The announcement of the government’s new serious crime bill has been accompanied by claims that it will help deal with corrupt solicitors and accountants involved in organised crime by giving courts tougher powers to punish them. But what is this likely to mean in practice and is there a danger that it equally could target innocent solicitors and accountants who have simply unwittingly become caught up in the criminal process?

There has been much rhetoric that the new powers will allow the authorities to track down and jail hundreds of corrupt solicitors, accountants and other associates of organised crime under the offence “participation in an organised crime group”. However, the question has to be asked whether the new law is needed and whether sufficient safeguards will be put in place to prevent innocent solicitors from being dragged into a process which, even if it results in them being found not guilty, could still seriously damage both their reputations and their livelihoods.

Under the new provisions, prosecutors will need to prove that those accused had ‘reasonable grounds to suspect’ that they were helping in the carrying out of criminal activities. However, the result of that is to throw the burden of proof upon the accused and requires them to show that they did not have those grounds for suspicion, thus catching not only those who reasonably suspect and do nothing but also those who unreasonably did not suspect.

But are the provisions are needed? Whilst clearly there have been cases where solicitors and accountants have been found knowingly to have been involved in criminal activities, similarly there have been cases where the involvement was an innocent, if perhaps naïve, one.

Inevitably criminal gangs are going to use those in the legal and accountancy professions to assist them in planning what are often complex crimes requiring specialist knowledge of the law. Many, however, are able to dress up that involvement in such a way that the professional adviser is unaware of their participation in a criminal act.

Given that the burden of proof – “reasonable grounds to suspect” – is so low, does that place solicitors in an invidious position of needing to carry out due diligence checks in any matter where there could be a possibility of there being criminal involvement – checks which will inevitably further slow down, and increase the cost of, representation?

The impetus for solicitors to carry out such checks will not simply be linked to the fact the offence will have a maximum penalty of 5 years’ imprisonment. The practical and financial implications of becoming subject to a police investigation – possibly involving officers attending and searching home and offices premises – combined with the reputational repercussions that this will have, is likely to make many wary of becoming involved in anything which could potentially result in such actions being taken. Rather than protecting the public this could leave those involved in entirely innocent activities without access to legal advice and representation.

The Law Society has announced that it will be engaging with parliament “to raise awareness of the implications of Bill for the profession” and the Money Laundering Task Force has already assisted in producing a briefing paper for peers in advance of the Bill’s Second Reading in the House of Lords.

It is to be hoped that, in the light of those representations, the government will look seriously at whether another criminal offence is needed in addition to those to be found in the Proceeds of Crime Act, given the difficulties this would raise for professional advisers. Solicitors and accountants are already subject to extensive reporting obligations if they know or suspect that a client is involved in criminal activities and must in any event take steps to verify client identities and look at the motives behind various financial transactions. Why is yet another set of provisions required – especially a set of provisions which could result in an innocent adviser being imprisoned simply for not having a reasonable suspicion?

Implications in practice

Assuming therefore that the bill becomes law, what is this likely to mean to solicitors on a day to day basis?

It will almost certainly mean that any solicitor acting in connection with any matter which could, conceivably, be linked to organised crime, will have to take even greater steps to know who their client is and the purpose behind the business they are transacting. That will inevitably have an impact upon costs and indeed upon the willingness of firms to take on work.

Thus, firms will also need to think about:

• how they are going to determine when a matter should give them reasonable grounds to suspect,
• how far their enquiries will have to go if they do feel that reasonable grounds exist,
• whether they have sufficient knowledge of the issues surrounding the legal aspects to be able to make a judgment,
• what they are going to do if the client states that there are reasons why they would not want to disclose information to the solicitor – for example information relating to confidential processes,
• the extent to which they need to investigate a client’s claim if they suspect that what the client is telling them is not true,
• who is to be responsible for the cost of investigating a matter if it transpires that the client was not involved in criminal activities,
• how firms are to monitor everyone within the firm to ensure that they are responding to reasonable grounds,
• whether there can be an objective definition of “reasonable” – one person’s reasonable is not always another’s,
• when there is an active relationship that requires looking into, and
• when work they are doing for a person is linked to a criminal activity as opposed to being incidental work for someone who is otherwise involved in criminal acts.

It is clear from the Impact Assessments carried out by government that consideration of the cost and increased work/responsibility for professional advisers has not been taken into account. Indeed, the Overarching Impact Assessment of 2 June states that the provisions of the Bill will impact mainly on the public sector, and that the other main affected groups will only be those public bodies required to make administrative changes.

Firms are advised, therefore, to keep an eye on the progress of the bill and, as soon as the scope of its provisions become clear, ensure that they take steps to update their internal practices.