Ethics and Professional Conduct Flashcards
An accountant has referred their client to a solicitor for legal advice on a company tax matter. The solicitor and the accountant agreed in writing that the solicitor would bill the client for the solicitor’s part of the work. When the solicitor receives the money from the client, the solicitor will pay 25% of the fees to the accountant for making the introduction. The solicitor has sent the client an email informing them of the arrangement.
Do the rules of professional conduct allow this arrangement between the solicitor and the accountant?
Yes, because all requirements for the fee sharing arrangement have been met.
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The SRA Codes of Conduct provide that all fee sharing agreements with a third party must be in writing. Additionally, the client must be informed of any fee sharing arrangement that is relevant to their matter. The arrangement between the solicitor and the accountant meets these requirements. (A) is incorrect because written consent from the client is not required; it is sufficient to inform the client of the fee sharing arrangement. (B) is incorrect because fee sharing arrangements are generally permitted. (D) is a completely incorrect statement. There are restrictions on payments for referrals in matters involving personal injury and wrongful death, and where the client is subject to criminal proceedings. Fee sharing arrangements and payments for referrals are generally permitted in other types of matters, such as the tax matter here. (E) is incorrect because a solicitor can enter into a fee sharing arrangement with any third party, not just with other lawyers.
A clothing company wants a solicitor to act for them in an employment discrimination matter. However, a conflict check reveals that a partner at a different branch office of the firm has acted for the clothing company’s main competitor in property matters for many years.
Which of the following statements best describes whether the solicitor should act for the clothing company in the employment discrimination matter?
The solicitor is not prohibited from acting because the firm acts for the competitor in unrelated matters. However, the firm may choose to decline to act for the clothing company due to professional embarrassment.
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(C) A conflict (or significant risk of conflict) relates to the same matter or a related matter. A general business interest is not sufficiently ‘related’ to create a conflict situation. A firm of solicitors could therefore act for two companies whose main business was the same, provided that it was on unrelated issues. So, the firm here could act in an employment discrimination matter for the clothing company and in conveyancing matters for the competitor without a conflict arising. However, even if there is no significant risk of conflict, the solicitor or firm may decline to act in any event due to professional embarrassment. (A) and (B) are incorrect because there is no conflict or significant risk of conflict in this situation. (D) is incorrect because it is irrelevant that the partner who acts for the competitor is in a different branch office. Even if the partner were in the same branch office, there would be no conflict. (E) is incorrect because the concept of ‘competing for the same objective’ is relevant only when there is a conflict of interest (for example, when two companies who are competing for the same asset want the same firm to act for them in their separate bids for that asset). As discussed, there is no conflict of interest between the clothing company and its competitor because the firm would be acting for the clients in unrelated matters.
A solicitor acting in a client’s matter needs to pass the client’s file to financial advisers to deal with investment elements of the matter. The solicitor happens to own a firm of financial advisers, and the solicitor intends to pass the client’s file to this firm. The solicitor believes it is in the client’s best interests to use this firm of financial advisers.
Do the rules of professional conduct allow the solicitor to pass the client’s file to the firm of financial advisers?
Yes, provided the solicitor obtains the client’s informed consent to do this.
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(B) A solicitor is permitted to refer the clients to their separate business as long as they have the client’s informed consent to do this. Informed consent means the solicitor should tell the client about their interest in the separate business. (A) and (C) are incorrect because informed consent from the client is required. (D) and (E) are incorrect because referring a client to a separate business is permitted with informed consent, and there are no other facts indicating that the solicitor is acting without integrity, or that this would create a conflict of interest.
Two international companies are long-time clients of a firm. Each client intends to bid for the same third company and has approached the firm to act on its behalf in the process. Separate teams of individuals within the firm would act for each client, and each client’s team would not have access to the other client’s files. After the firm fully explains the situation to the clients and reasonably believes that the clients understand the issues and risks involved, each client confirms in writing that it wants the firm to act.
The firm may act provided it is satisfied that it is reasonable to act for both clients.
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(B) This is a situation where the conflict can be resolved under the ‘competing for the same objective’ exception, which applies where two or more clients are competing for an objective which, if attained by one client, will make that objective unattainable to the other(s). Here the firm can resolve the conflict under this exception because the clients are two companies competing to take over the same third company. A firm may act for both clients in this situation where: (1) the clients have given informed consent, given or evidenced in writing, to the firm acting; (2) where appropriate, the firm puts in place effective safeguards to protect the clients’ confidential information; and (3) the firm is satisfied that it is reasonable to act for all the clients. These conditions are met here. (A) is incorrect because the ‘competing for the same objective’ exception may be applicable to this conflict. (C) is incorrect because even though the ‘substantially common interest’ exception is inapplicable to this situation, the separate ‘competing for the same objective’ exception may be used. (D) is incorrect because it is not required that the clients take independent advice. (E) is incorrect because the conflict rules generally apply to the entire firm, not individuals within it. Whether separate teams of solicitors will be working on the matters is irrelevant to whether a conflict exists.
A wheelchair-bound client visits his solicitor for an important meeting. At the end of the matter the client sees the following disbursement on his bill: “Hire of wheelchair ramp: £250 plus VAT”. Which of the following statements best describes the firm’s position?
The firm should not have charged the disbursement because it is not entitled to pass on the cost of making reasonable adjustments.
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(D) A firm must make reasonable adjustments to ensure that disabled clients, employees, or managers are not placed at a substantial disadvantage compared to those who are not disabled, and the firm must not pass on the costs of these adjustments to those persons. (A) is incorrect because even if it was in the client care letter, the firm is not entitled to make this charge. (B) is incorrect because the entire charge is prohibited. (C) is incorrect because the issue is whether a firm can pass on the costs of reasonable adjustments. Additionally, choosing not to meet with the client in person because of the client’s disability could place the client at a substantial disadvantage compared to clients who are not disabled. (E) is incorrect because as previously stated, the firm cannot pass on the costs of the reasonable adjustment.
A new solicitor makes a serious but unintentional error on a client’s file. The new solicitor’s supervising partner was on holiday when the new solicitor made the error, and she had told the new solicitor to handle things himself and use his best judgment while she was away.
Did the partner breach the SRA Code of Conduct for Solicitors, RELs and RFLs?
Yes, because the partner failed to effectively supervise the new solicitor’s work.
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(B) In acting as a supervisor or manager to others providing legal services, a solicitor must remain accountable for the work carried out through them and effectively supervise work being done for clients. Here the supervising partner went on holiday and failed to ensure that the work being done on the client’s matter would be supervised during that time. (A) is incorrect. This is not the best answer because the seriousness of the error is not the basis of the partner’s breach. The partner breached the Code by failing to ensure that the work being carried out for the client was properly supervised. (C) is incorrect. Although the new solicitor is responsible for his error, the supervising partner also breached the Code by failing to supervise the new solicitor’s work. (D) is incorrect. The partner had a duty to ensure that the new solicitor’s work was properly supervised, and complying with this duty may have prevented the error. (E) is incorrect because it is immaterial that the new solicitor did not intend to make an error.
A solicitor’s husband and the husband’s business partner want to instruct the solicitor in setting up their new business venture. Although the husband and the business partner are amicable on most issues, there will be some negotiation involved.
Which of the following statements best describes whether the solicitor should act?
The solicitor should decline to act because there is a significant risk of an own interest conflict.
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(B) The solicitor’s own personal interest and relationship with the husband create an own interest conflict in this matter (or a significant risk of one) and so this solicitor should decline to act. Of concern is that the solicitor could be tempted to act in her husband’s favour in the negotiations. The solicitor also has a financial interest in the matter because she is married to the husband. (A) is incorrect because the solicitor must decline to act due to the own interest conflict. (C) is incorrect because the ‘substantially common interest’ exception is only relevant to conflicts between clients, and here the main concern is the solicitor’s own interest conflict. (D) and (E) are incorrect because the solicitor cannot act even with consent.
A newly qualified solicitor is in court. The opponent’s representative fails to mention a case which is relevant and supports their position. The solicitor explains to his supervisor that the other representative has made this mistake and inadvertently weakened their case. The supervisor tells him to forget about the omission.
Does the solicitor have a duty to draw the court’s attention to the case?
Yes, because the case is relevant and likely to have a material effect on the outcome of the proceedings.
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(A) The SRA Code of Conduct for Solicitors, RELs and RFLs provides that a solicitor must draw the court’s attention to relevant cases and statutory provisions, and any procedural irregularities of which they are aware, and which are likely to have a material effect on the outcome of the proceedings. This is the position even if it would harm the position of the solicitor’s client, and this is because of the overarching ethical requirement in the SRA Principles to act in a way that upholds the constitutional principle of the rules of law and the proper administration of justice. For this reason, answers (C), (D), and (E) are incorrect. (B) is incorrect because a solicitor is obligated to comply with their regulatory duties even if their supervisor disagrees.
A firm of solicitors is trying to expand its business. The firm distributes leaflets to every home in the city and places an advert on a billboard. The firm also sends letters to victims of a road traffic accident to inform them of the firm’s expertise in handling personal injury claims. Finally, the firm telephones certain former clients to ask them whether they would like to update their estate plans. All information provided by the firm is true and not misleading.
Which action by the firm (if any) violated the SRA Standards and Regulations?
Sending letters to the victims of the road traffic accident.
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(E) A solicitor or firm must not make unsolicited approaches to members of the public to advertise its legal services. This means that a firm cannot advertise its services in a targeted or intrusive way. Sending letters to particular people (the victims of the accident) based on information known about them is a targeted approach and is therefore prohibited. (A) is incorrect for this reason. (B) is incorrect because, as an exception to the general rule, a solicitor or firm can make unsolicited approaches to current and former clients. (C) is incorrect because public advertising (such as on billboards, on the radio, in a newspaper, online, or on a social media platform) is generally allowed. (D) is incorrect because the SRA has stated that distributing leaflets to every home in a large geographic area is permitted because this is not targeted or intrusive.
A solicitor is acting for a client in an appeal against a taxation determination by Her Majesty’s Revenue and Customs (‘HMRC’). The client wants the solicitor to appear for the client at the appeal hearing at the First Tier Tribunal (‘Taxation’), where the appeal is to be heard. The client gives the solicitor relevant details of his assets and income, including overseas assets, but instructs the solicitor not to mention the overseas assets. These are relevant to his taxation position.
Which of the following statements best describes what the solicitor should do?
The solicitor should attempt to convince the client to change his instructions and allow the solicitor to include the overseas assets in his case. If the client refuses, the solicitor should cease to act.
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(D) A solicitor has a duty not to mislead the court. This standard can be violated by omission. Thus, if a solicitor becomes aware that a client is attempting to mislead the court in any material matter, the solicitor should refuse to continue acting for the client unless the client agrees to disclose the truth. (C) is therefore incorrect. (A) is incorrect because there is no duty on the solicitor to tell the HMRC. (B) is incorrect because the solicitor should first try to persuade the client to disclose the truth. (E) is incorrect because there is no conflict of interest here.
Six months ago, a solicitor stole a substantial amount of money from her firm’s clients while struggling with a gambling addiction. The solicitor has recently completed a rehabilitation programme and is very remorseful. The solicitor considers informing the firm’s compliance officer for legal practice (‘COLP’) of what she has done.
Which of the following statements best describes the solicitor’s obligations under the SRA Standards and Regulations?
The solicitor must report the matter to the COLP on the understanding that the COLP will report the matter to the SRA.
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(A) If a solicitor is aware that any person or body (including themselves) has committed a serious breach of a regulatory arrangement, they must ensure that a prompt report is made to the SRA or other approved regulator, as appropriate. Any obligation to provide information to the SRA is satisfied if the solicitor provides the information to their firm’s COLP (compliance officer for legal practice) or COFA (compliance officer for finance and administration), as and where appropriate, on the understanding that they will provide the information to the SRA. (B) is incorrect because a solicitor meets their obligation by reporting the matter to the COLP on the understanding the COLP will make a report. The solicitor is not required to make their own report to the SRA (unless there is some indication that the COLP will not make a report). (C) is incorrect because a solicitor must report their own serious breaches, as well as the serious breaches of other solicitors. (D) is incorrect because once the solicitor provides information to the COLP on the understanding that the COLP will report the matter to the SRA, the solicitor has no duty to check that a report was made. (E) is incorrect. If there has been a serious breach and the COLP has declined to make a report, the solicitor has a duty to report the breach to the SRA themselves.
A company has approached a solicitor to act on its behalf in respect of exploring a potential acquisition of a rival business. The solicitor’s spouse is an executive at the rival business.
Under what circumstances should the solicitor act for the company?
None, because this is an own interest conflict and there is an absolute prohibition on acting.
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(A) A solicitor must not act if there is an own interest conflict or a significant risk of an own interest conflict, such as where the solicitor’s spouse is an executive at the same business the company potentially wants to acquire. The acquisition could affect the spouse’s employment or finances and the solicitor’s judgment could be affected. (B), (C), (D), and (E) are incorrect because an own interest conflict is an absolute bar to acting.
A solicitor is acting for a client who owns a leasehold property and is negotiating with the freeholder for an extension of the lease. In correspondence with the freeholder’s solicitor, the solicitor promises to pay the freeholder’s legal fees, and the freeholder reasonably relies on this promise. However, the client subsequently refuses to put the solicitor in funds to make this payment.
Does the solicitor have a duty under the SRA Standards and Regulations to make a payment in these circumstances?
Yes, because the promise is an undertaking to make the payment and is binding on the solicitor.
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(C) The SRA Code of Conduct for Solicitors, RELs and RFLs provides that a solicitor must perform all undertakings given by them within the agreed timescale, or within a reasonable time if there is no agreed timescale. The solicitor has given an undertaking to the freeholder’s solicitor and is bound by it notwithstanding that he is not put in funds to make the payment by his client. (A) is incorrect as the statement has regulatory effect. (B) is incorrect because the solicitor has given an undertaking and is now obliged to fulfil their promise to make payment. For this reason, a solicitor is not under any duty to give an undertaking and in these circumstances should have asked their client to put them in funds prior to giving the undertaking. (D) is incorrect because an undertaking does not have to be in writing to be binding. (E) is incorrect because the solicitor, not the client, gave the undertaking to the freeholder’s solicitor. Therefore, the undertaking is a matter between the two solicitors.
A solicitor has a longstanding client who has recently lost capacity and now lives in a care home. The client’s son has a power of attorney and seeks the solicitor’s advice on registering it now that the client is not well enough to manage her own affairs. In the course of registering the power of attorney, the son asks the solicitor to act in the sale of the client’s house to his own daughter (the client’s granddaughter). The son says that he will not be getting a valuation for the property because he knows that the client intended to gift part of the value of the property to the granddaughter.
Which of the following statements best describes the position?
The original client remains the client, and the solicitor should not carry out the son’s instructions because they may be contrary to the client’s best interests.
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(C) The solicitor should take care to ensure that they are free to protect the interests of the elderly client. This is because a solicitor must only act for clients on instructions from the client, or from someone properly authorised to provide instructions on their behalf. If the solicitor has reason to suspect that the authorised person’s instructions do not represent the client’s wishes, the solicitor must not act unless the solicitor is satisfied that they do. Where the client’s wishes cannot be ascertained, and the solicitor has legal authority to act for the client despite this fact, the solicitor’s overriding obligation is to protect the client’s best interests. Here, because a sale at an undervalue is contrary to the client’s best interests, the solicitor should not carry on the transaction. Instead, the solicitor should advise the son of the son’s obligations as an attorney and explain the proper mechanism for dealing with this issue (for example, making an application to the Court of Protection). (A) is incorrect because the original client remains a client despite the son’s power of attorney, and because the transaction does not appear to be in the client’s best interests. (B) is incorrect because the original client remains the client; the son is merely the client’s agent. Because the transaction is not in the client’s best interests, the solicitor should not carry out the son’s instructions. (D) is incorrect because a retainer does not end when a client loses capacity; the solicitor has an ongoing duty to act in the client’s best interests. (E) is incorrect because the solicitor should not act in this situation even though the son has a power of attorney; the overriding obligation is to protect the client’s interests.
A solicitor is acting for a client on the purchase of a property. The deposit monies are coming from the client’s mother. The solicitor is contacted by the mother, who instructs the solicitor to register a charge on the property in favour of the mother when the purchase takes place.
Which of the following statements best explains what the solicitor should do?
The solicitor should advise the mother that she cannot accept her instructions because of a conflict of interest and send her away for independent legal advice.
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(C) The solicitor in this case would not be able to act for both the mother and the client who is purchasing the property because of the risk of a conflict of interest. The solicitor should therefore ensure that no retainer arises by implication and should refer the mother to take separate legal advice on how to protect her investment in the property. (A) is incorrect because taking on the mother as a client in this matter would be a conflict of interest. (B) is incorrect because a conflict of interest covers the entire firm. (D) is incorrect. Although there are two exceptions which allow a solicitor to proceed with a matter despite a conflict between clients, neither exception applies here, and the client’s informed consent will not solve the problem. (E) is incorrect because there can be a conflict of interest between family members.
