With cuts in legal aid, criminal law practitioners are increasingly finding that clients have to find ways to pay for representation through private funds.
The quandary for solicitors is that if the client is charged with or has previously been convicted of an acquisitive crime, are these private funds criminal property and can they accept them?
Under s.329 of the Proceeds of Crime Act 2002 (POCA), a solicitor will have a defence to possessing known or suspected criminal property where they have provided adequate consideration.
The Crown Prosecution guidelines specifically advise that this defence is aimed at covering payment of legal fees, where the fees charged are of a value appropriate to the service given.
This defence is only available to the person receiving the criminal property, not to the person providing the criminal property. You will not require consent from the Serious Organised Crime Agency (SOCA) to receive the funds.
However, this is not the only consideration for criminal law practitioners.
From an anti-money laundering perspective:
- If you are the firm’s money laundering reporting officer and an internal report is made to you, you will need to consider a s332 Failure to Report offence. You will need to give serious consideration to whether the information giving rise to the suspicion or knowledge is protected by legal professional privilege. In the event that you do decide a report is required, it is important to remember that this is simply a disclosure to SOCA and not a request for consent.
- If the client requests some of the funds to be returned to them or passed to a third party, you will need to consider whether that act will be money laundering and whether you need consent from SOCA.
From a practical perspective:
- You need to establish whether the assets of the client are restrained. Many restraint orders will restrain all assets of an individual, irrespective of whether the asset is listed in the order. To obtain a release of these funds you will need to make an application to the court which issued the order, not to SOCA.
- Where a client is under restraint and funds are already held in a client account, the case of Irwin Mitchell v RCPO makes it clear that you are permitted to apply those funds against a bill for services and transfer them to the office account.
- You should appreciate that where law enforcement agencies seek to trace funds held by your client, you may be issued with a production order for details of the account where the private funds came from. This is particularly likely when friends or family members are contributing, as law enforcement agencies may be looking for other places where criminal funds may have been hidden.
For more information on money laundering offences and the adequate consideration defence, see Chapter 5 of the Anti-money laundering practice note.