7 October Flashcards
A few months ago, a solicitor helped a client purchase a vineyard in Tuscany. The solicitor had performed appropriate customer due diligence and everything appeared to be in order. Recently, however, the solicitor learned that the client had been arrested for running an elaborate internet scam, and it looks likely that the purchase was paid for using the proceeds of crime. The solicitor is concerned they might have committed the offence of concealing under the Proceeds of Crime Act 2002 (‘POCA’).
Which of the following best describes the test for whether the solicitor had the necessary mental state to have committed the offence of concealing under POCA?
A subjective test applies. To be guilty, the solicitor must have actually known or suspected the purchase money represented a benefit from criminal conduct.(B) The necessary mental state for the solicitor to have committed the offence of concealing under POCA is that the solicitor must have actually known or suspected the purchase money represented a benefit from criminal conduct. This is a subjective test. (A) is incorrect because it does not include that the solicitor can have the necessary mental state if they suspect that the criminal property represents a benefit from criminal conduct. (C) and (D) are incorrect because they describe an objective test and because they are incomplete in that either knowledge or suspicion can satisfy the test. (E) is incorrect because a subjective test must be used for concealing. The objective test is used in relation to the indirect offence of failure to report.
A small law firm’s offices are located in a building that was originally constructed as a private residence in the 19th century, with a set of seven stone steps leading to the entrance. The firm has been in the same offices for nearly 50 years. The firm is representing several members of a family in relation to their estate planning needs. One of the clients, who has a disability and uses a wheelchair, wishes to attend a meeting being held at the firm’s offices. The junior solicitor who is organising the meeting in question goes to the managing partner to ask about the firm’s obligations under the Equality Act 2010 (the ‘Act’).
Which of the following best describes the firm’s obligations to the client under the Act?
The firm must make any reasonable adjustments to its premises to ensure that the disabled client is not placed at a substantial disadvantage compared to those who are not disabled, taking into account the cost and resources of the firm.(E) The firm has an obligation to make reasonable adjustments to its premises to allow the client to access them, taking into account the cost and resources of the firm. If a disabled client or employee is placed at a substantial disadvantage compared to non-disabled clients or employees, then the firm has an obligation to provide reasonable adjustments. In assessing what is reasonable, the firm can take into account its resources and the likely cost of the adjustment. (A) is incorrect because, as explained above, the firm has an obligation to make reasonable adjustments. (B) is incorrect as the Act applies to the provision of legal services, and firms have a legal obligation to provide reasonable adjustments to ensure that disabled clients and employees are not placed at a substantial disadvantage compared to those who are not disabled. Neither the age of the building nor how long the firm has been located there negate this obligation. (C) is incorrect for multiple reasons. There is no obligation to make substantial adjustments, only reasonable ones. Also, the client (or, when relevant, the employee) cannot be asked to incur the expense of reasonable adjustments. (D) is incorrect because it goes too far. The firm is not required to make any necessary adjustments, only those which are reasonable. Not all adjustments will be reasonable in the circumstances. Some may be too costly or impractical. Further, the standard is that the disabled individual must not be placed at a substantial disadvantage rather than at ‘any disadvantage’
A newly qualified associate solicitor is excited to work with a well-known partner to help a client purchase several pieces of art from a dealer in Morocco. A few weeks before the purchase is set to be finalised, the partner tells the associate that they have come to suspect that the client may be using the proceeds from drug trafficking to fund the purchase. The partner explains that they’ve filed a suspicious activity report in both of their names with the firm’s nominated officer who is currently looking into the matter. Afraid of being implicated in money laundering less than a year into their legal career, the associate deletes several emails from the firm’s server that might suggest they knew or should have known about the client’s wrongdoing.
Which of the following best describes the offence which the newly qualified associate solicitor may have committed under the Proceeds of Crime Act 2002 (‘POCA’)?
Prejudicing an investigation.(C) Prejudicing an investigation. The newly qualified associate solicitor may have committed the offence of prejudicing an investigation, and no defence is available. The offence of prejudicing an investigation is committed when a person knows or suspects that a money laundering, confiscation, or civil recovery investigation is being carried out and makes a disclosure to any person that is likely to prejudice the investigation or falsifies, conceals, or destroys documents relevant to the investigation. There does not need to be any intent to prejudice the investigation. In this case, the associate knows that an investigation is taking place because the partner told them so, and they attempted to destroy documents relevant to the investigation. The defence of not knowing or suspecting that the documents were relevant or that the disclosure would be prejudicial is not available. The associate purposefully destroyed documents which they thought were relevant. (A) is incorrect because the offence of concealment is when a person conceals, disguises, converts, or transfers criminal property. It is one of the “direct” involvement offences. Here, the concealment is not of criminal property but of the associate’s involvement in the transaction. As explained above, the relevant offence here is prejudicing an investigation. (B) is incorrect because the relevant offence is prejudicing the investigation. In any event, a suspicious activity report has been made in the name of the partner and the associate so there is no failure to report. (D) is incorrect because nothing indicates the newly qualified solicitor committed the offence of tipping off. Tipping off occurs when a person discloses to a third person that a suspicious activity report has been made to authorities, or discloses an investigation to a third person. (E) is incorrect because the relevant offence is prejudicing an investigation, not failure to report. The fact that a report has been made does not relieve the junior solicitor of the duty to avoid committing the offence of prejudicing an investigation. QUESTION ID
Since there are almost always some solicitors working late, a large law firm has a small team of administrative assistants who work from 6pm to 2am. Because it is harder to find experienced personnel willing to work this late shift, the firm pays a shift allowance equal to 20% of the hourly rate to these workers. Whilst the majority of the administrative assistants who work traditional hours are age 40 or over, the majority of those on the late shift are under 40.
Which of the following statements best describes whether the firm can justify this policy under the Equality Act 2010?
The policy is indirect age discrimination but could be justified if offering a shift premium is a proportionate means of achieving the legitimate aim of covering the late shift.(A) The firm’s policy is an example of indirect discrimination on the grounds of the protected characteristic of age but could be justified. Indirect discrimination is when a policy or provision is apparently neutral but on closer examination puts individuals with a protected characteristic at a disadvantage compared with individuals who do not have that characteristic. The firm’s policy is apparently neutral in that all employees who work the late shift get the shift premium. However, the policy puts older employees at a disadvantage as the majority of the employees working the late shift who are eligible for the premium pay are under age 40. Indirect discrimination can be justified if the firm uses a proportionate means to achieve a legitimate aim. Here, it is likely that offering premium pay to those willing to work unsociable hours is a proportionate means of achieving the aim of having administrative assistants available to solicitors who are working late. (B) is incorrect because the wording of the potential justification in this answer choice is incorrect. To justify a policy that is indirectly discriminatory on the basis of age, the employer must show that there is a legitimate aim and the policy is a proportionate means of achieving that aim. (C) and (D) are incorrect because, as explained above, the policy is indirectly, not directly, discriminatory. (D) is also wrong because direct discrimination on the grounds of age can be justified if the employer can show it is a proportionate means of achieving a legitimate aim, but there must usually be some wider public policy reason for the discrimination. (E) is incorrect because, as explained above, the policy is indirectly discriminatory on the basis of age. QUESTION ID: LGS157
A couple wish to retire after operating a small business for 35 years. Since their children aren’t interested in taking over, they have decided to close shop. A solicitor is helping the couple wind up the business, including ensuring the company complies with all of its contractual obligations and pays all outstanding taxes. The couple have also asked the solicitor for advice on selling the company’s assets, which include a leasehold on office space, office equipment, and shares in some private companies. Neither the solicitor nor their firm is authorised by the Financial Conduct Authority to carry on a ‘regulated activity’ as defined in the Financial Services and Markets Act 2000 and related secondary legislation.
Which of the following best describes whether the solicitor can give the advice requested?
The solicitor can provide the advice because although the shares are a specified investment, the advice is a necessary part of other services, namely winding up the business.(B) The solicitor can provide the advice because although the shares are a specified investment, the advice is a necessary part of other services, namely assisting with winding up the business. The general prohibition states that no person may carry on a regulated activity unless they are authorised or exempt from authorisation. A regulated activity is an activity specified in the Regulated Activities Order that relates to an investment specified in the Order, is carried out in the course of business, and to which no exclusions apply. Here, the solicitor has been asked to advise (a specified activity) on the sale of company assets including shares (a specified investment). However, the solicitor is not carrying out a regulated activity because they may rely on the necessary exclusion. A solicitor may conduct activities in relation to specified investments if the activity may reasonably be regarded as a necessary part of performing legal services which do not otherwise consist of carrying on a regulated activity. The advice on the sale of all of the company assets is a necessary part of the service of winding up. (A) is incorrect because the company shares are a specified investment. Notably, shares are a specified investment whether the relevant company is public or private. (C) is incorrect because the solicitor is acting in business. The solicitor is acting for the client as part of an ongoing matter for which the client has engaged the solicitor. (D) is incorrect because although the company shares are a specified investment, the solicitor may rely on the necessary exclusion, which means they are not carrying on a regulated activity. (E) is incorrect. The necessary exclusion is available for the specified activity of advising, but it is not available for the specified activity of managing
Question
Two months ago, a solicitor helped a client purchase several works of art from a gallery in Florence, Italy. The solicitor billed the client for the legal work, and the client promptly paid the bill using a UK bank account. Last week, the police contacted the solicitor and informed them that the client had been arrested for drug trafficking. The police believe that the account that the client used to pay the legal bill contained proceeds from the illegal drug sales.
Which of the following best describes whether the solicitor has committed an offence under the Proceeds of Crime Act 2002 (‘POCA’)?
ResponsesPress Enter or Space to submit the answer
The solicitor may have committed the offence of acquisition, use, or possession but could rely on the adequate consideration defence.(B) By accepting the client’s payment, the solicitor may have committed the offence of acquisition, use, or possession but could rely on the adequate consideration defence. Under POCA, it is an offence if a person acquires, uses, or has possession of criminal property. However, a defence is available if the property was acquired, used, or possessed for adequate consideration. The defence applies when professional advisers, such as solicitors, receive money for or on account of costs. It is most likely to arise in situations in which a solicitor provides legal services as part of a legitimate arm’s length transaction but unbeknownst to them is paid from a bank account which contains the proceeds of crime. Here, the solicitor acquired funds from the client from an account which contained the proceeds of criminal activity. However, the solicitor acted for the client on the purchase of artwork, a legitimate arm’s length transaction. There is no suggestion that the solicitor had any suspicion about the client or the client’s payment prior to contact by the police. Therefore, the solicitor could rely on the adequate consideration defence. (A) is incorrect as no tipping off has taken place here. Tipping off occurs when a person discloses to a third person that a suspicious activity report has been made to authorities, or discloses an investigation to a third person. (C) is incorrect because, as stated, the adequate consideration defence is available here. (D) is incorrect because the potential offence here is acquisition, use, or possession, not arrangement. The solicitor has not facilitated the acquisition of criminal property by someone else, but rather acquired criminal property themselves. (E) is incorrect because an offence may have been committed here and there is also a defence available, as explained abov
The managing partner of a medium size law firm monitors several popular websites for reviews regarding the firm. Whilst reviews of the firm’s services have been positive, recently several posts have criticised the unprofessional appearance of certain staff members. In response, the firm revises its dress code to require that all employees appear neat and professional at all times. The new policy lists several specific rules, including that hair dye be limited to natural colours and all tattoos be covered. After receiving both written and oral warnings, a receptionist is dismissed for continuing to come to work with his hair dyed bright blue and wearing shirts that reveal tattoos on both forearms. The former employee asserts that his appearance is an important part of his personal identity and threatens to bring a legal claim against the firm.
Which of the following best describes the legal position under the Equality Act 2010?
The policy does not violate the Equality Act 2010 because appearance is not a protected characteristic.(A) The Equality Act 2010 covers discrimination in relation to the protected characteristics of marriage/civil partnership, age, sex, disability, gender re-assignment, pregnancy and maternity, race, religion or belief, and sexual orientation. Here, the employee was dismissed for violating the firm’s policy on appearance. Appearance is not a protected characteristic so the firm’s policy is not discriminatory on its face or as applied to this employee. (B), (C), and (D) are incorrect because, as explained above, appearance is not a protected characteristic. (E) is incorrect because there is no indication that the employee’s appearance was related to religion or belief. If his hair colour and visible tattoos had been for religious reasons, then there may have been indirect discrimination on the grounds of religion or belief. Indirect discrimination can be justified if the policy is a proportionate means of achieving a legitimate aim.QUESTION ID: LGS167
An individual contacted a solicitor because they believed their employer had discriminated against them based on their sexual orientation. After discussing funding options, the solicitor and the client entered into a conditional fee agreement. According to the agreement, if the claim against the employer is successful, the solicitor will be entitled to their standard rate of £250 per hour plus a success fee of 20%. After the solicitor spent 40 hours working on the case, the client is victorious, and the court awards them £70,000. The court also orders the employer to pay the client’s costs.
Which of the following best describes the costs position?
ResponsesPress Enter or Space to submit the answer
The client will pay the solicitor £2,000, and the employer will pay the solicitor £10,000.(E) The client will pay the solicitor £2,000, and the employer will pay the solicitor £10,000. A conditional fee agreement provides that if a case is successful, the solicitor can charge their fee to the client with a percentage uplift (the success fee) beyond the normal fees charged. If the claim is successful and costs are awarded, the other side is liable for the solicitor’s normal fees and the client is liable for the success fee. Here, there is a conditional fee agreement in place with a 20% success fee. The claim has been successful, and costs have been awarded in the client’s favour. The solicitor has done 40 hours of work at £250 per hour, which totals £10,000. This is the solicitor’s normal fee and can be recovered from the employer since the employer has been ordered to pay the client’s costs. The success fee of £50 per hour (20% of £250) is payable by the client, totalling £2,000 (£50 x 40 hours). (A) is incorrect. The success fee in a conditional fee arrangement is calculated as a percentage of the solicitor’s hourly rate, not as a percentage of the damages awarded. If the solicitor and client had wanted the solicitor to be paid a portion of the client’s recovery, they should have entered into a damages-based agreement. (B) is incorrect because the other side has been ordered to pay the client’s costs, so the client will be liable for only the success fee. (C) is incorrect because the employer is liable for only the client’s costs at the normal hourly rate. The client is liable for the success fee. (D) is incorrect because the figures are transposed. As explained above, the employer will pay £10,000 for the solicitor’s normal fees and the client will pay £2,000 for the success fee. QUESTION ID: LGS143
To honour Women’s History Month and diversify its client base, a firm of solicitors offer a special discount to female clients who are purchasing property or starting a business. A male client who has worked with the firm in the past is looking to start a small company. He is unhappy that he will have to pay more for legal services than a female client. The firm seeks advice as to whether the discount is discriminatory under the Equality Act 2010.
Which of the following best describes the firm’s special discount?
The special discount is directly discriminatory on the grounds of sex and cannot be justified.(C) The special discount is directly discriminatory on the grounds of the protected characteristic of sex because the firm is expressly treating male clients less favourably than female clients. Direct discrimination is treating one person less favourably than another because of a protected characteristic. The firm cannot justify actions that are directly discriminatory on the grounds of sex. Only direct discrimination on the grounds of age or disability may be justified. (A) is incorrect because, as explained above, the special discount is directly discriminatory. The male client is being treated less favourably than the female clients. (B) is incorrect. Regardless of whether celebrating Women’s History Month and diversifying the client base are legitimate reasons, this is direct discrimination on the grounds of sex which cannot be justified. (D) and (E) are incorrect because the special offer is direct, not indirect, discrimination. Indirect discrimination may be justified if an employer can show the action is a proportionate means of achieving a legitimate aim, but direct discrimination on the grounds of sex cannot be justified, even if the firm has a potentially legitimate reason. QUESTION ID: LGS160
After working for a company for 10 years, a carpenter decides to set up shop as a sole trader. The carpenter seeks out a solicitor to help the carpenter set up a business. The carpenter informs the solicitor that he desires to set up business as a sole trader, but asks the solicitor to advise him on other possible business types, including their advantages and disadvantages.
The carpenter also tells the solicitor that whenever his company sent him out on a job, the customer would have signed a set of standard terms and conditions. The carpenter asks the solicitor whether she could perform that work as well.
The solicitor tells the carpenter that she can perform the work that he is seeking, but that before she can begin, they must talk about the fees that she will charge the carpenter.
Which of the following funding arrangements would be most suitable in these circumstances?
A fixed fee.(C) A fixed fee would be the most suitable funding arrangement in these circumstances. In non-litigation matters, the most common form of funding is private funding. As this is a non-litigation matter, a fixed fee, whereby the client privately funds the matter, is the best option here. There will be a private retainer between the client and the solicitor which sets the fixed fee. (A) is not suitable because this is a non-litigation matter for which third-party funding would not be available. (B) is incorrect because there is no ‘event’ which needs to be covered by insurance. (D) and (E) are incorrect because this is a non-litigation matter, so neither a conditional fee agreement nor a damages-based agreement is appropriate. Q
A solicitor is preparing for a meeting with a new client. The client owns a popular independent shop and wants to bring a legal claim against a supplier for breach of contract. Although this meeting is likely to focus on the dispute, a positive outcome might lead the client to use the solicitor for additional legal work.
Which of the following best describes what the solicitor is obligated to provide to the client with regard to the costs of bringing the civil claim?
The solicitor should provide an explanation of relevant funding mechanisms, an initial estimate of the likely costs, and updated estimates throughout the case.(B) The solicitor should explain only relevant funding mechanisms and provide the client with an estimate of the likely costs at the start of the case, which the solicitor should update throughout the case. The SRA standards and regulations require solicitors to be transparent on the issue of costs, and these matters must be discussed with the client at the beginning of the case and updated throughout the case. In addition, the solicitor must explain and advise the client on relevant funding mechanisms. (A) is incorrect as the solicitor need not explain all funding mechanisms, but rather only methods which are relevant and applicable on the facts. For example, there is no need to confuse a client by discussing legal aid or before-the-event coverage when the solicitor knows those options will not be available for this claim. (C) and (D) are incorrect because the solicitor must explain relevant methods of funding rather than just estimate costs. (D) is also incorrect because the solicitor must update the estimate as the case progresses. (E) is incorrect because the discussion need only focus on the current matter. Discussing all potential future matters is likely to be overwhelming (not to mention speculative) and not useful to the client.QUESTION ID: LGS140
QUESTION ID: LGS140
A solicitor has been helping a client purchase several parcels of land which the client plans to develop into a large theme park. Whilst the client is away on holiday, the solicitor discovers a potential problem with the title for one of the lots and decides to purchase defective title insurance on the client’s behalf. Neither the solicitor nor their firm are authorised by the Financial Conduct Authority to carry on a ‘regulated activity’ as defined in the Financial Services and Markets Act 2000 (‘FSMA’) and related secondary legislation.
By purchasing the defective title insurance, has the solicitor carried out a specified activity under FSMA ?
Yes, the solicitor has carried out the specified activity of dealing as agent.B) Yes, the solicitor has carried out the specified activity of dealing as agent. Under the general prohibition of FSMA, a solicitor may not carry on regulated activity in the UK unless they are authorised or exempt from authorisation. A regulated activity is defined as an activity specified in the Regulated Activities Order relating to an investment specified in the Order, which is carried out in the course of business, and to which no exclusions apply. The specified activities might be remembered with the mnemonic device ‘ADAMS’. Activities = Advising, Dealing as an agent, Arranging, Managing, and Safeguarding. Dealing as agent is buying, selling, subscribing for, or underwriting investments as agent for a client. Here, the solicitor purchased an insurance policy on the client’s behalf, which is the specified activity of dealing as agent. Thus, (A) is incorrect. (C) is incorrect because the solicitor was not managing, that is, managing assets belonging to another person in circumstances which involve the exercise of discretion. (D) is incorrect because the solicitor was not advising, that is, giving advice to the client which the client would then act upon. (E) is incorrect because the solicitor was not making arrangements, that is, arranging for another person to buy, sell, subscribe for, or underwrite a particular investment. As explained above, in purchasing defective title insurance, the solicitor was dealing on behalf of the client. Q
Question
A woman and a solicitor have been neighbours for many years. Having recently received a substantial cash inheritance from her mother, the woman makes an appointment to meet with the solicitor at the solicitor’s office. The woman engages the solicitor to help her purchase land in the country town where her mother grew up so she can build a holiday home for her family. The woman also wants to purchase some Premium Bonds as an investment for her two young children. Neither the solicitor nor their firm is authorised by the Financial Conduct Authority to carry on a ‘regulated activity’ as defined in the Financial Services and Markets Act 2000 and related secondary legislation.
Can the solicitor give the requested advice without breaching the general prohibition against carrying on a regulated activity?
Yes, the solicitor can give the requested advice because the solicitor would not be advising the client on a specified investment.(A) Yes, the solicitor can give the requested advice because the solicitor would not be advising the client on a specified investment. The solicitor would not be breaching the general prohibition against carrying on a regulated activity because they would not be advising the client on a specified investment. A regulated activity is defined as an activity specified in the Regulated Activities Order relating to an investment specified in the Order, which is carried out in the course of business, and to which no exclusions apply. Here, the solicitor has been asked to advise (a specified activity) on using the inheritance to purchase Premium Bonds and land. Because neither land nor national savings products (such as Premium Bonds) are specified investments, the solicitor would not be not carrying out a regulated activity in breach of the general prohibition. (B) is incorrect because, as explained above, Premium Bonds and land are not specified investments. There is no regulated activity here so the solicitor would not need to rely on any exemption. (C) is incorrect because the solicitor would be acting in the course of business. Although they are neighbours, the woman has engaged the solicitor to provide legal services. (D) is incorrect because, as explained above, Premium Bonds and land are not specified investments, so the solicitor may provide advice on them without breaching the general prohibition. (E) is incorrect because solicitors can provide investment advice on non-specified investments without authorisation or exemption.
