After years of debate – and despite a hostile judiciary – pressure is building to bring plea bargaining into UK fraud prosecution. But don't expect an easy ride, says Kingsley Napley's Michael Caplan QC

The Serious Fraud Office (SFO) was founded over 20 years ago to combat the increase in, and complexity of, fraud. Its task was straightforward: investigate and, if warranted, prosecute. Fast-forward two decades, and the world has moved on – globalisation, greater freedom of movement and unparalleled technological advances mean fraud prosecution must continue to modernise to keep apace.

Latest estimates are that fraud and corruption costs the British economy over £30bn a year, and the inventiveness of scams never ceases to amaze. The SFO is only too aware of the increasing complexity of criminal prosecution and hence stresses the need for the broadest of armouries in its fight against fraud.

It now encourages self-reporting, whistle-blowing, discussions and negotiations. Still, this is not enough. The chief prosecutor and the Government's latest suggestion is for deferred prosecution agreements (DPAs), the viability of which is currently up for debate.

negotiate-justiceA DPA is an agreement in which the defendant agrees to pay a financial penalty and implement agreed corporate reforms in consideration of the prosecution dropping charges. If those reforms take place, then no prosecution ensues – if not, the prosecution is resurrected. They are not new – having been in operation in the US for some years. However, the US prosecutorial system is very different to the UK's.

The terms of discussion are clear: are DPAs the pragmatic option in a world in which law enforcers wish to bring the dishonest to account but recognise that criminal trials are often too expensive, uncertain and time-consuming? If so, do DPAs fit with the independence of the judiciary, whose task is to impose appropriate sentences following proven criminality, rather than to tacitly sanction a cosy side arrangement?

For defendants, DPAs have considerable attraction – no criminal conviction and certainty of outcome. A large fine and cost may be payable, but boardrooms will usually consider this a reputational and financial saving compared with a high-profile trial. However, concerns necessarily remain.

Some corporates will be more likely to enter into a DPA rather than take their chances before a jury despite having a perfectly proper, but not necessary reputationally attractive, defence to the allegations. Also, for DPAs to take off here, greater certainty over fines would be needed. The US has defined sentencing guidelines; these would need to be developed here.

From the prosecutors' perspective, it is easy to see the benefit of putting together a package deal which would seek to bind courts in the US and here; a sort of deferred prosecutions 'international' arrangement, with an agreed fine and conditions.

The British courts are understandably slow to embrace the change. The judiciary has always been fiercely protective of its independence, and rightly so. To date, judges have made it clear they do not want to be part of plea bargains, negotiated agreements or sanctions of some kind of extra-judicial punishment. They do not see this as their function. They have shown little sympathy for the argument that we live in a world where fraud readily transcends national boundaries and consequently there should be co-operation with law enforcement agencies abroad resulting in agreement and consistency in different jurisdictions.

In this complex world of financial crime, the more opportunity there is to sensibly discuss and negotiate, the better it is for all concerned. After all, the idea of a deferred prosecution little differs from a suspended sentence which will not be imposed if the conditions are complied with and will not result in a criminal prosecution. It is a type of probation – attracting publicity that companies would see as a punishment in itself.

DPAs are, in principle, attractive, and there is a compelling argument that they would be in the public interest. That said, with the SFO strapped for cash and personnel, who will monitor the process and determine what happens in the case of a dispute? However, the greatest difficulty, I suspect, will be in agreeing the guidelines and winning over the judiciary. An interesting debate lies ahead.

Michael Caplan QC is a partner at Kingsley Napley and chair of the City of London Law Society Corporate Crime & Corruption Committee.

Related: Attorney general takes soundings on move to US-style plea bargaining for corporate crime.