Legal Services

Question 1

What is the SRA requirement regarding indemnity insurance for firms?

Answer 1

Insurance must be adequate and proportionate in relation to the firm and the clientele they have. SRA outlines a minimum coverage of £2mil or £3mil per claim depending on the legal structed of the regulated entity

Question 2

What is the SRA requirement for insurance for freelance solicitors?

Answer 2

If carrying out a reserved legal activity, a freelance solicitor must have the following requirements:

3 years PQE
No hold any client monies
Insurance must be adequate and proportionate

Freelance solicitors do need the minimum term of insurance set by SRA, but must notify SRA that they are freelance.

Question 3

What is the SRA requirement for insurance for solicitors in non-commercial bodies i.e charities?

Answer 3

Solicitor must ensure that the body takes out adequate and appropriate insurance

Question 4

What is private retainer/private funding in non-litigation matters?

Answer 4

It is when a client pays for legal representation themselves, forming a fee arrangement as part of the contract with their solicitor.

Question 5

What is fixed fee financing in legal services?

Answer 5

It is an agreement between the solicitor and client at the outset for a set fee, often used in domestic conveyancing and other practice areas.

Question 6

Describe a conditional fee agreement.

Answer 6

Known as “no win, no fee,” it allows clients to avoid paying fees if unsuccessful but pay standard fees (usually recoverable from losing party) and a success fee (usually from client at a agreed percentage) if they win.

Question 7

What is a damages-based agreement?

Answer 7

If successful, the solicitor receives a percentage of the damages awarded; if unsuccessful, the solicitor receives no payment

Question 8

What does third-party funding entail in litigation?

Answer 8

A third party covers legal costs and disbursements, often for a percentage profit, but not the opponent’s costs.

Question 9

What is “before the event” insurance?

Answer 9

“Before the event” insurance is purchased in advance, often part of car or home insurance, covering solicitors legal costs. Usually associated with ‘no win, no fee’ arrangement.

Question 10

What is “after the event” insurance?

Answer 10

“After the event” insurance is taken post-incident to cover disbursements and opponent’s costs if the claimant loses. Usually associated with conditional fee arrangement

Question 11

What is union cover in legal funding?

Answer 11

Union members may receive legal expenses coverage as part of their union subscription

Question 12

What are the two main tests for eligibility under Civil Legal Aid?

Answer 12

The financial means test (based on income, savings, and living costs) and the merits test (determining good prospects for success).

Question 13

What are the protected characteristics?

Answer 13

Age
Disability
Gender Reassignment
Marriage and Civil partnership
Pregnancy and Maternity
Race
Religion and Relief
Sex
Sexual orientation

Question 14

Can protected characteristics ever be justified?

Answer 14

Generally, there is no justification for direct discrimination. Exception can be age and disability if the company can show it is proportionate means of achieving a legitimate aim.

For indirect discrimination, it is open for the discriminator to show any indirect discrimination by showing it is a proportionate means of achieving a legitimate aim.

Question 15

Reasonable adjustments in workplace

Answer 15

Employers are required to make reasonable adjustments for disabled clients/employers so that they are not at a substantial disadvantage to others. The costs of adjustments must not be passed on and they should only be reasonable.

Question 16

What is money laundering?

Answer 16

Money laundering is the process of converting proceeds from crime into assets that appear legitimate. It often involves schemes to obscure the origins of illegal income

Question 17

What is money laundering?

Answer 17

Money laundering is the process of converting proceeds from crime into assets that appear legitimate. It often involves schemes to obscure the origins of illegal income.

Question 18

What are the three stages of money laundering?

Answer 18

The three stages are:

Placement: Introducing illegal money into the financial system.
Layering: Obscuring its origins through complex transactions.
Integration: Making the funds appear legitimate by using them in lawful investments or businesses.

Question 19

What is concealing?

Answer 19

Concealing is a principal money laundering offence. It involves actions like hiding, disguising, converting, transferring, or removing criminal property from the UK to make it difficult to trace or identify.

Question 20

Defences Against Concealing Charges?

Answer 20

Authorized Disclosure- If the individual makes a timely report to authorities (e.g., NCA) about the transfer.

Privilege - Legal professionals can invoke privilege if their actions involved confidential legal advice, but not if they knowingly participate in money laundering.

Question 21

What is arrangements?

Answer 21

Arrangements refer to situations where a person is involved in activities that they know or suspect facilitate the acquisition, retention, use, or control of criminal property by or on behalf of another person.

Question 22

Defences Against Arrangement Offences?

Answer 22

Authorized Disclosure - Reporting the suspicion to the National Crime Agency (NCA) before proceeding with the arrangement.

Privilege - Actions taken under legal professional privilege, such as providing legal advice, may offer protection unless the solicitor knows the property is criminal.

Question 23

What is acquisition, Use, or Possession in Money Laundering?

Answer 23

Under the Proceeds of Crime Act 2002 (POCA), it is an offence to acquire, use, or possess criminal property. This involves knowingly handling property that represents the proceeds of criminal conduct.

Question 24

What actions are covered under acquisition, use or possession?

Answer 24

Acquisition: Receiving or obtaining criminal property, either directly or indirectly.
Use: Utilizing criminal property for any purpose.
Possession: Having physical custody or control over criminal property.

Question 25

Defences Against the Offence of acquisition, use, or possession?

Answer 25

Authorized Disclosure - reporting the property to the National Crime Agency (NCA) before handling it.

Adequate Consideration - a person is not guilty if they provide goods or services for the property in good faith, for a fair value, and without knowledge or suspicion of its criminal origin.

This defence does not apply if the goods or services help facilitate further criminal conduct

Question 26

What legislation governs money laundering in the UK?

Answer 26

The Proceeds of Crime Act 2002 (POCA) and the Money Laundering, Terrorist Financing, and Transfer of Funds Regulations 2017.

Question 27

Define the term “predicate offence” under POCA.

Answer 27

A predicate offence is the criminal activity that generates the property being laundered. A conviction for this offence is not necessary to prosecute money laundering.

Question 28

What is the role of the Money Laundering Reporting Officer (MLRO)?

Answer 28

The MLRO is responsible for receiving reports of suspicious activities, filing SARs with the National Crime Agency (NCA), and ensuring compliance with anti-money laundering laws.

Question 29

What are the penalties for money laundering under POCA?

Answer 29

Up to 14 years of imprisonment and/or an unlimited fine

Question 30

Name some red flags that might indicate money laundering.

Answer 30

Examples include:

Using multiple bank accounts in different countries.
Unusual or suspicious cash deposits.
Overpayment of taxes or large cash transactions.
Funds returned after a failed transaction without a clear reason.

Question 31

What is “tipping off,” and why is it significant?

Answer 31

Tipping off occurs when someone discloses that a Suspicious Activity Report (SAR) has been filed or an investigation is underway, potentially prejudicing the inquiry. It is an offence under POCA.

Question 32

How long should records be kept?

Answer 32

A minimum of 5 years after completion of business