What are the arguments against reforming corporate liability?

What are the arguments against reforming corporate liability?

The Law Commission’s consultation on expanding corporate criminal liability is now well underway. Three webinars in its series have been held and the arguments in favour of and against reform are becoming crystallised.

So, what are the main challenges to reform?

First, there is the increased compliance obligations (and associated costs) commensurate on, for example, making an organisation criminally liable for fraud or money laundering by its employees or associates. Global companies with strong risk and compliance functions might be able to absorb the increased resource demands fairly easily but what of the smaller and medium sized organisations? Especially, if the idea behind reform is to level the playing field for them.

Second, there is the question of what the objective really is, and whether the reform of corporate criminal liability will achieve the desired results. Are there alternatives available which will do the same thing but avoid, say, a disproportionate impact on e.g. the employees, suppliers and competitors of an organisation? There are certainly options for strengthening the existing regulatory regime and better resourcing law enforcement but are these enough?

Thirdly, there are arguments based on principle. For example: the function of the criminal law is to deter and appropriately punish criminal conduct. Should it also dictate the way business is done in such a granular way? The acts of a company are parasitic on human involvement and those humans can already be investigated and appropriately punished for their wrongdoing. The identification principle does ensure that, where a company and human act in unison, the former would be caught by the criminal liability of the latter. So, does removing the need to establish this level of relationship take the reach of the criminal law too far?

These and other arguments against reform are looked at in our series on the Law Commission’s discussion paper. See our News Analysis: Expanding corporate criminal liability—the argument against reform, written by  Susannah Cogman, partner, and Hannah Lau, associate, at Herbert Smith Freehills LLP and published on LexisPSL®Corporate Crime.

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About the author:

Gillian is an experienced litigator with a background in fraud, white collar crime, civil forfeiture and other litigation under the Proceeds of Crime Act. She also has experience of regulatory investigations. Gillian has advised clients in all aspects of criminal law but specifically in relation to fraud and corruption allegations, money laundering, and tax evasion.

At her previous firm (Byrne and Partners LLP), Gillian defended national and international proceedings brought by the SFO, FCA, HMRC, NCA and CPS as well as other regulatory bodies. She represented individuals facing serious and complex conspiracy to defraud and corruption allegations (R v Davies & Ors, R v Alstom & Ors) and prosecutions arising out of a number of high-profile Operations: Amazon, Wasabi, Pemberton, Odeum and Skijump. Prior to this, while at the Crown Prosecution Service and Revenue and Customs Prosecution Service, Gillian worked on a number of noteworthy general crime and proceeds of crime cases including R (on the application of Gujra) v CPS (discontinuing private prosecutions), R v L (2011) (jury composition), R v Auton & Ors (cannabis sentencing), RCPO v Taylor (warrants of commitment) and R v May (confiscation and enforcement).