The cost implications of business prosecution

There have been recent changes to court costs rules for business prosecution & criminal proceedings following the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

Under these changes, Defendant Cost Orders, are effectively being abolished except for in some minor cases.

These costs rules apply to a wide range of regulatory proceedings often brought against businesses, including Health and Safety Executive prosecutions, Environment Agency prosecutions, and Local Authority prosecutions.

In magistrates’ courts, under the new regime, businesses will be able to recover some of their legal costs if they are acquitted, however, if they are privately funding their legal representation, then there will be a big shortfall, due to the fact that any costs recovery will be limited to legal aid rates, which are traditionally low.

If a business chooses to be represented privately, then it will not be able to recover its legal costs in successfully defending proceedings before a crown court.

For businesses, the government has justified this by saying that companies are expected to take out extra insurance to cover legal costs.  Most businesses have civil liability and employment tribunal insurance.  However, with very few insurance policies covering legal costs and losses arising out of criminal proceedings, businesses need to fully understand the financial risk that regulatory proceedings pose.

In light of this, it is vital that businesses obtain quality legal advice as soon as regulatory proceedings are brought against them, bearing in mind the clear risks of limited or non-recovery of legal costs, irrespective of the outcome of the case.

If you wish to know more about this, or wish to speak to someone on any aspect of regulatory law, then please contact David Edwards at David.Edwards@harrison-drury.com on 01253 258321.