Insider Trading Suspects’ Defense Stymied by U.K. Legal Aid Cuts

Four men charged with insider trading have lost their trial lawyers because of cuts to legal aid in the U.K., days before they were scheduled to enter pleas, according to four people with knowledge of the case.

The men, who include former Deutsche Bank AG managing director Martyn Dodgson, are among six defendants charged in the U.K.’s biggest insider-trading investigation, known as Operation Tabernula, who will appear in court in London tomorrow. The trial lawyers, known as barristers, withdrew because of cuts to government funding of legal cases that came into effect earlier this week, said the people, who asked not to be named because the matter is private.

The U.K. government overhauled legal aid as part of austerity measures to trim the deficit. They’re trying to cut 350 million pounds ($570 million) from the annual budget for legal aid of about 2 billion pounds, according to the U.K. Ministry of Justice. The issue in the Tabernula case highlights the difficulties defendants with even less resources may face.

“The cuts to fees will lead to the destruction of the criminal justice system,” said Nigel Lithman, chairman of the Criminal Bar Association. “There will be no barristers either coming into the profession or prepared to continue doing criminal legal aid work. There will be no quality people representing the everyday person.”

The cuts to legal aid include a 30 percent reduction in fees for lawyers in high-cost cases, such as Tabernula, that are expected to run for a long period of time and require a large number of lawyers.

Barristers, Solicitors

Grant Harrison, a former managing director at Altium Capital Ltd., Iraj Parvizi, a former director at Aria Capital Ltd., Dodgson, and three other men are all scheduled to enter pleas tomorrow, though that may get pushed back because of the lack of barristers, the people said.

Parvizi and one of the other men, Benjamin Anderson, have kept their trial lawyers because they’re able to pay them, according to the people. All six still have solicitors, lawyers who don’t usually argue before courts in the U.K.

One of the people, a lawyer for one of the defendants, said they’ve asked about 60 barristers to take the case on the reduced legal-aid budget, without success.

The Financial Conduct Authority has arrested about 10 men in the case, starting in March 2010. Dodgson, Parvizi and two of the other men were charged in October 2012 with conspiracy to insider trade across a four-year period. The agency said at the time that the men made more than 3 million pounds on improper trades. Julian Rifat, who worked for Moore Capital Management LLC, and Clive Roberts, who was the head of European sales trading at Exane BNP Paribas, were also arrested in 2010 and are still under investigation.

‘Well-Rewarded’

Solicitors for the defendants and Chris Hamilton, a spokesman for the FCA, declined to comment. The four barristers who are withdrawing also declined to comment. There’s no suggestion that the barristers acted inappropriately in dropping the case.

Lithman is calling on barristers to protest the aid cuts by not attending court on the morning of Jan. 6, 2014, the first day the criminal courts are in session after the holiday break. The majority of the Criminal Bar Association’s 5,000 members plan to demonstrate, he said.

Tooks Chambers, a London-based set of trial lawyers with 90 percent of its work publicly-funded, is closing later this month as a “direct result of government policies on legal aid,” the firm said in a statement on its website.

Barristers in high-cost cases are “well-rewarded,” the Ministry of Justice said in an e-mailed statement.

“Around two-thirds receive fee incomes of more than 100,000 pounds, and often well over that,” the government said. “Even after our changes they would continue to be generously paid - for both this work and for more general advocacy work in criminal courts.”

To contact the reporter on this story: Suzi Ring in London at sring5@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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