In an article last fall, U.S. District Judge Jed Rakoff lamented the prevalence and process of plea bargaining in today’s criminal justice system.  While plea bargains currently resolve an estimated 97 percent of federal criminal cases, recent changes to the sentencing guidelines may encourage some white-collar defendants to take their chances at trial. Last week, the U.S. Sentencing Commission announced a number of amendments to the sentencing guidelines for economic crimes.

Several changes, in particular, stress the subjective culpability of individual participants over the nature of the scheme itself. According to the commission’s chief judge, Patti Saris, the amendments “emphasize substantial financial harms to victims rather than simply the mere number of victims and recognize concerns regarding double-counting and over-emphasis on loss.”  Despite objections raised by the Department of Justice (DOJ), the amendments will take effect on November 1, 2015, barring objections from Congress.

Perhaps the most significant change is the commission’s clarification of the term “intended loss.” The current guidelines define “intended loss” as the “pecuniary harm that was intended to result from the offense.” Under this definition, a number of courts have taken an objective approach to this calculation, computing the loss amount based on the foreseeable financial risk created by the scheme. This amendment reorients the inquiry toward the defendant’s subjective culpability. Courts now must calculate intended loss based on “the pecuniary harm the defendant purposely sought to inflict.” While the commission reiterated its commitment to the “underlying principle that the amount of loss involved in the offense should form a major basis of the sentence,” this amendment shifts the focus from the foreseeable results of the scheme to the individual defendant’s actual goal.

A second change reinforces this effort. In their present form, the guidelines allow courts to apply an increased sentence if the scheme involved “sophisticated means.” Courts had applied this sentencing enhancement regardless of whether the individual defendant actually used “sophisticated means.” The commission added another element to this enhancement: Not only must the offense involve sophisticated means, but it also must entail that “the defendant intentionally engaged in or caused the conduct constituting sophisticated means.” In addition to these two changes, the amendments also encourage courts to consider a mitigating role adjustment for lower-level participants, particularly those who received little personal benefit from the scheme. Significantly, the commission has adjusted the calculation of loss amounts for inflation – a step that could reduce some sentences by nearly 25 percent. The amendments also allow courts more flexibility in calculating the losses on stocks and bonds.

Not all the changes are likely to help defendants. The commission also stiffened penalties for fraud schemes that inflict substantial harm on victims. Sentencing enhancements for defendants charged with defrauding large numbers of victims may be applied now when a defendant inflicts severe harm on a smaller number of victims. Nonetheless, these changes are likely to reduce prosecutors’ leverage in plea bargaining with lower-level participants in fraud schemes. The cooperation of these lower-level participants is often necessary for the DOJ to secure convictions of the scheme’s leaders. Prosecutors’ ability to tie defendants to sizeable loss amounts has been one of their most effective tools in securing guilty pleas from defendants who played minor roles in the fraud. With loss amounts now hewing more closely to the defendant’s role – combined with an inflationary adjustment – lower-level defendants may find the risks of going to trial less catastrophic going forward. If this happens, expect to see more generous plea offers for the least culpable offenders come 2016.