Let private pockets pay

The Maxwell brothers' £4m legal aid bill has caused public outrage. Perhaps, says Roger Smith, the City should be made to look after its own

Last week the Lord Chancellor announced that the legal aid bill in the case involving the two Maxwell brothers, Kevin and Ian, had already passed £4m. The resulting public outrage was both predictable and understandable; it was also misdirected.

The Maxwells' trial begins in around two months' time. The members of the jury are still unchosen. They are reading their papers and watching their televisions, blissfully unaware of the future disruption of their lives. Any comment that might be prejudicial to the Maxwells' fair trial makes what was always going to be a difficult task harder. The Maxwell brothers, like all defendants, are innocent until and unless proved guilty.

The only point behind releasing the extent of the costs can have been criticism. The implication is that £4m for the trial yet to occur of two people who retain the trappings of wealth is too steep. This, in turn, carries one or more of three inferences:the lawyers are milking the system improperly; their clients were wrongly granted legal aid; or serious fraud cases are very expensive. Any hint of the first two is surely improper in the course of an incomplete prosecution. Lord Mackay's statement, if not ill-intentioned, was surely ill-advised.

The seriousness of the underlying issue is not to be denied. Indeed, it is one that Lord Mackay addressed in a consultation paper released just before Christmas. This gave no specific details of cases that have recently given rise to concern. Such reticence was carried to excess. As a result, the paper does not make sufficiently clear what specifically is thought to have gone wrong.

There are certainly now enough examples of apparently wealthy recipients of legal aid to provide some general lessons. Ernest Saunders, the one-time £350,000 a year Guinness chairman, received legal aid for his trial after transferring ownership of his assets, albeit only as the result of judicial intervention.

Asil Nadir ran up £1m in legal aid before he skipped bail and slipped off to Cyprus. The trial of Peter Clowes and his co-defendants cost just under £5m, that of Roger Levitt just under £4m. These are enormous sums paid to help men who seem considerably more wealthy than the many poor people now denied legal aid. Financial eligibility for civil cases has been cut by at least a third since 1979.

The current run of cases demands consideration of how legal aid is administered and regulated. It is not inconceivable that some defendants have lied about their assets in order to obtain legal aid. To that extent, the Lord Chancellor should quietly put up or shut up. If there is a suspicion of fraud, let it be prosecuted. On the other hand, it may be that minds sufficiently sophisticated to have run rings round the Inland Revenue for decades can eat the current legal aid rules for breakfast. For instance, many apparently wealthy defendants sustain their affluent lifestyle through the remarkable generosity of friends and relatives. If there are doubts about the ownership of resources given or lent to legal aid claimants, Lord Mackay need do no more than borrow Peter Lilley's copy of the income support legislation. This contains pages of anti-avoidance provisions that could be transferred wholesale.

The real issue may, however, relate more to the problems of serious fraud than legal aid. Serious fraud is proving hard to control, as is evident from the disarray of the Serious Fraud Office, the large number of acquittals, and the non-custodial sentences that have convicted fraudsters toasting their judges in champagne. It is not surprising that the problems extend to the defence of those taken through the criminal process. The cases are expensive; they require highly sophisticated lawyers; many defendants seem to sustain their millionaire lifestyles while the millions of pounds consumed by their lawyers are paid from the public purse.

There are no easy answers. The ultimate sanction, withdrawal of legal aid, just makes things worse. The health of unrepresented defendants tends to break down under the strain of a long trial; judges find cases harder to control; juries become sympathetic to defendants left alone amid herds of browsing QCs; convictions become harder to obtain. Before the media got on to the problem, Lord Mackay's department was actually suggesting that those who decline legal representation in serious fraud cases shouldhave it thrust upon them, in the form of a court-appointed advocate.

The conundrum raised by these cases has to be cracked. The City of London, after all, literally trades on its integrity. A substantial part of our economy depends on its ability to keep its nose clean. A possible new approach emerges from looking at serious fraud cases as a category of their own, part of the good housekeeping to be undertaken on behalf of our international trading reputation. After all, Robert Maxwell, branded by an independent inquiry 20 years before his death as unfit for office in a public company, was fostered and feted by the City's institutions. It must, therefore, be worth exploring whether the costs of dealing with serious fraud should be regarded as part of the City's regulatory mechanisms. Its regulators could impose subscriptions at a high enough level to meet both prosecution and defence of City-related serious fraud when it is discovered. The role of the state would be reduced to taking the decision to commence criminal investigation or prosecution.

This would be a form of privatisation considerably less problematic than that of British Rail. Defendants could be granted legal aid without adverse public comment. Taxpayers could sleep easy in their beds. Above all, the City would have considerable incentive in preventing serious fraud.

The author is the director of the Legal Action Group.