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Legal Services Flashcards

1
Q

What is the general prohibition?

A

No person may carry on regulated activity in the UK unless they are authorised or exempt from authorisation

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2
Q

What is the designated professional body exemption?

A

If there is a regulated activity, the financial services are marketing act exempts incidental activity of members of certain designated professional bodies, which includes the SRA.

This is a limited exception, if a solicitor provides financial services which:
- arise out of or are complementary to legal services provided and
- the manner and scope of the provision is incidental to the provision of legal advice and
- the solicitor does not receive any compensation without accounting to the client for it the service will be exempted.

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3
Q

What are regulated activities?

A

Advising
- advise on prospects

Dealing as agent
- deal on behalf of client eg signing docs, purchasing on behalf

Arranging
- arranging for sale etc, may be through stockbroker

Managing
- exercise of discretion

Safeguarding
- act as trustee/safeguarding
- looking after

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4
Q

What is the required mental state for a person to commit the offence of concealing?

A

Actually know or suspect that proceeds were from criminal conduct.

Subjectively know or suspect

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5
Q

What factors do firms need to take into account when deciding what level of indemnity insurance?

A
  • firms client value
  • value of matters taken on each year
  • historical claims of firm
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6
Q

When can direct discrimination be justified?

A

Only where in relation to age or disability and is a proportionate means of achieving a legitimate aim

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7
Q

Who is responsible for a solicitors training in regard to ML?

A

The firm

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8
Q

Can a firm directly discriminate?

A

Generally no,

Exception for age and disability if proportionate means of achieving legitimate aim

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9
Q

What is the required mental stage for a solicitor to commit the offence of failure to report?

A

Should have known or been suspicious
- objective test

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10
Q

What are the protected characteristics under the equality act?

A
  • age
  • sex
  • disability
  • marriage/CP status
  • gender reassignment
  • maternity
  • religion
  • sexual orientation
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11
Q

What are direct offences under POCA?

A

Arrangement

Acquisition, use or possession

Concealment

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12
Q

How long must records be kept of nominated officers investigation?

A

5 years after end of relationship

Includes discussions, advice sought & received,

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13
Q

How does a solicitor commit the offence of tipping off?

A

Making a disclosure which may prejudice any investigations into the client

Indirect offence

Discloser to 3rd party that SAR or other report made

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14
Q

In a firm, what staff need to have ML training?

A
  • all relevant staff
  • client facing or senior support staff
  • solicitors
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15
Q

Does a freelance solicitor need to have indemnity insurance?

A

Only if carrying out reserved legal activities

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16
Q

What are the methods for funding?

A

Private funding

Conditional fee arrangement

Damaged based agreement

Third party funding

Before the event insurance

After the event insurance

Union cover

Civil legal aid

Criminal legal aid

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17
Q

What are the features of a conditional fee arrangement?

A
  • agree if succeed, solicitor entitled to standard fees (recoverable from other side plus disbursements) plus % success fee (uplift) payable by client
  • if nothing recovered, client may have to pay other sides costs and disbursements and their own disbursements.
  • success fee cannot be more than 100% of usual fee
  • agreement should contain definition of success and when payable/what is payable if lose
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18
Q

What are the features of a damaged based agreement?

A
  • agree that if successful, solicitor entitled to % of damages regardless of their fee & disbursements (these are recovered from other side)
  • % cannot exceed 25% of total award in a PI case and 50% in a non PI case
  • if lose, solicitor gets nothing
19
Q

What is third party funding?

A

Third party pays solicitors costs and disbursements

If nothing recovered, client usually owes nothing.

If win, fee agreed with funder

20
Q

What is before the event insurance?

A

Insurance purchased before litigation, includes agreement to pay solicitors fees & disbursements

Often included in car insurance policies

Insurer may require use of designated solicitor

21
Q

What is after the event insurance?

A

Insurance taken out after event giving rise to claim

Insurer agrees to pay disbursements and other sides cost if lose

Often used alongside conditional fee agreement

22
Q

What is civil legal aid?

A

Available if meet financial means test and merits test

Only available for some types of claim.
Housing, family, debt

23
Q

What is criminal legal aid?

A

Subject to means test
- u18s and if receive benefits automagically eligible

Merits test
- if it is in the interests of justice, whether will lose job or able to present own case.

Considers household income savings etc

24
Q

What is a reasonable adjustment under EA 2010?

A

Firms must make reasonable adjustments if disabled employee or client at a substantial disadvantage compared to non disabled employee or client

Cannot pass expense onto client or employee

If cost outweighs benefit, not reasonable

25
What are features of the offence of concealment?
Committed if: - subjectively knows or suspects that they are concealing, converting, or transferring criminal property or removing form UK. - extends to concealing source or location, or nature or owner. - settlements, ADR, negotiation not concealment - Offence doesn’t cover ordinary litigation but does cover sham litigation Defences: - authorised disclosure made to nominated officer before concealing transaction took place - authorised disclosure can be made after takes place but must be good reason for delay - doesn’t violate duty of confidentiality -
26
What are features of the offence of arranging?
Committed if: - knows or suspects that they are facilitating the acquisition, retention, use or control of criminal property on behalf of another person Can include: - setting up limited company to funnel proceeds of crime - misuse of funds - using cash for major sales - creating trusts, charities, companies and management Defences - authorised disclosure
27
What are features of the offence of acquisition, use or possession of criminal property?
Committed if: - Know or suspect it is criminal property Defences - authorised disclosure - took property in good faith with adequate consideration Includes: Money paid to firm from criminal account If knows or suspects, defence not available
28
What are features of the offence of failure to report?
Indirect offence If solicitor should have known or ought to have suspected, offence to fail to report suspicions. Test = whether reasonable person would be suspicious - includes any information coming to them in COB Look out for: - transfers between accounts - buying investment and cashing in - overpayment of tax - deposit and asking for returns Defences - lack of training but firm may be liable - information came to solicitor in privileged circumstance eg in connecting with giving legal advice, or in connections with legal proceedings or contemplated.
29
What are features of the offence of tipping off?
Committed if: - disclosure made to third party that SAR made or discloses that investigation underway. Defence - colleague working in same matter or - another legal profession to prevent ML
30
What is a regulated activity in relation to specific investment?
Regulated activities: Advising Dealing as agent Arranging Managing Safeguarding Specified investments: - insurance contracts - shares in company or other securities - debentures - mortgage contracts - pension schemes - funeral plans NOT premium bonds or land Limited to activities carried on by way of business.
31
What is an exclusion under the regulated activities order?
If a solicitors activities fall with the exclusions, even if carrying out a specific activity, will not fall foul if exempt Exclusions: - Takeover exclusion - Acting as trustee, nominee or personal representative - Introducing or acting through an authorised person - Reasonably regarded as necessary exclusion
32
When does the take over exclusion apply?
Solicitor can act as agent, arrange or advise with respect to client who is buying or selling 50% or more of the voting shares of the company or where the object of the transaction otherwise may be reasonable regarded as taking control of the daily running.
33
What does the exclusion of acting as trustee, nominee or personal representative include?
Solicitor can advice, arrange, manage and safeguard when acting as trustee, nominee or PR
34
What does the exclusion of introducing or acting through an authorised person include? When does this apply?
Can introduce client to person authorised by FCA in order for client to reduce advice May arrange or act as agent with respect to specific investment if client received advice from authorised person and the solicitor assists client in acting on the advice. But not available is received any payment or commission from authorised person which is no accounted for by the client.
35
What does the reasonably regarded as necessary exclusion include?
Won’t violate if carry on activity that would be regulated activity in relation to specified investment may be excluded if regarded as necessary part of providing legal services. Can’t be used for managing assets or if activity billed separately from main legal advice.
36
What is the incidental activities of members of designated professional bodies exemption?
Limited exemption. - If solicitor provides financial services which arise out of or are complementary to legal services provided - the manner and scale of provision is incidental to provision of legal advice - and the solicitor does not receive compensation for this from anyone else without accounting to client for it - services will be exempt Can be used when solicitor is advising on insurance policy May be used where: - solicitor member of SRA and advice is incidental to advice/legal situation What counts as determining whether activity is incidental? - looks at whether incidental to work as a whole and also whether incidental to clients particular matter.
37
What additional requirements must a firm comply with to carry out activities in relation to insurance policies?
Common in conveyancing, probate and litigation where require insurance. Firm need to: - notify SRA that they are carrying out activities in relation to insurance policies - be put on a register provider - appoint insurance distribution officer
38
What is the minimum amount of indemnity insurance a firm must have?
- Minimum cover for firm = £2 or £3m depending on leave structure - Must ensure adequate and appropriate Freelance solicitors - if no reserved legal activities, don’t need authorisation and no need for indemnity - can carry out reserved legal activity without authorising sole practitioner firm by SRA. Needs to have 3 years post qualification experience and take out and maintain adequate and appropriate indemnity insurance. No need to minimum terms but need to notify that acting as freelance solicitor Solicitors in non commercial roles - eg charities - must ensure body takes out and maintains indemnity insurance with adequate and appropriate coverage.
39
What firms do the money laundering regulations 2017 apply to?
Not all, if carry out in scope work (most) Includes: conveyancing, corporate finance work, trust creation, operation and management work, company formation etc Need to identify client in any matter
40
What does ss158 and 159 of the Equality act allow to do?
Positive action to promote or advance and individual based on their protected characteristics at the expense of another
41
What steps need to be taken under CDD for a law firm partnership?
Beneficial owners of company/firm should be identified (owns more than 25%) and individual members. If partnership, need to verify beneficial owner, each individual, trading address, existence of firm, nature and name of business. If members regulated professionals, no need to separately verify but if not, need to.
42
When can a law firm carry out a specified activity in relation to insurance contracts?
No exclusions apply to insurance Must be exempt To be exempt - work must be incidental and complementary to work - notify SRA and be put on register of providers - appoint insurance distribution officer
43
Can the provisions in relation to a conflict be amended by articles?
Yes, can enable director to vote and count in quorum but still must make a s177 declaration (unless exception applies eg other directors aware or service contract or cannot reasonably give rise to a conflict

SQE1 (23 decks)

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