Legal Services Flashcards
SRA & Codes of conduct
- Can refer to Solicitors Disciplinary tribunal (SDT), or do themselves
- Max fine without SDT in £25,000
- ## can go through SDT if want to give more
SRA Principles
- purpose to maintain trust and confidence in legal profession
1) - in way that upholds constitutional principles or rule of law and proper administration of justice
2) - act in way that upholds public trust and confidence in sols profession and in legal services provided by authorised persons
3) - With independence
4) - With honesty
5) - with integrity
6) In way that encourages equality diversity and inclusion
7) In best interests of client
SRA Code of conduct
- not just to work but also to personal life
- SRA will take enforcement action in line with enforcement strategy for breaches of code
1- Maintaining trust and acting fairly
- can’t allow person, client, barrister discrimination
- can’t stop acting for discriminatory reason can where risk of money laundering
- can’t take unfair advantage
- if give undertaking - sol and firm who are liable
- Don’t mislead courts, or be complicit
- Treat with respect
2 - Dispute resolution and proceedings before courts and tribunals and enquiries
- don’t tamper misuse evidence
- have another present when interviewing wits
- make properly arguable submissions/args
- don’t waste courts time
- avoid predatory litigation
- don’t use litigation for means other than genuine dispute
- Non Disclosure agreements (NDA’s) more prevalent these days and contain risk. Can’t threaten consequences not legally enforceable.
3 Service and competence
- only act on clients instructions
- in clients best interests
- always be aware when taking instructions of undue influence or duress
- always be aware of clients personal circs - eg if blind no paper instructions
- managers have obligations and responsibilities for those they supervise
4- Client money and assets
- if obtain financial benefit from receiving instructions must account for this UNLESS written agreement to say permits these to be kept
- keep client money and assets safe, and that of others
- don’t hold money unless authorised body
5.1-5.3 - Referrals intros and separate business
- if refer to to third party must inform client if fee-sharing arrangement
- if these is there must be in writing
- can’t sue fee sharing where client making claim arising from death or personal injury
5.4 - 5.6 - other business requirements
- sols firm must be authorised body
- must renew practising cert each year
6.1-6.2 - Conflicts of interest
- can’t act where significant risk of own interest conflict
-Two exceptions to this
1) clients substantial common interest - share same purpose eg buyer and lender in prop trans
2) competing for same objective and can only be achieved by one of them. Only where bidding against each other for asset.
For either to apply:
1) client must give consent in writing
2) effective safeguards in place
3) satisfied as sol that reasonable to act
- relates only to current clients
6.3 - 6.5 - confidentiality and disclosure
- confidential unless disclosure required and permitted by law
- any disclosure must be with client consent
- applies when client dead
- No duty where client instructing and using you for fraud
- must distinguish between priv and conf info- priv never can be disclosed, unless priv waived.
- obligations on sol from client for disclosure. Unless prohibited by legal restrictions
- where issue of confidentiality between previous and new client 6.3 CAN’T act for new client. If already started acting for both must cease for both
7 - co-operation and accountability
- up to date with laws and regs
- keep accounts record
- comply SRA legal ombudsman
- respond promptly SRA
- 2 types notification req
- automatic - charged with offence or bankrupt.
- Must notify SRA promptly if charged, insolvent, material changed in info previously supplied to SRA, any info previously supplied to SRA false or misleading
discret - should breach be reported to SRA?
- if reasonably believe other legal regulator breached SRA
- reasonably believe breach of SRA then should be reported promptly
- NDA MUST NOT be used to prevent reporting to the SRA
- to disclose priv info need clients consent
- must be done promptly
8.1 Client Id
- need ID client, must have CDD procedures in place
8.2 - 8.5 - Complaints handling
- have and take part in complaints procedure
- client care letter
- legal ombudsmen deals with complaints
- must try to resolve first, 8 weeks, if don’t then have 6 months to bring complaint
8.6 - 8.11 Client info and publicity
- must give info in way clients understand
- make clear how legal services regulated and how client is protected by regulations
- client must be given best possible info re price of matter from outset and throughout
matter
- all can be D/W in client care matter
- cannot make unsolicited approaches to members of public unless clients or former clients
- SRA has transparency rules that must be followed authorised firms.
On-boarding a new client
1) Conflicts check
- unless exceptions in pars 6.1 apply CANNOT act for client where there is a conflict, or significant risk of one
2) Refuse Service
- cannot refuse to act for personal, discriminatory reasons or unreasonable reasons
- reasonable reasons would be no time, competence or client not having funds
3) AML
- due diligence conduct checks, practice wide risk assess.
- assessment on client and matter
- firm obligations under MLR’s 2017
- appears to be high risk of money laundering THEN DO NOT act and consider making SAR
- CDD must be done before establishing a bus relationship with the client - before signing and any agreement.
4) Interview
- objective, explain role and services can provide, include who will oversee
- initial advice on issue, next steps and how will communicate and provide cost details
5) Client care letter & T & C’s
- to client with retainer agreement
- must satisfy client info requirements under code of conduct
- T & C;s should set out terms of service, how will be conducted and cost , should be signed by client
Code of conduct for firms
- PARA 8.1 - manager of firm
- responsible for compliance with code
- if several managers, responsibility is joint and several with other managers
PARA 9 - Compliance officers
- COLP compliance officer for legal practice
- oversight over compliance with reg rules and SRA regs
- oversight over firms compliance
- compliance by firms managers, employees and owners with SRA’s
- ensuring no breach of SRA
- promptly reporting to SRA anything reasonably believes to be breach
- promptly reporting breach thinks SRA should investigate
- COFA compliance officer for finance and administration
- oversees SRA accounts rules
- making sure complied with by firm and staff
- reporting promptly to SRA any serious breach of accounts
- rules complied with by firm and staff
- In ABS - business not owned or run by sols known as HOLP - head of legal practice and HOFA - head of finance and administration
SRA regulation of individuals and firms
- must be authorised and eligible type of business
- Can be:
a) Recognised sole practice - one sol owns and runs
b) Recognised body - managers and owners are solicitors - partnerships, LLPs and companies Ltd and PLCS
c) Licensed body - alternative bus structure (ABS) companies or LLP’s not owned or run entirely by sols, must have - at least one sol,
- someone else has interest in business eg manager.
- eligible firms must have sol who is employed and at least 3 years qualified.
- firm applies to SR to be authorised, SRA carry out investigation to make sure firm suitable
- Authorisation granted if - will deliver work to standard required, managers competent, well managed, authorised and run by right people
- always have COLP and COFA
- licensed body has HOLP and HOFA
- all owners and managers must be approved by SRA
- must complete annual return to SRA
Professional indemnity insurance
- all professional firms must have
- qualifying, adequate and appropriate to firms practice
- compensates client for negligence of sol
- must satisfy SRA rules on indemnity insurance
* taken out with participating insurers
* must meet minimum requirement’s
- £3 MILL for any one claim excluding def costs, for recognised and licensed bodies
- £2 MILL for any one claim, excluding def costs, for recognised sole practitioners
- MUST be adequate for firm - if large may need more money available
- must be open with clients about what policies they have
- renewed by firm every year. If issue has 90 days to take out new policy:
* must tell SRA doing this
* if after 30 days no policy, can take on NO NEW work
* if no policy after 90 days must stop practising
Legal services board (LSB)
- created by Legal services act 2007
- anyone who provides legal services regulated by LSA
- acts in accordance with regulatory objectives of LSA
- LSB overseas - 8 separate regulators, SRA is one of these
- Don’t have to be solicitor to carry out an unreserved legal activity
- unreserved legal activity is anything notg a reserved legal activity ie contract work
- unreserved legal activities DO NOT NEED SRA authorisation
SRA cannot authorise notarial activities - authenticating docs, attesting powers of attorney - they need to be authorised by master of faculties - important person in church of England who is in charge of a court that gives permission for notarial activities
Equality Act 2000
- makes discriminatory behaviour in connection with a protected characteristic unlawful when sols are:
- acting for clients
*employing people
*acting in partnership - instructing barristers
- Principles SRA push further than this, 6 - stating must encourage equality, diversion and inclusion 2- trust and confidence and 1.1 and 1.5 - not unfairly discriminate
Unlawful discrimination
STEP 1
- must be in relation to protected characteristic, outside of this IS NOT UNLAWFUL but may breach code
1) Race
2) Religion or belief
3) Sex, inequality
4) Sexual orientation
5) Age - all
6) Disability - physical or mental impairment that over long term affects day to day activities or in list of disabilities in EA 2010
7) Transgender- who will or have undergone gender reassignment
8) Marriage/civil partnership - only if married not engaged
9) Pregnancy and maternity
STEP 2
- ID prohibited conduct
DIRECT DISCRIM (DD)
- overtly or obviously treating someone less favourably because of protected characteristic
3 elements
1) compare how treated differently
2) less favourable - very broad, includes any disadvantage, no need to have suffered loss. Objective reasonable person test. Motive intention is irrelevant
3) reason for doing must be because of protected characteristic
DD always unlawful except:
- age discrim where would not be able to do because of health and safety reasons
- positive action
GENERAL - firm reasonably believes don’t participate to same extent as other due to protected characteristics. Can take actions to alleviate if proportionate
RECRUITMENT AND PROMOTIONS - firm reasonably believes at disadvantage. Can only employ another with same qualifications. This includes making someone a partner in a firm
SPECIFIC DISCRIM
- Disability discrim - treats less favourably and not treatment not proportionate to achieve legitimate aim. Doesn’t apply if didn’t or couldn’t reasonably have known of disability
- Gender re-assignment - if absent because of gender re-assign and treat differently than if off with sickness
- Preg and Mat leave - eg breastfeeding
These are in addition to right to claim for direct and indirect discrim
INDIRECT DISCRIM
- policy practice applies to everyone but adversely affects someone with protected characteristic
- includes recruitment, redundancy, working form home and dress code
- does not have to be written down
DEFENCE
- if proportionate means of achieving legitimate aim
- balance between achieving policy and seriousness of discim
- mostly used where discrim makes business sense.
VICTIMISATION
- treats badly or puts at disadvantage because
* brought claim
* gives evidence or info in relation to claim
* does anything in relation to a claim
* makes allegation someone breach EA
-UNLESS above done in bad faith
- NO PROTECTED CHARACTERISTIC NEEDED, ONLY that one of above actions is taken
HARRASSMENT
- 3 Kinds
1) unwanted conduct relating to protected characteristic, violates dignity or intimidates, hostile, degrade humiliate, make offensive working environment
2) unwanted sexual conduct - NO PROTECTED CHARACTERISTIC NEEDED
3) engaged in unwanted sexual conduct that relates to sex or gender reassignment
- for all 3 consider perception of victim, circs of case and if reasonable for conduct to have that effect
- duty on employers to take reasonable steps to prevent sexual harassment to employees
FAILURE TO COMPLY WITH DUTY TO MAKE REASONABLE ADJUSTMENTS FOR DISABLED PEOPLE
- duty to make reasonable adjustments for disabled people if at substantial disadvantage
- 3 ways to comply
1) reasonable steps to minimise or avoid damage
2) steps taken to work around or remove disadvantage due to physical feature
3) reasonable steps to provide auxiliary aid
- if 1-3 requires info, must be provided in accessible format
- reasonable = nature of disadvantage or cost. CAN’T pass to disabled person
- applies in all contexts- clients etc
STEP 3
- apply to specific senario - discrim, harass or victimisation
- prohibited conduct UNLAWFUL if while serving client
- examples
* changing terms service due to client being pregnant
* terminating services because client disabled
* not providing service due to beliefs of client that firm does not tolerate
* subject client to detriment due to reports under EA
VICARIOUS LIABILITY
- firm also liable
- exception if before act occurred they took reasonable steps to prevent from happening in first place - training and policies
- costs of adjustments CANNOT be passed to disabled client
- must anticipate not act after horse has bolted
- applies to solicitors as employers to
- law firm with 250 or more employees must publish gender pay gap report annually
- SOLICITORS AS PARTNERS
- can’t discriminate or hold back from promotion, training, payment or sack due to protected characteristics
- applies to partnerships and LLPs
- applies to instructing barristers also, vicarious liability applies
LIMITATION OPERIOD AND REMEDIES
- burden - if find contravention of act, no reason for behaviour then presumption of breach
- claim in county court, or if work related employment tribunal- within 6 MONTHS
- CT may allow claim after that if just and equitable
- Remedies - damages inc comp- injuries to feelings, injunction and declaration apologising publicly
MONEY LAUNDERING
- cash in bank account - origins obscured by passing through multiple accounts - money then used for what appears to be a legitimate transactions eg prop purchase
- 2 types of offences
PROCEEDS OF CRIME ACT 2002 - POCA - crim offences for money laundering
- lawyers can commit these offences
MONEY LAUNDERING REGULATIONS 2017 - MLRs - applies law firms that assist in property and corporate transactions, manage client money or carry out trust or company formation or management work
- sets out admin burdens on law firms to deal with ML
- failure to comply = crim offences
TRIGGERS POINTING TO ML
- suspicious use of client account
- setting up unusual trust
- evidence of sham litigation or transaction - case settles easy or no economic purpose to transaction
- client secretive - refusing to meet face to face, unusual instructions
- transaction in relation to terrorist org
- transaction involves high risk jurisdiction - Iran, North Korea
- property purchase in cash, funded by unknown people.
OBLIGATIONS UNDER MLRs
1) who do they apply to
- applies to law firms and management teams of firms that
* do real estate conveyancing
* Corporate finance work
* Trust creation operation and management work
* company formation operation and management work
-Litigation, will writing and legal advice not captured, if does mixture only work in scope comes under regulations
- CDD requirements or form of them will be conducted by all firms to ensure don’t commit POCA offences
- SRA responsible for firms compliance with MLR’s 2017 - approving partners, MLROS’s and MLCO and taking action where necessary
2) Practice wide risk assessment (PWRA)
- whole risk assessment in order to allow firm to take appropriate steps to ID and assess firms exposure to risk of money laundering and terrorist financing
- single written doc provided by firm
- must included ML policies of firm, show proportionate to firms size and practice
- must inform of individual client and
matter risk assessment a firm must also undertake before doing CDD
- must take into account - info from SRA/law society, risk factors like jurisdiction, service provides and clients, size and nature of firm
- must keep copy of PWRA and provide info to law society on request
- reviewed and updated by senior managers regularly
- SRA will act if PWRA not conducted or is inadequate and may ask to view it form time to time
3) Client Due diligence (CDD)
4 key situations when must be done
i) taking on new client - must be before any work conducted
ii) occasional transaction
iii) suspicion of money laundering
iv) doubts about veracity of clients ID or other docs
- MUST also have risk procedure’s for all clients, including client written risk assess, and matter written risk assess and a documented procedure for how these risk assessments affect and inform the CDD
done on client. Also if firm needs to take mitigating steps to reduce AML risks
- should be done at outset
- procedures for CDD must be documented inc firms procedure on how to ID and verify a client and ID wealth sources and how discrepancies reported and CDD done
- recommended firms carry out CDD requirement’s for ALL work not just in scope to make sure don’t breach any requirements
- if can’t carry it out CAN’T do work for them
THREE TYPES OF CDD
Standard due diligence
- neither enhanced nor simplified
- most commonly used
- individs and partners in partnership
* must ID client - name DOB and address
*verify ID
* obtain info on purpose of transactions, including source of funds
* if partnership ID beneficial owner, person who owns more than 25% or manages partnership, understand ownership and control structure of partnership
IF client is a company/LLP
* ID and verify comp name number, registered office
* ID law comp/LLP subject to
* if comp read A of A
* full names of directors
* proof of reg from companies hse, cert of incorp
* ID beneficial owners (BO), reasonable steps to verify ID
* if BO is a company/LLP take reasonable steps to understand structure, and purpose of transaction including source of funds
If client is a trust, ID and verify ID of each:
*settlor
*trustees
*beneficiaries
* if class of people - that class
* anyone who has power to remove or add beneficiaries
* sources of wealth to set up trust
* nature and extent of assets
* read trust deed if existing trust
* info on purpose of transaction and source of funds
SIMPLIFIED CDD
- less extensive than SDD, but still monitor to see if should be SDD
- used if client low risk
* public authority - council
* individual in UK with low risk transaction
* client is renowned bank
* listed on London stock exchange
ENHANCED CDD
- High risk matter
* risk terrorist financing/money laundering
* high risk jurisdiction - Iran, north Korea, Russia, Cuba
* false ID provided
* other risky unusual evidence
- MUST adopt more extensive efforts of checks in SDD inc background checks and source of fund
- used after SDD or simple DD if increased risk of money laundering
HOW AND WHEN TO DO CDD
- firms ID in policy when should be done
- should be before business relationship established
- if established relationship can only do AFTER where
* delay necessary not to interrupt conduct of business
*little risk of ML
* Verification done ASAP
BUT if comp MUST still get confirmation of entry at Companies house before starting
- ID = signed passport, D/L or assurances from someone in regulatory sector who has D/W person for some time
- Private comp = cert of incorporation, audited accounts, details from companies register
- Trust - ID of each relevant party
- may need to reapplied for existing clients, if policy says to do so
- ongoing monitoring is important
REPORTING RETSTRICTIONS
- firm must have Money laundering reporting officer MLRO. This is who makes disclosures (SAR’s) to NCA on basis of disclosures from solicitors in the firm
- must have procedure on how SAR made
- MLRO responsible for disclosures to NCA, if fails may commit POCA offence s331
- MLRO must be part of firms senior management and SRA must be notified of appointment within 14 days
- sol must report suspicious activity - can commit s330 POCA if doesn’t report.
-If MLRO believes money laundering taking place make SAR to NCA
- If MLRO and firm wants to continue with transactions, despite risk can submit DAML - defence against money laundering request to NCA - they have 7 days to respond
POLICIES CONTROLS & PROCEDURES
- must have written procedures in place in writing for ongoing compliance with MLR risks
- proportionate to firms size and approved by senior management
- senior management must monitor compliance with firms policies and ensure properly resourced
- must include how to id AML risk, how to handle and how firm deals with risk roles of MLRO and MLCO
- inc how disclose to MLRO and NCA
-systems that would enable rapid response to enquires of NCA
MLCO - money laundering compliance officer
- either partner of firm or on the board
- sole practices and work falling out of in scope don’t have to have one
- SRA must be notified of appointment within 14 days
- MLCO and MLRO can be same person
- larger more complex like to have two separate people
SCREENING TRAINING & AUDIT REQUIREMENTS
- new lawyers must be screened
- screen skills, knowledge, expertise conduct and integrity
- training to relevant employees to instruct on AML obligations, red flags of ML and how to report.
- records must be kept of the training
- must to appropriate to size of firm and risk
- must establish independent audit function
RECORD KEEPING
- 5 years after completion of work for client
- must be able to respond rapidly to SRA or other law enforcement agencies
DOCS which firm must have are
- Risk assessment - firm wide
-CDD records 5 years after conclusion of case
- policy controls and procedures - inc sign off by management
- Training - record of it
- Internal controls - disclosures to MLRO audit and screening
- record keeping
SRA APPROVAL
- Must approve beneficial owners of firm (more than 25%)
- officers and managers of a firm - partnership team
- MLRO and MLCO and if same as above so that they can be approved as both
OFFENCES
s327- concealing removing
- strict liability but does require mental element that “knows or suspects” to be crim prop.
- DEFENCE
1) - authorised disc
- BUT must be before act or where consent to given to do act from NO or NCA ie DAML received
- NOTE can’t tip off client where waiting for DAML= offence s333a
- provides defence to 327,328 and 329
2) disc made DURING course of prohibited act. Once knew disclosure made
3) disc after Act but reasonable excuse for not making it earlier and makes as soon as after
4) reasonable excuse - narrow defence
- where criminal action/money laund in public domain, or info which should have been disclosed was subject to legal prof priv
5) Overseas defence - conduct took place in country where not criminal in that country, even though is in UK
- disclosure made to NO or NCA in good faith WILL NOT breach client confidentiality
s328 - arranging
3 step test
i) any arrangement - work been done
ii) criminal property - any crim or potentially crim property that sol knows about or suspects
iii) Knows or suspects - do they know or suspect crim property
- low bar - slight suspicion counts
DEFENCES - as above
s329 - Acquisition or possession
- must know or suspect property is criminal
- eg crim money going into client account, also breach of SRA accounts rules
DEFENCES as above
- adequate consideration - proper payment of services conducted by sol and believes legit transaction
- defence won’t operate where
*money received not adequate, pennies
* sol believes work doing to further criminal purpose
* onward movement of money. Need DAML
- can commit 2 offences s328 depositing money and s329 possession
s330 - Failure to disclose
- to firms NO or NCA asap
- report must be made even if only suspicion
- disc must contain reason why suspects, so if doesn’t have this information then no offence
DEFENCE
- reasonable excuse - no idea and not training given, overseas defence
- BUT can be liable even if don’t actually know or suspect, as there is an objective standard- know or suspect. So any signs disclosure should be made
- BUT info subject to legal or litigation priv, CAN’T disclose EXCEPT where communicated with intention of committing further crim purpose
- Duty of confidentiality under SRA code of conduct does NOT apply with regard to making s330 disclosure
s331 - FT disclose NO
- disclosure to nominated officer (NO)
- know or suspect and have all info but fail to make required disc -SAR, to NCA as soon as practicable
DEFENCE
- reasonable excuse and overseas def
s333A - tipping off
- where knows or suspects disclosure made SAR to NO or NCA
DEFENCE - done to dissuade committing money laundering, or if do not know or suspect will prejudice investigation
- NO defence to say it was authorised by NO
PROCEEDURE after SAR made under POCA to NCA
- sol makes authorised disclosure to NO or NCA
- sol must get consent from NO or NCA in form of DAML to proceed
- NO decides if needs to make SAR to NCA
- If NO - can tell sol he can continue with transactions
- If Yes - send to NCA and NO can’t give consent to proceed
- can only continue if NCA issue DAML
- NCA have 7 days to respond to request
- if fail to NO can give consent after 31 calendar days
- does not apply to terrorist financing - can only proceed if have express permission
- client AML regulated profession - SRA authorised
