As part of the changes brought about by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (the Act), from October 2012 Defence Costs Orders will no longer be available to defendant organisations. The Act makes changes to the Prosecution of Offences Act 1985 to the effect that organisations defending criminal proceedings will have to pay their own legal costs regardless of whether or not they successfully defend a case.

This change is likely to have a significant impact on the approach that organisations take to regulatory enforcement, such as cases brought by the Health and Safety Executive and Environment Agency. The prospect of a large legal bill, even if successful, may well cause some organisations to plead guilty despite having a reasonable defence.

It will also increase the importance of insurance cover for regulatory investigations and proceedings. With the safety net of defence costs orders gone, the use of insurance for legal costs in criminal proceedings is bound to increase. Such cover should also allow for legal advice during the early stages of an investigation when a lot can be done to reduce the chances of a subsequent prosecution.

Coming at a time when organisations are also facing fees for investigations by regulatory bodies, organisations should revisit their own insurance policies to ensure that they are adequately covered and able to take decisions on the merits rather than economics of a particular case.