Legal Services

Question 1

Firms will need to be authorised by the SRA if they provide any of the following:

Answer 1

• Reserved legal services unless business is exempt
• Immigration services unless regulated by OISC
• Claims management services unless regulated by FCA
• Regulated financial activities unless regulated by FCA

Question 2

Rules on professional indemnity insurance?

Answer 2

Law firms must take out and maintain profession indemnity insurance that provides adequate and appropriate cover in respect of current or past practice taking into account arrangements the body or its clients may make, and

Ensure its clients have the benefit of indemnity insurance and not exclude or attempt to exclude liability below minimum level required.

Question 3

What is a licensable body?

Answer 3

Managers include lawyers and non lawyers. Once authorised by SRA, is a licensed body. This is sometimes referred to as an alternative business structure (ABS). Means non lawyers can share in management and control business of firm that conducts regulated legal services.

Question 4

FOr multinational law firms, are there any requirements for the lawyers abroad?

Answer 4

Comply with SRA overseas rules 2013 and certain CCS provisions.

Question 5

What is direct discrimination?

Answer 5

Because of a protected characteristic, A treats B less favourably than A would treat others.

Question 6

What is indirect discrimination?

Answer 6

Acts, decisions, or policies, which are not intended to treat anyone less favourable, but have the effect of disadvantaging a group of people with a protected characteristic.

Question 7

What is harassment?

Answer 7

A engaged in unwanted conduct related to a relevant protected characteristic which has the purpose or effect of violating Bs dignity or creating an intimidating, hostile, degrading, or humuliating environment for B.

Question 8

What is victimisation?

Answer 8

A subjects B to a determinant because B has done a protected act or A believes B has done or will do a protected act. The acts are:

Bringing evidence under EA 2010;
Giving evidence or information in connection with proceedings under EA 2010;
Doing any other thing for purposes of or in connection with EA 2010;
Alleging someone has done something that contravened EA 2010.

Question 9

What does the duty to make reasonable adjustments entail?

Answer 9

Changing way of doing this that could present barriers to disabled people.

Making changes to overcome barriers created by the physical features of premises if these are open to public or section of public.

Providing extra aids and services (auxiliary. aids) if this would make it easier for disabled people to make use of the service.

Question 10

What are the direct involvement offences under PoCA

Answer 10

s327 - Concealing, disguising, converting or transferring criminal property/ removing criminal property from the UK

s328 - entering into or becoming concerned in an arrangement which you know or suspect facilitates the acquisition, retention, use or control of criminal property by or one behalf of another person.

s329 - acquiring, using or possessing criminal property.

Question 11

What are defences to s327,328,329?

Answer 11

1. S338 - authorised disclosure. Before prohibited act OR during act but the solicitor didn’t know it was a prohibited act at the time and disclosure is made on their own initiative and as soon as practicable.

This is disclosure to a constable, customs officer or nominated officer.

2. Not making disclosure but having reasonable excuse for not doing so

Question 11

What are non direct PoCA offences

Answer 11

s330 - failure to disclose if you know or suspect or have reasonable grounds to know or suspect someone is laundering , can identify the person and receive information in the course or business in the regulated sector

s333A tipping off.

Question 11

After disclosure to NCA, when can you authorise or undertake act

Answer 11

If authorised to do so by NCA, or seven working days has passed from the disclosure to the NCA during which authority to proceed has not been refused, or NCA initially refused consent during notice period and 31 days starting with day firm was told it has been refused have expired.

Question 12

Non direct offences only apply in…

Answer 12

the regulated sector.

Question 13

What type of legal work do MRL 2017 not apply to

Answer 13

Employment or most litigation cases.

Question 14

What does standard CDD entail

Answer 14

identify customer verify their identity, nature of business relationship, if a company its name, number, place of business, names of directors etc, identify beneficial owner (over 25% shareholding).

Question 15

when would you use enhanced CDD

Answer 15

High risk country or a person established in a high risk country, in relation to correspondent relationships, if someone is a politically exposed person or is the family member or a close associate of one.

Also if the transaction is complex or unusually large, or there is a weird pattern, no apparent economic or legal purpose… basically — FISHY!!

Question 16

When could simplified CDD be appropriate?

Answer 16

Public administration, publicly owned enterprise, financial or credit institution, company on regulated market, individual resident in geographical low area of risk.

Also life insurance policies with no premium, pension schemes that meet certain prescribed conditions, child trust fund, junior isa.

Question 17

usually verification needs to take place before the establishment of the relationship. However, in what case could the verification happen during the establishment of the relationship?

Answer 17

The delay is necessary to not interrupt the normal conduct of business and there is little risk of money laundering or terrorist financing occurring.

Question 18

What are regulated activities FSMA

Answer 18

Dealing in investments, arranging deals in investments, managing investments, advising on the merits of investments.

Specified investment + specified activity.

Question 19

What are specified investments FSMA (Half of equation for regulated activity)

Answer 19

Rights under contract of insurance

Shares in a company

Instruments creating or acknowledging indebtedness

Government and public securities

Rights under a pension scheme

Regulated mortgage contracts (not loans to buy offices or loans to companies0.

Question 20

What are specified activities FSMA (Half of equation for regulated activity)

Answer 20

Dealing in investments as principal or agent

Arranging deals in investments

Managing investments

Advising on the merits of investments (this includes giving advice requiring an element of opinion AND a recommendation to a course of action).

Question 21

What are the three main FSMA exclusions?

Answer 21

Regulated activities that are a necessary part of other services carried on in the course of a profession (cannot be renumerated separately - also this exclusion doesn’t count for contracts of insurance and certain investment firms)

Regulated activities in connection with the sale of a body corporate (50% more of shares or day to day control)

Authorised persons (T is entered on advice of authorised person or client is clearly not seeking an has not sought advice from solicitor on merits of transaction)

Question 22

s327 FSMA and Scope Rule 2 to make the activity an exempt one:

Answer 22

s327:
= Person carrying on regulated activity must be member of a profession
= not receive commission unless they account to client for this
= specified activity must be provided in a way incidental to provision of professional services
=person must only carry out regulated activities they are permitted to carry out as a result of s332 (scope rules)

Scope rule 2:
= activities arise out of or are complementary to the provision or a particular professional service to a particular client
= there is not an order or direction under FCA s328/329 in force preventing from carrying out these activities.

IF the activity is an exempt regulated activity, law firm needs to ensure it complies with SRA scope rules and is authorised by SRA in relation to this activity. If not, it needs to be authorised by the FCA or refuse to carry out activity.

Question 23

what are the restrictions on financial promotions exceptions

Answer 23

Sale of a body corporate (50% plus)

Investment professionals

High net worth companies (called up share capital not less than 5 million - or 500k for body corporate with more than 20 members)

High net worth individuals

Question 24

when can you offer shares to the public without a prospectus

Answer 24

the offer is directed to fewer than 150 people or only sent to qualified investors.

Question 25

CFA?

Answer 25

No win no fee - If solicitor wins they will get normal fee plus uplift success fee. Success feel comes out of claimants damages.

PI success fee can’t exceed 25% of damages (excluding damages for future)

Question 26

DBA?

Answer 26

No win no fee, if successful solicitor will get a proportion of damages. Max 25% in PI, 35% in employment tribunal, 50% in all other cases.

Question 27

What does ATE insurance usually cover?

Answer 27

Clients own disbursements and their opponents costs and disbursements in the event of losing their case. Often used in conjunction with CFA/DBA - effectively CFA will cover clients own solicitor costs and ATE covers disbursements and opponents costs.

Question 28

Means and merits test for public funding representation at court?

Answer 28

MEANS: under 18 or on welfare benefits and income based jobseekers allowances automatically pass. MC - IF not, gross annual income 12.4k or less. If between 12 and 22k, undertake full means test. CC - assessed on income and capital - if between 3k to 37.5 k eligible for public funding with a contribution.

MERITS: 10 propositions - I will lose my liberty, livelihood, etc.

Question 28

What if D fails means/merits tests?

Answer 28

No right of appeal for failing means.

MC merits can submit another application and if unsuccessful appeal to MC.

Question 29

You mislead court v find out client has misled court.

Answer 29

You: Get clients consent to then tell court you have misled them. If they don’t consent, stop acting.

CLient: Cease to act unless client agrees to tell the truth.

Question 30

Rules for introductions and referrals

Answer 30

Introduction is they introduce a client to you, referral is you refer a client to them.

• Make sure client is fully aware of financial interest, fee sharing arrangements. Fee sharing arrangement is in writing. Cannot do this with criminal proceedings. Only act in client’s best interests.
• Can’t refer, receive referral for damages for PI/death for a referral fee. Onus is on the law firm to prove any payment was in the course of services and NOT a referral fee.

Question 31

Your client recently sold a business for a substantial profit. She is now seeking advice regarding what to do with the monies from the sale.

She is seeking advice on two issues. Firstly, she would like you to assist her with a cash purchase of a holiday cottage in Cornwall. Secondly, she would like some advice in relation to setting up a personal pension scheme.

Neither you nor your firm are authorised by the Financial Conduct Authority to carry on a regulated activity. Are you able to give the client the advice requested?

Select one alternative:

You can advise the client on both issues, provided you are competent to do so.

You can only advise the client about purchasing the holiday cottage, provided you are competent to do so.

You cannot provide advice to the client on either issue, since to do so would constitute a breach of the general prohibition under FSMA.

You should not provide any advice, but instead refer the client to an authorised person who will be able to provide advice on both issues.

You can only advise the client about the pension plan, provided you are competent to do so.

Answer 31

You can only advise the client about purchasing the holiday cottage, provided you are competent to do so.

Question 31

You are acting for an existing client in relation to the sale of a property in London for £750,000. The purchaser is buying the property in cash. The day before completion, you receive £1,200,000 in your firm’s client account from a bank in the Cayman Islands. This is a lot more money than you were expecting to receive. Your client calls you to say that he agreed to sell some furniture to the purchaser at the last minute and the monies relate to the sale of both the property and the furniture. Your client instructs you to transfer the full amount to a bank account in the British Virgin Islands.

Which offences are you at risk of committing under the Proceeds of Crime Act 2002 if you follow your client’s instructions?

Select one alternative:

Using or possessing criminal property; tipping off the client; failure to disclose your suspicions to a nominated officer.

Becoming concerned in an arrangement which you suspect facilitates the use of criminal property; and transferring criminal property.

Transferring criminal property; becoming concerned in an arrangement which you suspect facilitates the use of criminal property; using or possessing criminal property; failure to disclose your suspicions to your firm’s nominated officer.

Failure to disclose your suspicions to your firm’s nominated officer; using or possessing criminal property; transferring criminal property.

Transferring criminal property; tipping off the client; using or possessing criminal property; becoming concerned in an arrangement which you suspect facilitates the use of criminal property.

Answer 31

Transferring criminal property; becoming concerned in an arrangement which you suspect facilitates the use of criminal property; using or possessing criminal property; failure to disclose your suspicions to your firm’s nominated officer.

Question 31

Your firm has a referral agreement with another law firm under which, if one firm (the ‘Introducer’) refers a client to the other (the ‘Recipient’), the Recipient will pay the Introducer 5% of the fees paid by the client in the matter (‘Referral Fee’). A partner in the other firm has referred a client to you. The client is seeking to bring a claim for damages for personal injury arising from a car accident.

Which one of the following options is correct?

Select one alternative:

You must turn down the referral.

You must turn down the referral and report the other firm to the SRA for referring a client to you in breach of the SRA’s rules and regulations.

You cannot pay the Referral Fee to the other firm. You could act for the client without paying the Referral Fee if this was agreed with the other firm.

You can act for the client, but you must obtain the client’s permission to pay the Referral Fee to the other firm.

You can act for the client and pay the Referral Fee provided you inform the client of your fee sharing arrangement with the other firm.

Answer 31

You cannot pay the Referral Fee to the other firm. You could act for the client without paying the Referral Fee if this was agreed with the other firm.

Question 32

A potential new client has been referred to you by one of the firm’s longest-standing and most trusted clients. You meet the man at your offices, and he explains that he would like you to act for him on the purchase of a property in London. The seller is the man’s cousin. The man is buying the property at a discount with cash. He wants to complete the transaction within the next few days. He asks for your client account details to transfer the purchase funds.

Which of the following statements best describes what you should do?

Select one alternative:

Accept the monies into the firm’s client account and proceed with the transaction because the man was referred to you by a trusted client.

Do not accept the monies into the firm’s client account and make an authorised disclosure to the Solicitors’ Regulation Authority without alerting the man to your concerns.

Do not accept the monies into the firm’s client account and make an authorised disclosure to your firm’s Money Laundering Reporting Officer without alerting the man to your concerns.

Accept the monies into the firm’s client account but, before proceeding further, advise the man of your concerns and ask him for evidence of the source of the funds.

Accept the monies into the firm’s client account and make an authorised disclosure to your firm’s Money Laundering Reporting Officer without alerting the man to your concerns.

Answer 32

Do not accept the monies into the firm’s client account and make an authorised disclosure to your firm’s Money Laundering Reporting Officer without alerting the man to your concerns.

Question 33

Correct. The solicitor is entitled to 50% of the damages. 50% of £120,000 is £60,000. Unlike a conditional fee agreement, with a DBA, if the case is successful, the solicitor will be paid a proportion of the damages awarded to the client by way of a remedy, rather than getting their charges plus a success fee, so £80,000 is wrong. £75,000 is 50% of the amount claimed by the claimant, not the amount of damages awarded by the court, and is therefore wrong. £30,000 is wrong because it is 25% of the damages awarded by the court – the maximum amount a lawyer can recover is capped at 25% in personal injury cases, 35% in employment tribunal cases and 50% in all other cases so the solicitor can recover 50% of the damages. £50,000 is 25% of the damages (rather than 50%) plus the solicitor’s charges (which the solicitor does not recover in a damages based agreement), so is wrong.