Ethics 3: business requirements

Question 1

What are the requirements solicitors or firms must follow in respect to referrals and introductions?

Answer 1

Counts for referrals or introductions both ways

Clients must be informed of interest
- finical or other interest

Fee Sharing Agreements must be in writing
- and clients must be informed

No Payments in Respect to Criminal Proceedings

Question 2

When are referral fees prohibited?

Answer 2

Payment of receipt of referral fees for:
- criminal proceedings;
- personal injury claims;
- death claims: and
- ancillary claims arising out of same circumstances (eg. uninsured loss recovery claim resulting from the accident)

Question 3

Who bears the burden of proof that solicitor or firm has/has not made/received prohibited referral fee?

Answer 3

If if appears to SRA that you have done soothes will treat the payment as such

Unless you demonstrate otherwise

(so good idea to keep records and shit of this)

Question 4

What is a separate business according to the SRA?

Answer 4

Business:
- which you own, or are owned by, or actively participate in or control or are otherwise connected with; and

• is not an authorised body, an authorised non-SRA firm or overseas practice

Question 5

What actions involving a ‘separate business’ requires clients consent?

Answer 5

• referring, recommending or introducing the client to a separate business, or
• dividing a clients matter between you and a separate business or allowing the clients matter to be so divided

Question 6

What is the requirement that solicitors must only associated with authorised bodies?

Answer 6

• must not be a manager, employee, member or interest holder
• of business that has name which includes ‘solicitors’ or describes its work in ways that suggests it is a law firm
• unless it is an authorised body by SRA

Question 7

What are filing requirements for solicitors and firms?

Answer 7

Must deliver to SRA an annual return in prescribed form

Question 8

Who is accountable for compliance with SRA?

Answer 8

Firms are accountable for work carried out by employees and other persons with whom the firm contracts.

Managers are responsible jointly and severally

Question 9

What are a firms monitoring requirements?

Answer 9

Must monitor financial stability and business viability.
- must also monitor and manage all material risks to the business including those which may arise fro the firms connected practices

Ceasing Operations
- if firm becomes aware that it will cease to operate must effect an orderly wind-down

Question 10

What are different types conflicts of interest?

Answer 10

Own interest conflict
- conflict between solicitor/firm and client

Conflict of Interest
- conflict between two or more current clients

Question 11

On what matters can a conflict arise?

Answer 11

On the:
- same matter

• related matter (relates to same asset or liability)

Question 12

If there is a conflict can another solicitor in a firm act?

Answer 12

Generally no conflict covers the firm

Question 13

At what stage of engaging a client should you consider a conflict?

Answer 13

Should consider conflict/significant risk of conflict at beginning of the matter (before retainer)

Can continue to consider as a going concern

Question 14

Can clients consent to a conflict?

Answer 14

No

Question 15

What should you do if a conflict arises (before and after retainer)?

Answer 15

Before Retainer
- decline to act
- can act for client whose interest they can best represent and not for other client who may conflict

After Retainer
- should inform all clients
- may decided to decline to continue acting for all clients
- can continue to act for one client but must be wary of if their duty of confidentiality is at risk

Question 16

How might a solicitor be able to continue to act for both parties if a conflict arises?

Answer 16

Limited Retainer
- only acts on aspects where there is no conflict and advise client to take independent advice on conflicted areas
- scope of work must be closely defined in client care letter

Question 17

What must a solicitor/firm do in relation to an own interest conflict?

Answer 17

If there is a conflict or a significant risk of one

Must decline to act

Question 18

What might give rise to an own interest conflict?

Answer 18

Any financial interest in clients business

Solicitor is beneficiary in the clients will
- extends to solicitors family or member of firm

Personal Relationship
- client is in claim against someone solicitor has personal relationship with

Commercial Relationship
-in business adverse to clients business

Employment claims of former employees
- if prospective client was former employees of solicitors firm and is bringing action against firm

Solicitors own conduct in question
- if client asks advice for rectifying mistake made by that solicitor in matter and one of the options is bringing professional negligence claim

Question 19

What must a solicitor/firm do in relation to a conflict of interest?

Answer 19

Must not act if there is conflict or significant risk of conflict

Unless exception applies
- substantially common interest
- competing for same objective exception

Question 20

When might the substantially common interest apply and what are the requirements/

Answer 20

Where clients have:
- clear common purpose in relation to a matter or particular aspect of a matter
- and there is a strong consensus on how it should be achieved

Conditions
- clients have giving informed consent, given or evidenced in writing
- where appropriate effective safeguards are put in place to protect confidential information
- you are satisfied that it is reasonable to act for all clients

Question 21

When might competing for same objective exception apply to conflict of interest?

Answer 21

• two or more clients
• are completing for an objective which if attained by one will make it unattainable for other

May apply to asset, contract or business opportunity

Conditions
- clients have giving informed consent, given or evidenced in writing
- where appropriate effective safeguards are put in place to protect confidential information
- you are satisfied that it is reasonable to act for all clients

Question 22

What should a solicitor consider to be satisfied that it is reasonable to act in a conflict of interests?

Answer 22

• whether the clients will benefit (ie. cheaper or more convenient)
• whether there will be extensive negotiations between clients
• whether there is an imbalance in knowledge or bargaining power between clients

Question 23

What is the duty of confidentiality? who owes it?

Answer 23

you and everyone at the firm must keep the affairs of clients confidential unless
- disclosure is required or permitted by law
- the client consent

Question 24

When is disclosure permitted in relation to duty of confidentiality?

Answer 24

• client consist
• disclosing will to an attorney appointed under lasting power of attorney (unless power forbids this)
• solicitor is being used by client to perpetrate a crime or fraud
• statutory requirements (eg tax affairs)
• statutory duty (money laundering)
• court order or police warrant

Question 25

When might a breach of duty of confidentiality be justified?

Answer 25

• disclosure to prevent the commission of a crime that will result in serious bodily harm
• disclosure where the client has indicated they intend to commit suicide or serious self-harm
• to protect a child or vulnerable adult

HOWEVER
- not justified after the event

Question 26

How long does duty of confidentiality last?

Answer 26

Continues despite end of retainer or death of client.

So should not disclose contents of will without consent of PR

Question 27

Does duty of confidentiality prevent firms outsourcing services?

Answer 27

No the requirements of effective systems and controls extends to them.

Must only outsource services when you are satisfied that provider has taken all appropriate steps to ensure your clients confidential information will be protected.

Question 28

What are the consequences of breaching duty of confidentiality?

Answer 28

Disciplinary action by SRA or SDT

Client may sue for breach of duty

Question 29

What is the duty of disclosure to clients?

Answer 29

Must ensure that client is aware of all information material to retainer of which the individual lawyer/firm is aware.

Question 30

What are the exceptions to duty to disclose to client?

Answer 30

• client gives informed consent, in writing or evidenced in writing
• you have reason to believe the dislosure would cause serious physical or mental injury to a person
• legal restrictions imposed of national security of the prevention of a firm (AML, anti-terror)
• you only have knowledge of information because it is contained in privileged documents which have been mistakenly disclosed to you

Question 31

When might duty of confidentiality and duty of disclosure conflict?

Answer 31

Must not act for A in matter where A has adverse interest to current or former client for whom your firm has confidential information which is material to A in that matter

Exceptions
- effective measures have been taken such as safeguards; OR

• B gives informed consent given or evidenced in writing including to any measures taken to protect their information