On Tuesday 23 October 2012, UK Justice Minister Damian Green announced government plans after additional public consultations to legislate adoption of U.S.-style deferred prosecution agreements (DPAs) for corporate crime. Following an initial consultation held last summer, the government has now concluded that DPAs will provide prosecutors with an effective tool to tackle increasingly complex issues and to “ensure that more unacceptable corporate behaviour is dealt with including through substantial penalties, proper reparation to victims, and measures to prevent future wrongdoing.”

DPAs serve as a form of plea bargaining allowing a company to escape prosecution if it admits wrongdoing, takes corrective action and pays a penalty. Those favoring DPAs argue that they will encourage self-reporting of white-collar crime and ensure that fines are paid in the UK rather than overseas.

Critics of DPAs, on the other hand, have raised concerns about transparency and the tendency to undercut the role of the judiciary. Another worry, raised by the City of London Law Society (the representative body for solicitors) in its response to the initial consultation, was the potential for DPAs to contribute to a public perception that white collar crime will not be treated as seriously as other crime, “which may undermine public confidence in the justice system”.

The Ministry of Justice indicated in its announcement that the contemplated DPA process will be scrutinised by an independent judge and that the threat of prosecution will remain for any organisation that fails to comply fully with an agreement. The law under consideration will require final agreement to be made in open court and published, so that the wrongdoer, the wrongdoing and sanctions for it are “entirely transparent”. Oliver Heald, the UK solicitor general, also said: “I am confident that DPAs will be an invaluable tool for the Serious Fraud Office and the Crown Prosecution Service as they work to combat economic crime. In cases where a company accepts wrongdoing, and is committed to put things right, a DPA will mean that it must comply with stringent conditions to compensate and ensure there are no repeat incidents, whilst avoiding a lengthy and expensive prosecution with the prolonged uncertainty it brings for the victims, blameless employees and others dependent on the fortunes of the company”. He also noted the following caveat: “There will always be cases where the public interest requires a full criminal prosecution and DPAs will allow prosecutors to focus more of their resources on these cases”.

As previously noted in our Alerts on the UK Bribery Act and the recent issuance of new guidance from the Serious Fraud Office, it appears likely that what might otherwise be considered a “take no prisoners” policy of criminal prosecution rather than civil settlement for self-reported violations may well be ripe for a measured approach, using a DPA rather than full prosecution in an appropriate case. Indeed, if DPAs are adopted, there may well be an additional incentive for self-reporting if, as in the U.S., it becomes understood that the first one in the prosecutor’s door may well have a better opportunity to walk out with a more lenient deal.