What does "no" mean here? 1) or 2)?

The 'no' means he can't afford a lawyer.

Thank you.

PS. I have another question.
Supposed the suspect had 100,000 dollars at his home and the fee for lawyer would be 50,000 dollars, the court decision is that the suspect should pay 100,000 dollars to his victim who told the suspect plainly on the scene "you've knowingly burned my $100,000 money in my desk drawer!". Well, in that case, does the suspect have to say "No, I cannot afford a lawyer"? Or he can say "Yes, I can afford that." Because the lawyer has the priority over the victime to get his lawyer fee first?

There wouldn't be a court decision before going to court, so everything related to a court decision just didn't and wouldn't happen. If the money were burned, there would be no issue. In any case, if there were a judgement for 100,000 and the lawyer had not already been paid, the lawyer would likely be out of luck. Not to worry; I don't know any lawyers that work on promises.

If the 100,000 had been in the victim's desk drawer and the crook stole it, it's likely some asset forfeiture law would come into play. It would not belong to the crook.

Oh wait. This question was for Pearlyluster. She can have it.

No, no...you go ahead!

Honest, Pearly, you're doing great. Don't stop now.