A system of “plea negotiation”, in which defendants in fraud cases can mitigate their sentences by agreeing to plead guilty before trial, could be in place by the autumn, according to the senior QC who heads the Government’s working group on the subject.

The system could also make it easier for victims of fraud to get their money back by allowing defendants to negotiate restitution in return for less time in jail.

Stephen Hockman, QC, who was chairman of the Bar Council in 2006, leads the working party that provided guidelines on how plea negotiation could be introduced into the law in England and Wales. He and his colleagues have just embarked on a process of consultation with banks and other interested parties, which will reach its conclusion on July 3.

Speaking exclusively to The Times, Mr Hockman was keen to distinguish plea negotiation from the plea bargaining that takes place in the United States, of which the suggested framework here is merely a “distant cousin”, he says. In America, defendants sometimes are coerced into pleading guilty because of the huge sentences that are available to judges on a guilty verdict, which make it too dangerous to contemplate a full trial.

The proposals for England and Wales have the advantage that they do not require parliamentary legislation and can be introduced relatively easily under existing law. This means that they could be in place by the autumn, with the first negotiations months later.

“It should increase the number of cases that can be brought successfully. Above all, I think it will make investigation and trial of fraud cases more efficient.” This would be to the advantage of both the prosecution, whether the Serious Fraud Office, the Fraud Prosecution Service or any other authority, and the defendant. At present fraud cases can drag on for years with a bewildering amount of detail.

Mr Hockman said that his working party had taken the opinions of a range of involved parties, including banks and the Financial Services Authority (FSA), during its deliberations.

The proposals over plea negotiation are part of a wider-ranging Fraud Review but were given fresh emphasis by the case of the NatWest Three, who were jailed in America in February for their part in a fraud involving Enron, the collapsed energy business.

They were sentenced to more than three years each after a plea bargaining process that was seen as swifter and more efficient than any trial they could have faced in the UK.

Mr Hockman says that the accepted figure for the total loss to the British economy from fraud is £20 billion a year, coincidentally equal to the entire invisible earnings from overseas business of the British legal profession.

“What we have at the moment is a system in which negotiating over charges already takes place,” he said. In any legal trial, both sides get together beforehand to decide what charges should be laid – for example, if the prosecution might accept a manslaughter charge rather than murder should the defendant be prepared to plead guilty. “What doesn’t happen at the moment is any explicit decision about sentencing.”

Under the framework proposed by Mr Hockman and his colleagues, before any charges are brought the prosecution and the defendant and his team will get together and discuss what they might be and, if the defendant is prepared to plead guilty to them, what sentence is appropriate. This may or may not include jail and the other forms of sentencing available to the judge, such as restitution, return of money defrauded, confiscation of assets or disqualification as a director.

“We would envisage that the negotiated package presented to the court would include reference to the length of any prison term and reference to the implementation of all other sentencing powers.” Once this package is agreed, it is put to the judge. The court, though, has the option of throwing it out and insisting on a full trial if the terms agreed are too lenient. Likewise, the defendant has the option to refuse the package and go for a full trial.

The proposals, Mr Hockman says, offer three advantages. They give the reasonable certainty of the result of the case, they mean that the defendant does not risk facing further charges subsequently and they give greater certainty of the eventual sentence.

Similar negotiations take place outside the judicial system by the FSA and HM Revenue & Customs. At present, the amount a jail sentence can be reduced for a guilty plea is restricted to a third, and this limit would be kept. But plea negotiation would make it easier for prosecuting authorities to decide which cases were worth proceeding with and which could prove an expensive waste of time.

There is, as yet, no intention of extending the concept beyond fraud or of ditching juries in such trials should cases come to court. The framework has the blessing of most lawyers, Mr Hockman believes, the Government, the Attorney-General and business. “I’m hopeful that this will get a good send-off,” he said.

Pros and cons

Against:

— The risk that the prosecution will give up too easily, accepting charges or sentences that do not reflect the gravity of the offence

— The risk that the defence will give up too easily and be tempted into a lenient package when the defendant is not guilty

— The risk that the court may be unwilling to derail a deal between prosecution and defence even if the judge feels he or she should

For:

— Plea negotiation is an option, not an obligation, for either side

— Greater likelihood of consensus, thus shortening what could be a lengthy and expensive process

— The court retains the full power to decide whether the charges and the suggested sentencing are appropriate

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