stand behind prosecutions. The real peril underlying these changes is that most people of ordinary means will not qualify for fully funded legal aid in the Crown Court. And the vast majority of companies will not qualify for legal aid at all. In Magistrate Court cases, a large number of people will fail 'the interest of justice' test, where their case is not deemed serious enough to qualify for legal aid. All of these individuals and companies will either be faced with paying for private legal representation — and only recovering a small percentage of their costs if they win — or, very dangerously, they may decide to make an early guilty plea, even when they know or believe they are innocent in order to avoid a substantial legal bill.

This is an appalling prospect for society and a very damaging one indeed for insurers. In RTA cases, plus a range of others, insurers will be adversely affected if defendants decide to plead guilty when they are not. Civil cases are highly likely to follow and their defence will be far more difficult and, in many cases, impossible. The prospects of contributory negligence in motor cases may also be much reduced, because the evidence that falls out of a fully investigated trial will not come to light. In catastrophic injury cases, this is a serious consequence.

With these issues at stake, the option of insurers withdrawing from coverage of criminal costs is thrown into a fairly unattractive light. It may even be that insurers are compelled to offer increased cover, but face the prospect of a much reduced costs recovery even where the defendant succeeds. It is tempting to ask why the Ministry of Justice bothered to consult at all, as the overwhelming response was against the proposals. Yet they are being implemented in the name of saving money. There must surely come a point where a price cannot be placed on justice.


Death by careless driving

There is further bad news for motorists and those who seek to insure the costs flowing from any accidents. A new law with very serious consequences for ordinary drivers has been in force since 18 August 2008. Causing death by careless or inconsiderate driving carries a maximum sentence of five years: minor mistakes that cause a death may now result in imprisonment. And the first such cases are now coming before the courts.

The criteria for driving are whether it either fell "below that to be expected of a competent and careful driver" or was "without reasonable consideration for other persons if those persons are inconvenienced by his driving". It is fair to say that many drivers fail these tests — and often.


Contested cases

Under the old law, there was a stark divide in how traffic fatality cases were prosecuted. The charge was either causing death by dangerous driving, or careless driving. The former was difficult to prove and the latter involved no greater penalty than a fine. The new law is likely to result in many more contested cases, with more being tried in the Crown Court bringing profound costs consequences for insurers.

A driver can mount a factual defence, asserting that the driving was not careless or inconsiderate. Beyond this, the defences available are few and difficult to establish. They can be divided into defences of necessity, automatism and mechanical defect — each of which puts its own different burden on the defendant.

There are cases in which lawyers have sought to assert that there is no provable link between the criticised driving and the death, as might occur where an elderly or unwell person were to die in a motorway pile-up many cars away from the careless driving that caused the original collision. However, the Court of Appeal has said if the driving had any role in causing the death, a conviction should follow unless the connection is minimal.

Insurers and solicitors should instruct experienced expert witnesses, both as to the mechanical state of the vehicles concerned and the reconstruction of the incident. When consulted early, while vital evidence is still available to be examined, such witnesses can be the fulcrum of the defence case.


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