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SQE 1 > Legal services > Flashcards

Legal services Flashcards

1
Q

What are the 6 reserved legal activities?

A
  1. Right of audience
  2. Litigation
  3. Reserved instrument activities (inc. prep/lodging an instrument re transfer of charge of land, relating to real/personal estate, or court proceedings NOT wills/powers of attorney)
  4. Probate activities
  5. Notarial activities (certifying docs)
  6. Administration of oaths
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2
Q

Exceptions to the need for authorisation from an approved regulator to carry out reserved activity for rights of audience

A

Exempt if a court grants that person a right of audience in a particular case

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3
Q

Exemption from the need for authorisation as a recognised sole practice if youre a freelance solicitor

A

Still need to notify SRA but dont need to be authorised if:
1.practice not ‘reserved legal activities’ (eg. family/ employment/PI/general legal advice);
2. any reserved legal activities are provided through an authorised body
3. Practised for min 3y + self- employed and practise in own name + indemnity insurance + no employees + only holds limited categories of client money.

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4
Q

Exceptions to the need for authorisation from an approved regulator to carry out reserved activity for probate activities

A

An employee can act under the supervision of an authorised person.

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5
Q

Exceptions to the need for authorisation from an approved regulator to carry out reserved activity for certain organisations

A

For some non-commercial organisations such as charities and independent trade unions.

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6
Q

What businesses are eligible for authorisation?

A
  1. Recognised sole practice
  2. Recognised legal services body
  3. Licences bodies
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7
Q

what is a ‘recognised body’?

A

A ‘legal services body’ where all managers and interest holders are legally qualified can apply for authorisation by the SRA as a recognised body.
‘Legal services body’=at least 75% managers/those holding shares are legally qualified AND un legally qualified managers approved by SRA AND at least 1 manager a sol

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8
Q

Requirements to be a licenced body

A

At least 1 manager authorised by SRA/another approved regulator
Is a ‘licensable body’, will be if non-authorised person:
1. Is a manager of body
2. Is an interest holder of body
OR
1. Another body is a manager/interest holder of B
2. ANS non authorised persons are entitled to exercise/control the exercise of at least 10% voting rights in other body

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9
Q

What personnel must a licensed body have?

A

SRA approved COLP and COFA
Authorised licensed body must ALSO have: Head of Finance and Administration (HOFA) and Head of Legal Practice (HOLP)]

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10
Q

Requirements to apply for practice certificate annually

A

◊ name is on roll
◊ Have significant knowledge of written/spoken English or Welsh
◊ Not suspended from practice as solicitor

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11
Q

Do non commercial organisations have to be authorised

A

No

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12
Q

What should indemnity insurance for recognised and licensed bodies cover?

A

The sum insured for any one claim (exclusive of defence costs) must be at least £3 million and at least £2 million in all other cases BUT must be ‘adequate and appropriate’

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13
Q

Indemnity insurance: can a firm attempt to exclude liability below min level

A

No (except freelance/working for non-commercial body can but consider SRA principles)

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14
Q

What happens if a firm cant get new qualifying insurance at the end of a policy?

A
  • The min Ts&Cs will extend the cover for max 90 days
  • Must inform SRA and cant take on new work
  • If still cant get at end of 90d, must stop practicing
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15
Q

What must professional indemnity insurance provide?

A

‘adequate and appropriate’ cover

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16
Q

Who does professional indemnity insurance apply to?

A

◊ SRA authorised firms
◊ Freelance solicitors
◊ Solicitors in non-commercial orgs

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17
Q

What information should clients be given re professional indemnity insurance?

A
  1. info about the firm’s compulsory layer of professional indemnity insurance, including details of the insurer and the territorial coverage of its insurance
  2. Freelance solicitors providing reserved legal services to the public must inform their clients that they are not required to meet the SRA’s minimum Ts&Cs
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18
Q

What must solicitors do to ensure their competence?

A

record, reflect and continue their competence through a choice of activities (which need not be accredited) to ensure that they are competent in their areas of law.

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19
Q

What are the 9 protected characteristics

A
  1. Race
  2. Religion and belief
  3. Sex
  4. Sexual orientation
  5. Age
  6. Disability
  7. Gender reassignment
  8. Marriage/civil partnerships
  9. Pregnancy and maternity
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20
Q

What must a belief be to be protected under the Equality Act 2010

A
  • Genuinely held
  • A belief as opposed to a view point
  • Relate to a substantial part of human life
  • Attain a certain level of cogency and be worthy of respect
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21
Q

What does sexual orientation cover?

A

Those with a sexual orientation towards persons of the same sex and/ or the persons of the opposite sex (not those with no sexual orientation)

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22
Q

What must a disability be to be protected under the Equality Act 2010

A

S6-person has disability if:
1. Have physical or mental impairment
2. AND the impairment has a substantial/long-term adverse effect on ability to conduct normal day to day activities

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23
Q

What is prohibited conduct under the EA 2010

A
  1. Direct discrimination
  2. Indirect discrimination
  3. Disability discrimination
  4. Victimisation (don’t have to have protected characteristic)
  5. Harassment
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24
Q

What is direct discrimination?

A

Because of a protected characteristic (need not be the only cause), A treats B less favourably (no loss needed) than A treats or would treat others.

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25
Q

What is indirect discrimination?

A

Occurs where conditions are imposed which apply to everyone, but which have the effect of prejudicing those who share a protected characteristic

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26
Q

What is disability discrimination?

A

A person (A) discriminates against a disabled person (B) if A treats B unfavourably because of something arising in consequence of B’s disability.
Don’t have to comare to treatment of others

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27
Q

What is victimisation?

A

A subjects B to a detriment because
(a) B does a protected act, or
(b) A believes that B has done, or may do, a protected act.

Protected acts:
* bringing proceedings under the Act;
* giving evidence or information in proceedings brought under the Act;
* doing anything which is related to the provisions of the Act;
* making an allegation that another person has done something in breach of the Act. The victim does no

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28
Q

What is harassment?

A

individual is subjected to a specific form of unwanted conduct which has the effect of violating the individual’s dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for the individual.

Conduct must relate to protected characteristic/be sexual

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29
Q

Which forms of prohibited conduct can/cant be justified?

A

CANT:
* Direct discrimination (except age/occupational requirement)

CAN if a proportionate means of achieving a legitimate aim:
* Indirect discrimination (except pregnancy/maternity)
* Disability discrimination

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30
Q

Can an employer be vicariously liable for breach of the Equality Act?

A

Yes if committed by employee in the course of employment
BUT DEFENCE if firm can show they took reasonable steps to prevent the particular act/acts of discrimination happening (before it happening)

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31
Q

What is a service providers duty to make adjustments

A

Must anticipate and make adjustments even if no disabled clients
Don’t have to fundamentally change nature of service

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32
Q

Where can a client bring a claim for failure to make reasonable adjustments?

A

County court

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33
Q

Who can bring a claim for failure to make reasonable adjustments

A

If personally affected

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34
Q

What is the burden of proof in a claim for failure to make reasonable adjustments?

A

◊ Initially on C to show a prima facie case of discrimination-prove facts from which it can be inferred discrimination has taken place
◊ Then shifts to D

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35
Q

What is the remedy in a claim for failure to make reasonable adjustments?

A

Any in tort or JR, usually damages, can be aggravated if Ds behaviour is malicious or oppressive
If firm and employee both found liable, will be jointly liable any damages

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36
Q

When can an employer take positive action to hire someone with a protected characteristic over those who dont have one

A
  1. Equally qualified (overall suitability for job, not just exams)
  2. Reasonably believes people with a particular protected characteristic are disproportionately under-represented in the workplace
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37
Q

What the general general prohibition for solicitors carrying out regulated activities?

A

Cant carry out regulated activity in UK UNLESS authorised or exempt

38
Q

Difference in the effect of the exclusions and professional firm exemption for regulated activities?

A

Exclusions: Act ceases to be a regulated activity
Exemption: Act is still a regulated activity but can be carried on without authorisation

39
Q

What are the 4 tests for what is a regulated activity?

A
  1. In business?
  2. Specified investment?
  3. Specified investment activity?
  4. Exclusion apply?
40
Q

9

What is a ‘specified investment’?

A
  1. Co. stocks/shares
  2. Debentures, loan stock, bonds
  3. Gov securities (eg. gifts)
  4. Unit trusts, open ended investment companies
  5. Insurance contracts
  6. Regulated mortgage contracts (most res mortgages)
  7. Home reversion/home purchase plans
  8. Deposits (inc. cash ISAs, £ in bank/bs accs)
  9. Credit agreements (agreement to allow sol time to pay exempt if no more than 12 payments, not exceeding 12mo, without interest/other changes)
41
Q

What is NOT a specified investment

A
  • Interests in land
  • Certain National Savings products
42
Q

7

What is a specified investment activity?

A
  1. Dealing as agent
  2. Arranging (contact between client and co)
  3. Managing (active participation involving exercise of discretion)
  4. Safeguarding
  5. Advising (beyond generic advise)
  6. Lending £ on/administering a regulated mortgage contract
  7. Est/operating/winding up a collective investment scheme/personal pension scheme
43
Q

6

What exceptions may apply for investment activities (regulated activities)?

A
  1. Introducing (+no further role)
  2. using an Authorised Third Party (ATP)
  3. acting for an execution- only client (client not seeking advice on merits)
  4. acting AS (not for) trustee/PR
  5. ‘professional/ necessary’ exclusion
  6. ‘Takeover’ exclusion (transactions to acquire/dispose of shares in body corporate IF: – Shares inc 50% or more ofvoting shares – Is between parties that are all a body corporate, partnership, individual or group of connected individuals )
44
Q

What is the s327 exemption for professional firms? (requirements to be an Exempt Professional Firm)

A

If professional firm not carrying out mainstream financial services but a regulated activity in the course of other professional work

General provision WILL NOT APPLY If:
1. Regulated/supervised by designated professional body
2. Firm doesn’t get pecuniary/other advantage from someone whose not the client which they don’t account to client for
b. manner of providing service incidental to provision’ of SRA regulated services
c. Only carry out regulated activities permitted by the DPB
d. Activities not prohibited by order from Treasury/by FCA under s328/s329
e. Firm not authorised by the FCA

45
Q

When will provision of regulated activity be incidental to the provision of SRA regulated services?

A

General test-must not be a major part of firms activities
Specific tests-cant carry out regulated activity in isolation for specific client, has to arise from/be subordinate to a professional (SRA) service

46
Q

What are the rules on financial promotion?

A

mustn’t, in the course of business, communicate an invitation or inducement to engage in an investment activity unless the promotion has been made or approved by an authorised person or it is exempt

47
Q

What are the tests to see if a communication breaks the financial promotions restriction

A
  1. Is a communication being made?
  2. Is the communication an invitation or inducement?
  3. Is there an investment activity?
  4. Communication made in the course of business?
  5. Does the communication fall within one of the exemptions?
48
Q

What is a ‘communication’ for the financial promotions restriction?

A

All types of communication, Requires active step but need not be direct

49
Q

What is a ‘invitation or inducement’ for the financial promotions restriction?

A

Invitation=directly invites person to take step resulting in them engaging in investment activity
Inducement=significant step in seeking to persuade someone to engage in investment activity

50
Q

What is an ‘investment activity’ for the financial promotions restriction?

A

Entering into a controlled activity (advertising/managing on investments) or exercising any rights conferred by a controlled investment (shares/insurance contracts)

51
Q

What are the exemptions for the financial promotions restriction?

A

One off, non real time/solicited real time communications if sol reasonably believes: 1. Client understands risk
2. At the time, the client would expect to be contacted by the sol in relation to that investment activity

Introducing to ATP if: 1. Sol not personally connected to ATP
2. Sol doesn’t get pecuniary reward (other than from client)
3. Client not seeing advice from sol on merits of engaging in activity

52
Q

What financial regulated work can a law firm, which is classed as an Exempt Professional Firm, conduct?

A

work falling under Part 20 of FSMA.

53
Q

What is the purpose of the SRA Financial Services (Conduct of Business(COB) Rules

A

regulate how firm can undertake financial services under the professional exemption

54
Q

What do the SRA Financial Services (Conduct of Business(COB) Rules include?

A
  1. Provide clients with info on firms status-ie not authorised by FCA/explain complains procedure
  2. Act in best interests so must carry out transactions as soon as possible unless reasonably believe not in clients best interests to do so
  3. Keep record of instructions from clients/3rd parties to carry out transactions
  4. keep record of how commissions dealt with
55
Q

What do the COB rules (for firms operating under the professional exemption) provide about insurance distribution?

A

must be communicated in way that’s clear, fair, not misleading and info on remuneration provided before conclusion of initial contract

56
Q

High risk practice areas for money laundering

A

○ Company and trusts work
○ Use of client account
○ Real estate
○ Sham litigation

57
Q

Must a firm do a risk assessment for money laundering?

A

Yes, take into acc..
* Services offered
* How services are delivered
* Nature of clients
* Industries operate in
* SRAS own assessment of risks within sector

58
Q

Why/how must a firm est and maintain policies controls and procedures for money laundering?

A

To mitigate and manage effectively rhe money laundering/terrorist financing risks identified in risk assessment
Must be:
* Proportionate to size/nature of firm
* Approved by senior management

59
Q

What personnel must be appointed in terms of money laundering?

A

□ nominated officer (aka Money Laundering Reporting Officer (MLRO)-to receive reports from within firm
□ Money Laundering Complience Officer (if appropriate bc of size/nature of firm)-SRAs main point of conduct

60
Q

Standard due diligence for natural persons?

A
  1. 1 gov doc verifying name and address or name and DoB
  2. OR 1 gove doc verifying full name AND 1 supporting doc verifying name AND address or DoB
    □ Ideally originals but can use copes when justified based on assessment of risks
61
Q

Standard due diligence for partnerships?

A

Obtain into on individuals making up partnership
UNLESS well known, reputable, histocial org with substantial public info, obtain:
1. Name
2. Registered/trading address
3. Nature of business

62
Q

Standard due diligence for companies?

A

Verify existence using:
* Name
* Co number or other registration
* Registered office address and principle place of business

If not listed on regulated marked, take reasonable measures to verify:
* Law its subject to
* Constitution/other governing docs
* Names of board of dirs or other senior ppl responsible for its operations

63
Q

Who else other than the client must be considered for money laundering

A

beneficial owner

64
Q

Who is a beneficial owner of a company?

A

◊ Individual who exercises ultimate control over management of body corporate
◊ Individual who ultimately owns/controls over 25% shares or voting rights in body corporate
◊ Individual who controls the body corporate

65
Q

Who is a beneficial owner of a partnership?

A

Individual who:
◊ Ultimately is entitled to/controls over 25% share capital or profits or more than 25% voting rights
◊ Otherwise exercises control over management of partnership

66
Q

Who is a beneficial owner of a trust?

A
  1. Settlor
  2. Trustees
  3. Beneficiaries
  4. Class of ppl in whose main interest the trust is set up
  5. Any individual who has control over the trust
67
Q

When is simplified due diligence permitted?

A

Where firm determines though individual risk assessment that business relationship/transaction presents low risk of ML/TF
Take into acc:
* If client is co listed on regulated market
* Location of regulated market
* Where client is est/does business
* List not decisive, must obtain evidence

68
Q

When must enhance due diligence be carried out?

A
  1. Case identified as high risk in firms risk assessment or in info made avaliable by SRA/Law Society
  2. Client/counter part to transaction in high risk 3rd country
  3. Client/close family member/known associate is a politically exposed person (PEP)
  4. transaction is complex or unusually large OR there’s an unusual pattern of transactions OR transactions have no apparent economic or legal purpose
  5. Any other situation where theres a high risk of ML/TF
69
Q

Who is a politically exposed person?

A
  • Assistant ministers
  • MPs
  • Members of supreme/constitutional courts or of other high- level judicial bodies whose decisions are not generally subject to further appeal, except in exceptional circumstances;
  • Members of courts of auditors or of the boards of central banks;
  • Ambassadors, chargés d’affaires and high- ranking officers in the armed forces;
  • Members of the administrative, management or supervisory bodies of State- owned enterprises.
70
Q

Who is a family member of a PEP

A
  • Spouse/civil partner
  • Children and their spouse/civil partner
  • Parents
71
Q

Extra considerations when dealing with PEPs

A
  • Domestic PEPs treated as lower risk then overseas PEPS unless enhanced risk factors present
  • Sol must have approval of senior management to act
  • Sol must take adequate measures to source wealth/funds
  • Must conduct enhanced ongoing monitoring of business relationships
72
Q

What training must be provided on money laundering/TF?

A

□ Law relating to money laundering/terrorist financing
□ Requirements of data protection
□ How to recognise and deal with transactions potentially relating to ML/TF

73
Q

What are the record keeping requirements for ML/TF?

A

Copy of docs/info obtained for due diligence/ongoing monitoring
Keep for 5y from end of business relationship/transaction

74
Q

What is the corporate offence/defence re economic crime?

A

Corporate offence: failure to prevent the criminal facilitation of tax evasion by employees/other associated persons (strict liability)
Only defence: firm had in place reasonable prevention procedures or can show that it was reasonable not to have had such procedures in place

75
Q

What are the 7 offences under the Proceeds of Crime Act 2002?

A
  1. Arranging
  2. Acquisition, use or possession
  3. Concealing
  4. Failure to disclose
  5. Failure to disclose by nominated officers
  6. Tipping off
  7. Prejudicing an investigation
76
Q

What is the offence of arranging?

A

Offence to enter into or become concerned in an arrangement which a parson knows or suspects facilitates the retention, use or control of the proceeds of crime
Funds don’t need to actually pass through hands of person connected with the arrangement

77
Q

Defences to Arranging

A
  1. Authorised disclosure
  2. Overseas defence
78
Q

What is the overseas defence?

A

where individual knew or believed that the criminal conduct occurred abroad and the conduct in question was lawful in the county where it took place

79
Q

What is the authorised disclosure defence?

A

Must be made..
* by the person who, but for the disclosure would be committing an offence
* in relation to the criminal property
* To a constable, an officer of HMRC , nominated officer (MLR))

80
Q

Authorised disclosure defence: requirements for disclosure prior to act taking place?

A

◊ sol makes authorised disclosure to firms nominated officer as soon as practically possible prior to the transaction taking place
◊ AND consent of nominated officer or NCA obtained

Nominated officer unable to give consent until:
1. They receive their consent from the NCA
2. They hear nothing from the NCA for 7 working days (from 1st working day after disclosure made)
3.Consent is refused by NCA but subsequently granted within 31d, starting from day refusal given or a period of 31d has expired from refusal date

81
Q

Authorised disclosure defence: requirements for disclosure during prohibited act?

A

◊ Disclosure made whilst prohibited act ongoing
◊ When sol began to do act, they didn’t know/suspect the property represented a benefit from criminal conduct
◊ Disclosure is made as soon as practicable after they first know/suspect the prop is the benefit of criminal conduct
◊ Disclosure is made on sols own initiative

82
Q

Authorised disclosure defence: requirements for disclosure after prohibited act?

A

◊ Solicitor must have good reason for their failure to disclose prior to completing act
◊ Disclosure must be made as soon as practicable
◊ Disclosure must be made on solicitors on initiative

83
Q

Defences to the offence to acquire, use or possess the proceeds of crime

A

□ Authorised disclosure
□ Overseas
□ Adequate consideration ( if there was adequate consideration for acquiring, using and possessing the criminal property UNLESS the individual knew or suspected those goods or services might help carry out criminal conduct)

84
Q

What is the offence of concealing?

A

to conceal, disguise, convert or transfer the proceeds of crime or remove the proceeds of crime from the jurisdiction of England and Wales

85
Q

Defences to the offence of concealing?

A

□ Authorised disclosure
□ Overseas

86
Q

When will someone commit the offence of failure to disclose?

A
  1. they know/suspect or has reasonable grounds to know/suspect, that a person is engaged in money laundering;
  2. the info comes to them in the course of a business in the regulated sector;
  3. the info may assist in identifying the money launderer or the location laundered prop
  4. they don’t make a disclosure as soon as is practicable.
87
Q

Defences to failure to disclose

A
  1. Disclosure made to firms nominated officer of NCA as soon as practically possible
  2. Indented to make disclosure but has reasonable excuse for not doing so
  3. Improper training
    4.Legal professional privilege (unless indeed offence)
  4. overseas
88
Q

When will a nominated officer commit the offence of Failure to disclose by nominated officer?

A

They know or suspect or have reasonable grounds to know or suspect money laundering as a consequence of their role as a person nominated to receive disclosures
AND they fail to make the necessary disclosure to the NCA as soon as practical

89
Q

What is a defence to Failure to disclose by nominated officers

A

Reasonable excuse for not disclosing info

90
Q

What are the ways the offence of tipping off can be committed?

A
  1. Disclosing a disclosure if that disclosure is likely to prejudice any investigation that follows such a report
  2. Disclosing an investigation where the disclosure is likely to prejudice the money laundering investigation (info must have come in course of a business in the regulated sector)
91
Q

Deffences to the offence of tipping off?

A

□ If person who made the disclosure didt know or suspect that the disclosure would prejudice an investigation into money laundering
□ If the disclosure is made by an advisor to their client for the purposes of dissuading the client from engaging in the alleged money laundering (treat with caution)

92
Q

What is the offence of Prejudicing an investigation

A

Similar to tipping off but for non-regulated individuals

SQE 1 (46 decks)

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