Spinal Surgery Complications – A Change in the Law?
Stephen Parkinson, partner in Kingsley Napley's Criminal Litigation team and senior partner of the firm, writes for The Times with Rod Fletcher, partner at Herbert Smith Freehills, on common misconceptions relating to Deferred Prosecution Agreements (DPAs).
The published article reads as follows:
Deferred prosecution agreements (DPAs) are rare in the UK, with only four agreed so far, but they are also controversial and misunderstood.
One common misconception is that DPAs are cosy deals between lawyers. This wrongly assumes that the parties to an agreement are on an equal footing. In fact, it is entirely up to the prosecutor to decide whether to offer negotiations, and an offer does not guarantee that agreement will ultimately be reached. In many cases a prosecutor will not deem a DPA to be in the public interest.
For example, the Serious Fraud Office (SFO) and the courts have made it clear that a DPA will only be considered if a company has genuinely and actively co-operated with the investigation, and normally will have self-reported the matter. While an early settlement with a company in return for a substantial financial penalty may be attractive to the SFO, it will be conscious that it runs a significant reputational risk if it selects the wrong target.
Unlike the US system, a UK DPA is subject to significant judicial oversight. A judge has to consider it to be in the interests of justice and also fair, reasonable and proportionate. As Sir Brian Leveson, the head of criminal justice, said in relation to the Tesco DPA: “It is important to underline that the court has not acted merely to provide formal confirmation of [the] agreement . . . I have considered the position following detailed analysis of the circumstances of the investigated offence and an assessment of the financial penalties [on] conviction.”
Another misconception is that DPAs are agreed by companies purely for commercial expediency. That view is too simplistic.
The reality is that there is a mix of considerations, legal and practical, that companies have to bear in mind when deciding whether to enter into a DPA. While a DPA can involve an 50 per cent discount on the financial penalty, entering into one also has reputational consequences affecting customers, employees, suppliers, investors and other stakeholders.
The starting point for any company is to understand the strength of the case against it. Before an offer is made, the prosecutor should have conducted an extensive investigation and be satisfied that there is an adequate case to prosecute immediately or within a reasonable period after further investigation.
The prosecutor must then make sufficient disclosure of the evidence on which it relies, and other relevant evidence, so that the company can make its own assessment. The issue for a company is to decide whether it agrees with the prosecutor’s assessment, bearing in mind always that this is primarily a documentary exercise. What follows, once that evidence is disclosed, will be a detailed analysis by the company’s lawyers, testing the documentary evidence against the allegations.
Could the prosecutor make out a case fit for court? If so, what is its strength and the likelihood of conviction if the company contests the case? There may be scope for representations to the prosecutor as to the shape of its case.
A corporate board will be hesitant to enter into a DPA if the legal advice is that the prosecution’s case is weak and there are no other relevant circumstances; conversely, a board may not wish to defend a case with poor prospects of success.
Alongside the legal considerations there are practical questions. What will be the impact on the company of a lengthy period between charge and verdict? What has the company already said publicly about the alleged wrongdoing? Are the proposed terms reasonable? Will this carry any legal risk, including affecting other litigation in which the company is involved, such as civil claims or employment litigation, with its different tests and evidence thresholds? Most importantly, what is ultimately in the best interests of the company?
A third misconception is that a company entering into a DPA needlessly provides assistance to the prosecutor. As noted, co-operation, and normally self-reporting, are essential prerequisites to obtaining a DPA. The SFO expects co-operating companies to work with it and the terms of the DPA will require co-operation in investigations and prosecutions on a continuing basis.
However, the SFO has been clear that if there is suspected criminal conduct by individuals, it is for the SFO to investigate, not the company.
Ultimately the decisions of whether to prosecute, what evidence to call and how to present the case are for the SFO alone, as happened in the Tesco case.
Adequate safeguards need to be in place to protect the interests of individuals, but for a company that is satisfied that there is a realistic prospect of being convicted of an offence, an offer of a DPA is bound to be considered. It can offer the company a chance to address any shortcomings and move on from a difficult period in its existence.
This article first appeared in The Times
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