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Professional Conduct 1 Flashcards

1
Q

Money Laundering

A

Financial transactions where proceeds from serious crime are cleaned so the source is harder, if not impossible, to trace.
Lawyers are vulnerable to being exposed to ML.

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2
Q

Money Laundering Legislation

A

Proceeds of Crime Act 2002 (PoCA)
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR)

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3
Q

How do firms tackle ML?

A

Compliance Officers for Legal Practice and Finance and Administration (COLP, COFA)
Each firm must nominate a money laundering reporting officer (MRLO)
Policies obliging employees to report suspicions/knowledge of ML
Reg 18 MLR- law firms + other business should assess the risks of ML and Terrorist Financing
Anti ML Risk Assessment required

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4
Q

Process of Money Laundering

A
  1. Criminal source of funds disguised
  2. Form of funds converted (cash to bank acct.)
  3. Trail by which conversion occurs disguised
  4. Launderer retains control of funds directly/indirectly
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5
Q

How is a solicitor at risk from ML?

A

Client depositing £ in firms client acct. for purposes of redirecting to 3rd party
C buying property/assets/investing using £ from crime
Setting up legal structures to money launder/hide source of funds (complex trusts)
C using firm’s client acct. to mix dirty and clean cash to clear audit trails
^ Solicitors should be careful about revealing details of client accts. (breach SRA code)

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6
Q

Money Laundering: Warning Signs

A
  • Instructions outside of firm’s expertise
  • Use of client accts
  • Clients paying large sums in cash
  • Money coming in/out of offshore tax havens (parties are offshore vehicles)
  • Money coming from high risk jurisdictions
  • unusual retainers
  • setting up a trust
  • property purchase
  • buyers and sellers w/ similar names/signatures
    High risk instruction = suspicious attribute + suspicious activity
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7
Q

Financial Action Task Force (FATF) and European Commission publish lists of countries with higher risk of ML

A

DPRK, Iran, Myanmar, Cayman Islands

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8
Q

Direct involvement offences PoCA- ML

A

s327 : concealing/disguising/converting criminal property
s 328: involvement with arrangement which you know/suspect helps the acquisition/retention/use/control of criminal property
s 329: acquiring/using/possessing criminal property
Apply to everyone. Can be guilty of multiple.

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9
Q

Non direct involvement offences PoCA

A

Applies to those working in the regulated sector (insurance/investment/acct./insolvency/tax/financial/property)
s 330: failure to disclose suspicions to nominated officer/MLRO
include- identity/whereabouts of property/reason for knowledge/suspicion
s 333A tipping off client after disclosing Wait for further action after reporting to NCA (7 bdays notice period -> 31 days moratorium period if NCA refuses consent)

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10
Q

Defence to direct/non direct involvement

A

Authorised disclosure to a nominated officer under s338
can be made before /during /after doing the prohibited act
during/after- didn’t know it was illegal/threatened + made disclosure ASAP during course of employment
Golden rule: DISCLOSE
no offence if outside UK and not unlawful in that territory

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11
Q

Enhanced CDD Regulation 33 MLR 2017

A

-where high risk of ML/Terrorist Financing
-high risk third country (requires source of funds of client and client’s beneficial owner, approval of senior management at firm, further examining patterns of deals)
-Politically Exposed Person (PEP) or associate of a PEP- someone entrusted with a prominent public function
-complex transaction
-unusually large transaction/pattern of transactions/ transactions with no economic or legal purpose
Method: independent reliable verification of info, examining background and purpose of T and monitoring relationship

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12
Q

Customer Due Diligence (CDD)

A

MLR requires regulated businesses to identify and verify the identity of their clients - CDD
should be done when establishing a business relationship/ carry out the occasional transaction/suspect ML/doubt the veracity of ID given
Company: must identify name/number/registered office/constitutional docs/names of directors
Company/trust/partnership - identify the beneficial owner (more than 25% shares/voting rights)
ongoing monitoring required - Reg 28

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13
Q

Penalty for PoCA offence

A

imprisonment/fine

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14
Q

MLR 2017 (Money Laundering, Terrorist Financing and Transfer of Funds (Info on the Payer) Regulations

A

Organisation must be in a position to identify + report potential money laundering.
applies to a number of organisations/institutions/professional advisors (Reg 8(2)) including independent legal professionals and trust/company service providers (most legal work/providing address)
but doesn’t apply to employment/most litigation cases but firms take all required steps regardless in practice

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15
Q

Simplified CDD- Regulation 37 MLR 2017

A

Never for individuals
low risk of ML/TF considering risk assessment done under Reg 18 and low risk factors (publicly owned/financial institutions/listed company)
Adjust extent/timing/type of CDD measures but still carry out sufficient monitoring to detect unusual/suspicious behaviour

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16
Q

Customer Due Diligence timing

A

Reg 30 - before the establishment of business relationship/carrying out the transaction or during if delay is necessary/little risk of ML/TF

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17
Q

CDD - can rely on CCD of another person, but you will be liable for 3rd party’s failure to comply with MLR

A

second solicitor relies on first solicitor’s (3rd party) CDD
in practice large firms do their own (lower risk)
UK - can only rely on CDD from authorised classes- auditors/insolvency/accts/solicitors/licensed financial institutions

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18
Q

ML - Customer Due Diligence evidence

A

Legal Sector Affinity Group published Anti-Money Laundering Guidance for the Legal Sector

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19
Q

ML CDD Evidence: UK natural person

A

current signed passport/driving license
data service providers : electoral roll/CH/Credit agencies/Passport office/DVLA

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20
Q

ML CDD Evidence: Partnership

A

Partnership is not legal entity so need info on individuals -
if well known partnership- name, trading address, registered address, name of business
Individuals running smaller partnerships/unincorp business- identified as private individuals
Larger partnerships/Unincorp business/LLPs- treated as private companies

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21
Q

ML CDD Evidence: Companies

A

Reg 28(3)- corporate client requires name/company number/registered office/principal place of business
Beneficial owner should be verified (if unable to report to NCA)

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22
Q

ML CDD Evidence - listed company

A

if listed on regulated market- simplified CDD only- no beneficial owners just confirmation of company’s listing on regulated market + ongoing monitoring
Further CDD for listed if necessary may be copy of audited accts./cert of incorporation

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23
Q

ML CDD Evidence: Private and unlisted company

A

Name, company number. address of registered office and principal place of business
Law the company is subject to and its constitution
full names of board of directors and senior persons in charge of operations
Cert of incorporation/articles/filed audited accts./company registry

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24
Q

Financial Services Regulation

A

FS- advising on merits (particular client+particular transaction)/dealing(buying/selling)/arranging (paperwork) investments
Heavily regulated to protect consumers from negligent advice
Financial Services and Markets Act 2000 FSMA governs this
Regulated Activities Order 2001 establishes what it governed by FSMA
2 regulators - Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA)

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25
Q

FSMA s19 - General Prohibition on solicitors carrying out regulated activity

A

Regulated Activity = Specified Investment + Specified Activity (e.g. advising on shares)
Consider: is investment (shares/bond/mortgage) and activity (advising/dealing/arranging/managing investments) specified under FSMA?
if not excluded exemption may be possible or authorisation may be required (if fulfilling s327 FSMA and SRA Scope Rule 2)
art 53 RAO Generic advice/explanations are okay (not recommendation on course of action)- outside of FSMA scope
excluded activities can be done without authorisation (regulated activities that are a necessary part of other services in profession/sale of a body corporate- can advise on merits here art 70 if buying/selling more than 50% of voting shares in company )

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26
Q

For Regulated Activities to be exempt, all conditions need to be met s327 FSMA

A
  1. person doing RA must be a member of the profession
  2. must not receive commission from 3rd party for RA unless client is accounted for commission (client must give informed consent for them to keep it)
  3. RA must be provided incidentally to provision of professional services (a small part of what the firm does for its clients overall)
  4. must only do RAs permitted by their relevant designated professional body (SRA Scope Rule 2 - activity arises out of/is complementary to the provision of a particular professional service to a particular client- must arise naturally)
    if none of the above apply, firm must be authorised by PRA/FCA, if not breaching s19(1) FSMA- crime
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27
Q

FSMA applies (not excluded regulated activity)

A

solicitor needs to be directly authorised (FCA/PRA) or supervised by a designated professional body (The Law Society or SRA)

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28
Q

Civil Court Structure

A

Supreme Court
Court of Appeal
High Court (1st instance)
Country Court (1st instance)
(Tribunals -> Appeal Tribunals-> Court of Appeal)

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29
Q

Start in County Court or High Court?

A

High Court if over £100k (over £50k for Personal Injury)
consider complexity of facts/law/remedies/procedures or importance to the public
Fatal accident - must start in High Court

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30
Q

County Court

A

1 National County Court with 170 hearing centres. Some admin done online. No separate divisions, low value claims not requiring specialism
Deputy District Judges/ Recorders/Circuit Judges

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31
Q

High Court

A

Royal Courts in the Strand (start claims from London here) + regional District Registries (start claims in London or here)
3 divisions :
Chancery
King’s Bench
Family
High Court Masters/Judges
Chancery + KBD known as Business + Property Courts

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32
Q

HC: King’s Bench Division

A

General KBD (Personal Injury/Professional Negligence/ Breach of statutory duty
Specialist courts:
Administrative Court (JR) (Planning C- planning permission)
Commercial Court (business disputes- often intl.)
Circuit Commercial
Tech + Construction
Admiralty (Shipping/Maritime)

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33
Q

Overlap between King’s Bench and Chancery

A

Bankruptcy, Partnerships, Company/Commercial, Contract, Tort
Financial List- both - financial dispute of £50million or more

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34
Q

Chancery Court

A

Property (land, mortgage, estates)/Trusts/Probate
IP
Insolvency (CA 2006)
Revenue (HMRC as party)
Competition Law

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35
Q

Court of Appeal

A

Civil and Criminal Division
final court of appeal for majority of cases
Judges of the Court of Appeal- Lord/Lady

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36
Q

Supreme Court

A

must have public importance
12 Justices

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37
Q

Lord Chief Justice

A

Most senior member of the judiciary

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38
Q

Solicitors’ Rights of audience

A

advocacy in Magistrates, County, Tribunal, Upper tribunal
Higher Rights of Audience (exams needed) needed for higher courts

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39
Q

Rules of Precedent: Stare decisis

A

Binding precedent - lower courts are bound to apply the judgments of senior courts. Certain courts bind themselves - CoA, High Court Upper Tribunal

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40
Q

Precedent: Court of Appeal

A

Civil division- bound by previous decisions
3 exceptions Young v Bristol-
a) CoA faced by 2 conflicting decisions of its own
b) CoA must refuse to follow decision conflicting with UKSC/HoL even if CoA not expressly overruled
c) Previous CoA decision done per incuriam not bound to follow (w/o care- not where prev not fully argued/misinterpreted authorities or statute)
Criminal division- same as civil, 4th exception in the interests of justice where the liberty of an individual is at stake (Taylor)

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41
Q

Precedent: Supreme Court

A

Was binding on itself until 1966.
As of Practice Statement 1966, it will only depart from previous decisions if right to do so (rare- done if no detriment to public administration usually)

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42
Q

Funding

A

A solicitor has a duty to try to find the best funding option for a client.
Private Funding
Professional Funding
Before/ after the event insurance
Community Legal Service
Conditional Fee agreements
Damages based agreements
Third party funding

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43
Q

Precedent Divisional Courts of High Court

A

Bound by itself and follow same exceptions as Court of Appeal for civil and criminal divisions.
Civil- bound by UKSC/HoL/Court of Appeal Civil
Criminal- bound by UKSC/HoL/Court of Appeal/Divisional courts
Decisions of HC binding on County Court and Magistrates

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44
Q

Privy Council

A

Final appeal court for UK and some commonwealth/overseas
often decided by SC judges
English + Welsh courts not bound by PC decisions unless PC expressly directs that domestic courts should treat their decision as binding

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45
Q

Precedent: Inferior courts

A

Do not bind themselves or other courts
Crown Court- bound by all incl KBD, doesn’t bind another Crown Court/Magistrates

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46
Q

Private funding

A

Using client’s private resources
normal for business
less so for individuals except conveyance/drawing up a will

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47
Q

Professional funding

A

Legal work funded by trade union/professional organisation.
Most likely for civil/criminal litigation (professional negligence, employee claiming against employer)

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48
Q

Before the event BTE insurance

A

Insurance pays out for legal work (may include disbursements)
Sold in conjunction with other insurance policies (Household/motor)
Often have financial limit
Low premiums (>1%)
not recoverable from other side if claimant wins

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49
Q

after the event ATE insurance- civil litigation

A

insurance taken after dispute has arisen
covers clients and opponents costs and disbursements in event of losing case
used in conjunction with Conditional FA/Damages FA (this covers client’s solicitor and ATE covers disbursements and opponent’s costs )
depends on merits of case and level of cover- premiums can be 25% of insurance cover sought
not recoverable from other party (except clinical negligence reports)

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50
Q

Conditional Fee Agreement (CFAs)- civil litigation

A

no win no fee
if successful normal fee+ success fee of up to 100% of normal (cannot recover success fee from opponent, comes out of damages)
Personal injury- success fee cannot be more than 25% of damages
Must satisfy certain conditions to be lawful
doesn’t fund disbursements (Expert/court fees), separate funding needed
if lose- liable for disbursement/opponent’s costs
if win- recover normal fee/disbursement/damages

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51
Q

Community Legal Service (CLS)(Legal Aid)

A

Stricts constraints on eligibility.
Eligibility for civil CLS funding:
must be individual, family/homelessness/DV disputes, low income and capital, must have meritorious claim

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52
Q

Damages based agreements (DBAs)- funding civil litigation

A

no win no fee
solicitor won’t get paid unless case wins- then paid a proportion of damages (not solicitors fees) (max amount is 25% damages in PI (excluding LOFI), 35% employment and 50% in other (nothing if fails)
does not cover disbursements

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53
Q

Third party funding (civil lit)

A

independent funding from 3rd party (banks, PE, hedge funds) in hope of successful claim, money back + uplift
Association of Litigation Funders guidelines- must not be misleading/try control litigation/have sufficient funds
limited to commercial cases of high value (not consumer cases)

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54
Q

Ways of charging a client

A

Hourly charging
Fixed fees
Unbundled legal services - fee for a specific legal task rather than generally representing client

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55
Q

Undertakings: Good Practice

A

Firms maintain registers as they are specifically enforceable.
They are drafted to be
Specific
Measured
Agreed
Realistic
Timed
Ambiguity construed in favour of recipient

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56
Q

Undertaking

A

A statement (oral/written) to someone that is reliant on it (makes it binding), that you will do/refrain from doing sth.
Doesn’t need the word ‘undertake.’
CCS 1.3 requires solicitors to perform all undertakings and to do so within an agreed timescale/reasonable amount of time
can be given to any individual in the firm
serious disciplinary offence to disobey

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57
Q

Solicitor dealing with the court

A

s50(1) Solicitors Act 1974- Solicitor is an officer of the court (overriding duty to the court, req. good behaviour)
CCS 2- must not waste the court’s time/be in contempt of court/ only put forward arguable statements

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58
Q

Solicitor misleading the court

A

CCS 1.4- must not mislead/attempt to mislead clients/court/others through act/omission or being complicit in those of others
Must immediately inform the court with client’s consent if accidentally done/cease to act if no consent
(draft non-arguable docs/facts, make case-unrelated allegations of crime, call on lying witness)

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59
Q

CCS 2 duties to the court

A

2.1 attempt to/or misuse/tamper with evidence
2.2 influence the substance of evidence (falsify/tamper witnesses)
2.3 do not bribe witnesses
2.4 only made assertions which are properly arguable
2.5 don’t be in contempt of court
2.6 don’t waste the courts time
2.7 draw court’s attention to relevant cases/statutes/procedure

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60
Q

Instructed to act by someone other than arrested client

A

CCS1.1- free to choose/not choose any client as long as not unlawfully discriminating.
CCS3.1- only act for client on instructions from them/someone properly authorised. Make sure instructions represent your clients wishes.
PACE- access to solicitor can’t be delayed because someone else called them
Practice- contact police and tell them someone else has contacted you, they inform client who confirms that they wish to instruct you (but their solicitor of choice/duty solicitor may have already been retained)

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61
Q

Conflicts of interests between clients

A

CCS 6.2 + Law Society notes
if conflict/signif risk of conflict between 2 or more clients, you must not act for all or possibly any of them
exceptions not applicable in criminal litigation: you must not act
1 litigator for all co-defendants in legal aid case- must be satisfied that they don’t signif. conflict (inc. future conflict, consider you must act in your client’s best interest)
confidential info may need to be disclosed to other client if relevant to their case (with consent- if no consent, both must therefore know that you are advising multiple clients

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62
Q

Confidentiality and Disclosure- criminal lit

A

Confidentiality- CCS 6.3 - (eternal) duty to protect confidential information of current and former clients unless disclosure required/permitted by law/client consents
Disclosure- CCS 6.4 - advisor must make client aware of all information material
CCS 6.5 don’t work for A where confidential information held for B which is material to A unless confidential information can be protected CCS 6.5a/b don’t apply to criminal cases- no information barriers
Duty of confidentiality more important than duty of disclosure but if duty of disclosure cannot be complied with, cannot continue to act, must not disclose reasons to client

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63
Q

When a conflict arises

A

e.g. if D changes plea/evident
decide between duty to disclose info to retained client puts you in breach of duty of confidentiality to the other and vice versa- if so must not act for either
cannot pass client to another member of your firm (no information barrier crim lit)

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64
Q

Guilty client but not guilty plea

A

not misleading the court (as long as not maintaining a positive case innocence- simply silent)
prosecution must prove the guilt of the defendant not innocence

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65
Q

Perverting the court of justice - breaching CCS

A

manufacturing false evidence- ccs 2.2
destroying/concealing evidence
interfering with witnesses
knowingly acting for D who assumes a false name with intent to deceive the courts and deliberately assisting your client to evade arrest

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66
Q

Duties conflict between client and court

A

Public interest in the administration of justice but confidentiality cannot be breached
explain to client solicitor’s duty to the court (e.g. withholding documentary evidence which court order demands (ccs 2.5 compliance with court orders), cannot continue acting without consent
inform court where no instructions from client (don’t divulge exactly what client said)

67
Q

CCS 3.2 Competent and Timely service

A
  • necessary skills (usually residential, maybe not high value commercial property)
68
Q

CCS 3.1 authorised to act on client’s behalf (client/so properly authorised)

A

use identity checks, written confirmation from spouses, power of attorney
Company- authorised - validly appointed director with authority (board resolution)

69
Q

CCS 6.1 - do not act if own interest conflict/signif risk of own COI

A

own interest conflict: duty to act in best interests of client conflicts with own interests (financial interest of yours/someone close to you, personal or business relationship of yours)
can act for family members as long as no client conflict (own interest)
relationships between solicitors are acceptable as long as impartial
No exceptions-> must not act

70
Q

CCS 6.2 Do not act where there are conflicts which do not involve your own interest

A

separate duties to act in the best interests of 2 or more clients conflict
seller wants to sell ASAP, buyer wants time to investigate
exceptions are rare-
clients have a substantially common interest/are competing for the same objective and have given written informed consent, safeguards for confidential info., it is reasonable

71
Q

Substantially common interest exception to CCS 6.2

A

Clear common purpose between clients and strong consensus on how it should be achieved
2 clients buying property together for development (if they fall out you may not act for both of them/ideally neither)
not seller and buyer - clear purpose but not consensus (seller ASAP buyer lengthy) but buyer and lender
Must have written informed consent/effective safeguards to keep info confidential/be reasonable

72
Q

Competing for the same objective exemption to CCS 6.2

A

auction/tender- one client achieves, others cannot
start with 2 or more end with 1
practice- only applies to sophisticated clients
all conditions must be met:
all must give informed consent evidenced in writing, safeguards to protect confidential information, must be reasonable (one not more vulnerable than the others

73
Q

Acting for buyer and lender

A

possible as common interest - ensuring property is marketable and of good value
Unlikely for commercial, common for residential- standard certificate of title/form of loan unnegotiated- approved by Law Society and Council for Mortgage lenders

74
Q

CCS 6.3 - duty of confidentiality

A

keep info of former/current clients confidential (even after death) unless disclosure required/permitted by law or client consents - HMRC/NCA/court order/statutory or regulatory reporting/civil/crim claim against client suing you/child abuse
duty of confidentiality always more important than duty to disclose (if no consent, can’t act)
express/implied consent to provide info to other side which is necessary to progress the sale
duty is to client not people in personal life

75
Q

CCS 6.4 duty of disclosure to client
CCS 6.8 must give info to client in ways they understand

A

make client aware of all the information material to the matter of which you have knowledge - personal duty on individual solicitor of their own info (not that of others in the firm)
material- reasonably expected to affect decision making
buyer- report on extent of investigations (limitations/matters not covered) - protects against negligence claims
Limited exceptions v rare (serious mental harm to client to know/legal restrictions/informed consent (knowing importance from info)/from mistakenly disclosed privileged doc)
don’t use complex/technical language to residential client (w/o offer to explain)

76
Q

Adverse Interests (one party likely to become the opposing party to a client/former client)

A

CCS and CCF 6.5- do not act for a client who has an interest adverse to the interests of another current/former client for whom you hold confidential information unless:
- effective measures taken so there’s no real risk of disclosing confidential info (systems, separate departments/servers, data encryption)
- the current/former client has given informed consent (needs understanding of potential prejudice)
Conflict checks ensure this

77
Q

SRA Accounts rules

A
  1. application: apply to bodies authorised by the SRA (firms, sole practitioners), managers (sole principal, member of LLP, company directors, partners, governing body) and employees
    Authorised body’s managers joint and severally liable for compliance with the rules nu the body/managers/employees
78
Q

13 SRA Accounts rules

A

4 sections
1. application (rule 1)
2. client money + client accounts (rule 2-8)
3. dealings with other money belonging to clients/3rd parties (rule 9-11)
4. Accountant’s reports and storage and retention of accounting records (12 +13)
firms have systems and controls in place to ensure compliance with the rules appropriate to nature + volume of client transactions/ £ value

79
Q

SRA Rule 4: client money must be kept separately from money belonging to the authorised body

A

Rule 2.1 defines client money as £ held/received
a)by bodies relating to regulated (legal/professional) services you have done for a client
b) on behalf of 3rd party in relationship to a)- agent/stakeholder- e.g. deposit, mortgage money
c) as a trustee/appointment (power of attorney/occupational pension scheme)
d) for fees/unpaid disbursements connected to transaction but not yet paid (search/court fees) (bill not issued yet)
e.g. covering likely costs prior to transaction, Land Registry fees, unpaid Stamp duty etc., client damages
no definition for non-client money/firm’s/office money (everything else captured- paid disbursements)

80
Q

Section 2 Rule 8.1- authorised body must keep and maintain accurate, contemporaneous and chronological records to show dealings with client money

A

a) record in client ledgers (identified by name and matter)
- all client money receipts and payments on client side/all others on business side
b) maintain a list of all balances shown by client ledger accts. of liabilities to clients/3rd parties with running total
c) provide cash book showing a running total of all transactions through client accounts held/operated by you

81
Q

SRA guidance- double entry principle

A

Each transaction has 2 entries (one is credit CR one is debit DR)
Client money- in client side of client acct. ledger (balance shows how much held for that client) and client cash book (cash sheet)
Non-client money into/out of business acct.- in business side of client ledger and (cash sheet) business account (how much client owes body)
View from client’s perspective- money to body is CR in client side of client ledger, taken out is DR in same (reverse for cash book)
If client has more than 1 matter concurrently- separate client ledgers for each matter (named accordingly.)

82
Q

Balances- double entry bookkeeping

A

Balance of client side of client ledger - £ in client acct. belongs to client/how much firm holds for them
should be nil/CR (body holds £ for client)
Client cash book- total £ held for all body’s clients (balance = all client sides of client ledgers)
should be nil
Balance on business side of client ledger - how much that client owes to body
should be nil or debit ( client owes money)

83
Q

Rule 8 record of bills (Some transactions which need to be recorded don’t involve £)

A

bill of costs - Rule 8.1
Rule 8.4- must keep a central record of all bills/other written notifications of cost given to you (profit costs acct. - also double entry in client ledger business acct. of client billed)

84
Q

Rule 8- reconciliation (comparing records)

A

8.2- obtain statements from banks/building societies/other financial institutions at least every 5 weeks for all client and business accounts held/operated by you
8.3 reconcile all client accounts financial statements with the cash book balance (£ client money in client acct.) and client ledger total (total of client side balances) at least every 5 weeks,

85
Q

Regulators

A

Overarching - Legal Services Board
SRA regulates law firms and lawyers authorised by SRA
Clients can complain to firm -> Legal Ombudsman (if firm exhausted/doesnt apply to large companies- no powers to discipline/fine but directs S to pay compensation/correct error/limit firms fees) -> SRA (can sanction, warn, order S to repay client/close down firm)
SRA can refer complaint about a solicitor to Solicitors Disciplinary Tribunal, who can strike them off (or suspend/fine/restrict, doesn’t award compensation (court action))
Law Society represents solicitors

86
Q

SRA Standards and Regulations 2019

A

Principles- lawyer’s relationship with client, court, other professionals and public (apply to personal life too), wider public>client
CCS (code of conduct for solicitors) - solicitors personally responsible for compliance (7.3 cooperate with investigations into legal services)
CCF (code of conduct for firms)- systems of compliance with SRA rules, responsibilities of managers, Compliance Office for Legal Practice and for Finance and Administration COLP and COFA
SRA Accounts Rules

87
Q

SRA Principles

A

Solicitors must:
1. uphold the rule of law/administration of justice
2. uphold public trust and confidence in the profession
3. with independence
4. honestly
5. with integrity
6. encourage DEI
7. act in the best interests of their clients

88
Q

Principle 7: acting in best interest of client

A

must also act with independence, honesty and integrity- refuse to lie for client etc.

89
Q

Principle 5 : Integrity

A

Integrity broader than honesty - misleading client/court- not breached Principle 4 of honesty but have breached Principle 5 (integrity)
taking unfair advantage of public/client/ allowing another to do is
misleading/allowing another to mislead

90
Q

CCS 1.1

A

Do not unfairly discriminate (allowing personal views into professional work)(links to Principle 7 of client best interest)

91
Q

CCS 1.2

A

do not abuse position by taking unfair advantage of client (e.g. working opposite an unrepresented client- don’t take advantage of their lack of legal skills- advise them to instruct a lawyer)

92
Q

CCS 1.4

A

do not mislead/attempt to mislead clients/the court/others through act or omission or complicity in that of others (incl. client(
lying to client about how good case it, not disclosing statute to court against the case you are making, making false reps to 3rd party

93
Q

DEI(EDI)

A

ensures the effective administration of justice/a diversity of views, improves access to services, allows the most talented people to become solicitors which maintains high standard

94
Q

SRA goes beyond EA 2010

A

Principle 6: act in a way that encourages DEI
CCS 1.1 : do not unfairly discriminate by allowing personal views to affect work
CCS 1.2 : do not take unfair advantage of clients
CCS 3.4: consider and take account of client’s attributes/needs/circumstance

95
Q

SRA’s approach to DEI- obligations

A

firms/individuals must:
- provide reasonable adjustments to disabled clients/employees (firms must bear cost)
- encourage diversity at all levels
- collect/report/publish data on your diversity
- uphold reputation of profession (don’t express extreme views on SM),personal views shouldn’t negatively impact others, treat people with dignity and respect
- be fair and inclusive in interactions during work

Firms must have a complaints procedure (deal with them promptly/fairly/effectively)
duty to clients + employees

96
Q

SRA’s approach to DEI- recommendations

A

Firms must have
- a statement about DEI for employees/clients
- monitor diversity of staff and clients
- draft and implement DEI - outlining employment approach, encouraging equality of opportunity and respect for diversity
- attract the best staff, fair process for promotions and retain best people for role

97
Q

Equality Act 2010

A

imposes legal obligations to protect people from discrimination due to protected characteristics :
age/disability/gender/marriage/civil part/pregnancy/maternity/race/religion/sex/sexual orientation

98
Q

Types of discrimination under EA 2010

A

Direct discrimination: A treats B less favourably than they do others due to B’s protected characteristic
Indirect discrimination: Provision/criteria/practice not intended to treat anyone less favourably (applies to everyone), but disadvantages a group of people with a protected characteristic (not a proportionate means of legitimate aim) e.g. requiring full time work
Harassment: generally due to protected characteristic, sexual misconduct, less favourable treatment due to person’s rejection of sexual harrassment/harrassment due to gender
A violates B’d dignity - intimidating/hostile/degrading/humiliating/offensive environment s26, consider B’s perception, other circs, if reasonable for the conduct to have that effect s26.4
Victimisation: A detriments B due to B bringing proceedings/complaining under EA 2010/helping another to do so/A believes B has done this (A bans B due to B suing A for discrimination)

99
Q

Disability provisions- Equality Act 2010

A

Requires active steps to create level playing field
s29- provision of services - service providers have a duty to make reasonable adjustments- EHRC guidance
positive duty to remove/prevent obstacles anticipatorily - so disabled person can use a service as close as reasonable to non-disabled- consider a range of impairments
1. change the way practices are done
2. change physical features of premises (or reasonable alternative/service)
3. provide extra aids/services

100
Q

Dealing with Clients - SRA

A

Principle 7: act in client’s best interests
CCS 3.2: service must be competent + timely
- have work checked by supervisor, ensure you are competent to do task
- CCS 3.3 - maintain competence, keep professional knowledges/skills up to date
- CCS 7.1- keep legal knowledge up to date
- CCS 3.4 consider clients attributes/needs/circs (wills- grieving)
- CCS 3.5- managers are accountable for work carried through them/supervise all client work
CCS 3.6- managers ensure their workers are competent and keep their professional/legal/ethical/regulatory knowledge up to date
CCS 4.2: clients/others money and assets entrusted to you should be safeguarded
CCS 1.3- perform all undertakings to timescale or if none, reasonable time

101
Q

Publicity

A

CCS 8.8 - firm’s publicity should be accurate/not misleading
CCS 8.9- solicitors must not make unsolicited approaches to members of the public to advertise services (except current/former clients)
SRA Transparency rules: further regs rule 1 - costs info should be clear, rule 4- regulatory info SRA no. + badge displayed on website/letterhead/emails

102
Q

Introductions (3rd party person/business/org refers business to you (recommendation or putting in touch) for fixed fee/% and Referrals (You refer clients to 3rd party e.g. surveyor)

A

CCS 5.1- inform clients of financial interests of introducer/referor, fee sharing should be in writing and client made aware, not to those in criminal proceedings/publicly funded, don’t acquire in breach of SRA regulatory rules
Preservation of independence vital
Referrals- Principle 7- act in client’s best interests
Good practice- make written statement to client that work is independent/confidential, monitor client conflict issues

103
Q

Referrals are prohibited for personal injury cases/death

A

S56 Legal Aid, Sentencing, Punishment of Offenders Act 2012- LASPO
including through intermediaries
CCS 5.2- where it appears to SRA you have made/received referral fee, it will be treated as referral fee unless proved otherwise
must be in consideration of provision of services/another genuine reason

104
Q

Bribery Act 2010

A

offence for UK citizen/resident to pay/receive bribe directly/indirectly
or on their behalf (companies/LLPs)
Anti bribery policies common at firms
due diligence- business contacts should also have AB policies
corporate hospitality/gifts + entertainment - prevent where possible, financial limit, fine line between business relationship and bribe

105
Q

Confidential Information : Data Protection Act 2018

A

controls how individuals personal data is used by organisations
Principles - use info:
fairly/lawfully/transparently
for specified/explicit purposes
adequate/relevant/limited to what’s necessary
accurate and kept up to date if needed
kept for no longer than necessary
ensure security against unauthorised/unlawful access/loss/destruction/damage

106
Q

Three Cs

A
  1. Customer Due Diligence
  2. Conflict Check
  3. Client care letter
107
Q

Taking on a new client - NO

A
  1. Breaching the law or the Codes?
    Principle 1: uphold rule of law + justice
    Principle 2: uphold public trust in profession
    CCS 6.2- conflict of interest
  2. Can you deliver the service in a competent or timely manner- CCS 3.2 (your practice area? too busy?)
  3. Are you authorised to act on your client’s behalf (CCS 3.1)?
    make sure your client’s wishes followed (ensure both spouses agree), do not act if unsure
    Other obligations: Principle 6 DEI + CCS1.1- allowing personal views to affect work
108
Q

Conflicts of interest

A
  1. Own interest CCS/CCF 6.1
  2. Conflict of interest CCS/CCF 6.2 unless:
    6.2a substantially common interest
    6.2b competing for the same objective

Significant risk of conflict is sufficient
CCF 2.1- effective systems to identify conflicts (have you/firm acted for against parties/owners of clients in the past?)

109
Q

Own interest conflict- CCS 6.1

A

financial interest of yours/someone close to you
personal/business relationship of yours
role as employee
your own conduct as firm/individual (wrong advice given )
If you do have own interest conflict, another solicitor in firm can act for them
drafting a will where you are a beneficiary

110
Q

Conflict of interest CCS 6.2

A

Separate duties to act in the best interests of 2 or more clients in the same or related matter conflict
Principle 7: act in client’s best interest
signif risk sufficient
Cannot act unless
6.2a- substantially common interest - clear common purpose + strong consensus on method (2 ppl buying house to live in, 2 clients setting up business together)
little/no negotiation
6.2- competing for the same objective (if attained by 1 impossible for others)- asset/contract/business through liquidation by auction/tender/bid - v rare (sophisticated clients)
Both exceptions
1.informed consent to you evidenced in writing
2.effective safeguards on confidential info (diff teams of lawyers)
3. reasonable ( 1 more vulnerable than the other- no, knowledge and bargaining power of each, if negotiations between clients, benefits to clients- specialist knowledge/speed/convenience/lower £)

111
Q

Requirement to carry out a conflict check

A

CCF 2.1- systems in place to ensure no conflicts at outset of instructions
Carry out for new + existing clients
each firm has their own procedure

112
Q

What does conflict check involve?

A

Searching client name/company number/counter parties inc. parent + subsidiary companies
Names of client directors’ (parent + subsidiary) + counter party’s
name of the matter

113
Q

Client care letters (engagement/retainer letter)

A

help clients understand their job/demonstrate they have met SRA requirements
as soon as is practicable after receiving instructions on new matter
no strict SRA req to send
must be easy to read + set out what is going to happen/what client needs to do
annual to established clients + new matter letters
confirmation of client’s instructions/options
general info on parties responsibilities (unpaid costs prior)
costs info (detailed)
explanation of who is dealing w/ matter
complaints procedure

114
Q

Competence + level of service by legal professionals for clients - CCS 3

A

3.1 only act for client/authorised
3.2 - competent, timely manner
3.3 keep knowledge up to date
3.4 consider client’s attributes/needs/circs
3.5 remain accountable for those you supervise
3.6 +. CCF 4.3 ensure those you supervise are competent, up to date, understand legal/ethical/regulatory duties
CCF 4.3- effective system for supervising client matter

115
Q

Terminating retainer

A

+ cannot obtain clear instructions
+ breaking law/breaching Codes (conflict of interest)
+ client failed to pay its bills- traditionally not good enough reason but now specific contractual agreement for termination on non-payment of interim bills)
cannot out of self interest (CCS 1- fairness), Principle 7 (best interests)(4- honesty, 5- integrity)

116
Q

CCS 8- certain info req to be given to clients (often done in client care letters)

A

8.6 - give info in a way they understand (options available)
8.10 tell them how the services are regulated by SRA/approved regulator
8.11 clients understand regulatory protections available to them

117
Q

Client : information on costs

A

CCF 7.1c
in client care letter + discussed w/ client (best practice- not req.)
Transparency essential
CCS 8.7 - best possible info on how matter priced, likely overall cost of matter, at time of engagement/throughout
CCS 8.8 accurate publicity relating to charges/where interest is payable
track costs throughout - pre warn client that proceedings can complicate

118
Q

Client complaints

A

CCS 8.2 procedure for dealing w/ complaints
8.3 inform clients in writing at time of engagement of complaints procedure (Legal Ombudsman too)
8.4- resolve w/ 8 weeks of complaint, if unsatisfied refer them in writing to Legal Ombudsman and method of contact or details of ADR
8.5 dealt with properly/fairly/free of charge

119
Q

Criminal funding- police station

A

all suspects entitled to free legal advice regardless of means (Defence Solicitor Call Centre DSCC- telephone only for non-imprisonable)
solicitor must be accredited rep on Legal Aid Agency Register (accreditation process)

120
Q

Public funding for representation at court

A

Representation order from legal aid agency if both
- means test
- merits (interests of justice) test

121
Q

Means test - crim public funding

A

Automatic pass- under 18/on specified welfare

122
Q

Means Test Magistrates Court

A

Means Test Magistrates C- weighted gross annual income (no. household unless partner complainant/co-D),
£12,475 or less- eligible
£22,325 or more - ineligible
Full means test needed- between 12 and 22- applicants annual household disposable income (£3398 or less- eligible)
eligibility/hardship review if fails

123
Q

Mean Test Crown Court

A

income + capital (equity from properties)
If more than £30k, applicants must contribute to defence (all/some/none) throughout if income, at end if mostly capital
ineligible if annual household disposable income above £37,500
public funding w/o contribution - £3398 or below
public funding w/ contribution- between £3398 and £37499- 90% disposable income for max 6 months (max based on offence, refunded w/ interest on acquittal)
eligibility/hardship review

124
Q

Merits test- criminal funding

A

form CRM14- application for legal aid in criminal proceedings - demonstrate interests of justice
automatically pass if indictable only offence/either way offence sent to Crown court
provides info on 10 propositions (D cannot do own defence as complicated)
guilty plea, if custodial sentence likely- will pass interests of justice

125
Q

10 propositions

A
  1. I will likely lose my liberty
  2. Suspended/non-custodial sentence if broken , court will deal with me for OG offence (OG sentence activated if convicted of current offence)
  3. Likely to lose livelihood
  4. Likely to seriously damage my reputation
  5. Substantial question of law involved (identify specific issue- admissibility etc.)
  6. Unable to understand proceedings/present own case (even w/ interpreter)
  7. Witnesses need tracing/interviewing for me (tell court why they’re needed)
  8. Expert cross examination of prosecution witness possible (why is more than authorised court officer needed, Complainants/police officer also witnesses)
  9. Interests of another involved in court proceedings (not family of D) that I am represented
  10. Other reasons (not guilty-> trial, CC, vulnerable witnesses)
126
Q

Representation order granted

A

Solicitor can start working on preparing case in MC and can claim for:
Preparation (taking instructions, interviewing witness, advising on plea, docs, instructing experts, assessing prosecution)
Advocacy- applications for bail/others
Routine letters/phone calls

127
Q

Failure of means/merits test

A

Fails means test- no right of appeal/can submit another if circs change
Fails merits test in MC- submit another app, if 2nd fails, appeal to MC
D fails either/both - consult w/ duty solicitor if imprisonable offence (DS can only represent them on 1 occasion usually first hearing at court)
D can privately fund a solicitor/ self-represent with court’s assistance + support

128
Q

Law firm outgoings

A

Mainly rent + salaries
Insurance (SRA min threshold), Tech, Advisers, Marketing, Training + Develop.

129
Q

Law firm : Methods of billings

A

Hourly charging
Conditional fees
Fixed fees
Capped fees
Insurance
Community Legal services

130
Q

Law firm: hourly charging

A

Traditional method, others becoming more common now
Fee earners record time in 6min blocks
Recorded time- Work in progress
Partner reviews WIP, decides how much to bill to client or write off
Time billed according to charge out rate
Invoiced monthly/as agreed with client
wills/conveyancing

131
Q

Law firm: conditional fee arrangements

A

Damages based agreements/no win, no/reduced fee
No fees if case loses
Case wins- recover fees from client’s damages- capped % (25% PI)
common in litigation/mediation

132
Q

Law firm: fixed fees

A

Firm invoices client for fixed amount (regardless of time spent)
Invoice after completion
Conveyancing/wills

133
Q

Law firm :Capped fee agreement

A

Firms records/bills in normal way, but can’t exceed pre-agreed amount
If recorded time reaches cap, team may stop work as partner renegotiates or extra work written off

134
Q

Law firm: Insurance funding

A

Client’s fees paid by insurance policy (panel of solicitor who do work at insurance company)
Personal injury, some litigation

135
Q

Basic Client ledger entries- client money transactions

A

in client side of client ledger account for individual client - balance is how much money firm holds for that client
AND
in client account cash book/sheet- running total of client acct. transactions
Rule 2.5 must return left over client money asap

136
Q

Recording non client transactions (firms £)

A

Business side of client ledger account for that particular client - how much that client owes the firm
AND
Business account (bank acct. of firm’s money)- payments in/out in business account cashsheet/book

137
Q

Client money received

A

CR client ledger client account
DR cash sheet client account

138
Q

Client money paid out

A

DR client ledger client account
CR cash sheet client account

139
Q

Non-client money received

A

CR client ledger business account
DR cash sheet business account

140
Q

Non- client money paid out

A

DR client ledger business account
CR cash sheet business account

141
Q

Cheques for client but not for work firm has done

A

sent by 3rd party- cannot pay into client account, must be forwarded to client (no double entry to record by can note receipt+ handover)

142
Q

Firm’s petty cash

A

Withdrawn from firm’s business account (non client money), recorded in petty cash cashbook/sheet
separate records
if spent on client , DR client ledger business account and CR cash sheet petty cash
reimburse - non- client money into business account

143
Q

Organisation needs SRA authorisation to provide these services

A

Reserved legal services for the public (rights of audience, conduct of litigation- issuing proceedings, reserved instruments (Land Registration Act 2002, any for real/personal estate, probate, oaths, notary)(certain charities exempt)
Immigration services (unless regulated by Immigration Services)
Claims management services (unless regulated by FCA)
Regulated financial activities (unless regulated FCA)

144
Q

Organisations authorised by SRA

A

Sole practitioners (not through limited company) declining (sole principal- can hire other non-principal solicitors)
Legal services body (all managers are lawyers)
Licensable Services Body (ABSs)- managers are lawyers/non-lawyers

145
Q

Where lawyers can provide legal services in bodies not authorised by SRA

A

Law centres, legal advice centres, in house practice, multi-national law firms
Must still comply with CCS/Cross-border overseas rules

146
Q

Annual SRA Risk Outlook

A

AI
Anti- money laundering (top priority)
Client money
Diversity in the profession
Information + Cybersecurity
Integrity + Ethics
Meeting legal needs- cost transparency
Standards of service- must be high

147
Q

Client matters must be supervised

A

CCS 3.5 - remain accountable for the work of those you supervise/manage + effectively supervise them (CCF 4.4)
CCS 3.6 ensure those you manage are competent, update their knowledge, understand legal/ethical/regulatory obligations (+ each individual has personal CCS obligation to do so)
Not all people working on/supervising client matters have to be legally qualified as long as competent- upwards authority

148
Q

COLP- Compliance Officer for Legal Practice

A

Authorised body must have COLP.
Ensures SRA + statutory compliance of firm
Records failures available for SRA/ reports material failures to SRA
Try meet standards of CCF (CCF 2- business systems , CCF 4- service + competence- clear governance + reporting lines 2.1)
Compliance w/ terms of authorisation, conflicts of interest identification/ protection of client confidentiality

149
Q

COFA- Compliance Officer for Finance and Administration

A

Authorised body must have COFA.
Ensures firm complies w/ SRA Accounts Rules 2019
Reports serious breaches of SRA Accounts Rules 2019 to SRA promptly.

150
Q

Who can be COLP/COFA?

A

Consenting manager/employee of authorised body
Not disqualified from acting- s99 LSA
COLP must be authorised to carry on reserved legal activities by approved regulators (not COFA)
1 person can be both
They do not have sole responsibility for CCF compliance- managers have joint + several

151
Q

SRA must approve all managers/owners of firms (Authorisation of firms rules ) except

A

Sole principle of authorised sole practice
Manager not involved in day to day/ compliance with SRA/ any legal activities or services

152
Q

Firm must have at least one manager/employee/ procure someone else who is a lawyer

A

Lawyer of England and Wales practising for a minimum of 3 years supervising all word done by authorised body.
Alternative Business Structures must have this.

153
Q

Law firm structure: Partnerships

A

+ flexible structure PA 1890
+ partnership culture (making partner)
+ control + decision making shared by partners
+ profit sharing - incentivises partners to find new business
+ privacy- no CH filing
- traditional finance raising (bank loans/working capital)
- shared decision making (hindrance)
- partners run firm (good lawyers =/managers)
- unlimited liability
- tax burden- individual partners
- foreign expansion- partnerships not recognised in every jurisdiction

154
Q

Law firm structure: LLP (LLPA 2000/CA 2006)

A

+ limited liability
+ tax (partnership -> LLP is tax neutral)
+ increased funding opps- separate legal entity, can borrow money in its own name/issue floating charges
- less tax efficient than a company
- increased filing
- external investment often needed (flotation/new investor)(may end up converting to a company anyway)

155
Q

Law firm structure: company

A

+ Limited liability for shareholders
+ clear decision making (board of directors)
+ easier to raise money (shares/floating charges/grant security to lenders)
+ tax
+ foreign expansion (global concept)
- admin + filing (AGMs, CH but increased transparency allows further external financing)
- tax issues (with partnership -> company)(company profits as director’s pay (not dividends) have NI tax)
- transparency (identity )

156
Q

FSMA specified investments

A

Rights under insurance contract
Shares in a company
Instruments creating/acknowledging debt
Government/public securities
Rights under pension scheme
Regulated mortgage contract (within EEA + at least 40% of land is a dwelling- home buyers not office/companies)

157
Q

FSMA - excluded activities (do not need FCA authorisation)

A
  1. Regulated activities that are a necessary part of other services done in the course of the profession (does not apply if paid separately, not incidental, to insurance contracts)(e.g. leasehold flat transferring shares)
  2. Regulated activities for sale of a body corporate (50% or more voting shares (including that which purchaser already owns), regarded as acquisition of day to day control)
  3. Authorised persons- dealing in investments as agent exempt where done on advice of/by FCA authorised person + client hasn’t sought advice on merits from solicitor
    Never for insurance contracts, if commission/advantage received must be accounted to client
158
Q

FSMA- exempt regulated activity must meet all of s327+SRA Scope rule 2

A

Must be member of a profession
Not receiving a pecuniary reward from 3rd party (unless given to client or they consent)
Specified activity must be incidental to the provision of professional services (small part of overall work of firm- likely yes)
Must only carry out permissible regulated activities (relevant designated body/Scope rules)
Scope rule 2- must be complementary to/ arise out of service to that client (cannot be in isolation) + no FSMA order/direction preventing it
Property - legal advice - regulated mortgage
Corporate- legal/tax advice to effect sale of shares
Litigation- draftings docs where regulatory matters involved

159
Q

FSMA- if s327 and Scope rule 2 not met

A

firm refuses to give advice and refers client to person authorised by FCA

160
Q

FSMA - If regulated activity not exempt

A

Solicitor needs direct FCA authorisation + compliance with FCA handbook
or to be authorised by designated professional body (SRA) and comply with Scope Rules and SRA COB rules

161
Q

s21 FSMA- criminal offence for unauthorised person to communicate financial promotion except

A

when approved by FCA authorised person or for
sale of a body corporate (50% +/day to day control)
Investment professionals
High net worth companies/individuals (companies with called up share capital of £5million or £500k for more than 20 members)

162
Q

s85 FSMA- criminal offence to offer shares to the UK public without an approved (FCA) prospectus except

A

when offer made to 150 people or fewer
offer only sent to qualified investors (banks, governments)

163
Q

FCA authorisation

A

time consuming + expensive

164
Q

Damages sent (client money) from opponent

A

bank immediately in client account and notify client
if cheque made out to client, send it to them

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