Regulation of Firms (SQE1 only) Flashcards
What are the 3 key aspects of SRA’s role?
- Authorises firms and other bodies to provide legal services
- Sets and enforces standards for solicitor’s profession
- Main point of call for disciplinary matters relating to solicitors - can issue warnings, fine and revoke recognition
What are reserved legal activites?
Services that cannot be provided unless authorised by SRA - inc:
- Rights of audience (appear before court, call witnesses)
- Conduct of litigation (issuing proceedings before court)
- Reserved instrument activities (preparing instrument of transfer/charge relating to land)
- Notarial activities
- Probate activities
What does it mean that SRA takes risk-based approach to regulating firms?
Do not set prescriptive rules but encourage firms to set own standards and ensure compliance (after setting out regulatory framework)
To what 4 categories of people do individual lawyers have duties to?
- Clients - 7 principles, CCS obligatinos etc.
- Third parties - uphold confidence in profession, duty to act public generally as well as court
- Colleagues - maintain competence and adequate supervision
- SRA and other regulators -cooperate with SRA and ensure they can justify their actions
Who is responsible for ensuring compliance with the CCF?
‘Managers’ = sole principal in a recognised sole practice, partners/members of LLP, directors of company, partner in partnership
What two roles must firms appoint and what is their job? Must they be different people?
- COLP (Compliance Officer for Legal Practice) = comply with regulatory obligations and record failures to do so
- COFA (Compliance Officer for Finance and Administration) = comply with SRA Account Rules and report serious breaches to SRA
One person can perform both roles (for small firms)
What is PII and why must firms take it out?
Professional Indemnity Insurance - provides cover for firm and clients, pays out claims from clients or TPs
Minimum levels specified in SRA
When must organisations get their legal services business authorised?
If they provide any of the following:
1. Reserved legal activities
2. Immigration services (unless regulated by OISC)
3. Claims management services (unless regulated by FCA)
4. Regulated financial activities (unless regulated by FCA)
Will a business who only provides non-reserved legal activities never be authorised?
Does not need to be - but may choose to be authorised to reassure clients its practice has protections that arise from being authorised by SRA e.g. requirement to have specific level of PII
What is a sole practice? Is it only one person?
- Solicitor practices on own account and provide services under own/trading name; sole principal
- Can employ several qualified solicitors as long as they are not also principals
NOT a company
Less common nowadays - profession more specialised and indemnity insurance gone up
What is the difference between a legal services body and a recognised body?
- Legal services body = a firm within which all managers/interest holders are lawyers (partnership, company, LLP)
- Recognised body = legal services body once authorised by SRA
What is a licensable body? How many non-lawyer managers must it have?
AKA alternative business structure (ABS)
Body within which managers/interest holders include both laywers and non-lawyers (must have at least one non-lawyer manager)
Intro of ABSs to the legal services market = non-lawyers are able to share in the management and control of businesses which provide reserved legal activities to the public.
Permits a non-lawyer - e.g. director of finance and administration - to own shares in an incorporated law firm or share the profits of a partnership, as well as having voting powers.
Do law centres/legal advice centres need to be authorised by the SRA? Must pro bono work be covered by indemnity insurance?
I.e. places that give legal advice and undertake casework for free
- Not if they do not provide reserved legal activities (but must be authorised if they do e.g. litigous debt claims!)
- A solicitor must still comply with CCS even if unpaid
- Pro bono work must be covered under indemnity reasonably equivalent to that required under SRA indemnity insurance rules
Must in-house practices be SRA authorised?
No - but solicitors must comply with CCS standards
What is the status of multinational law firms and the SRA codes?
I.e. firms operating both inside and outside E+W`
- Foreign lawyers practicing in E+W required to comply with CCS, SRA etc.
- SRA regulated individuals/authorised bodies practicing in offices outside E+W must comply with SRA Overseas Rules
What requirements in the CCS and CCF ensure that legal professionals address the risks to integrity of the legal profession?
- Keep client money safe
- Do not take unfair advantage of clients
- Ensure solicitors’ instructions reflect client wishes
- Address EDI
- Provide clear complaints procedure
- Provide clear information that client can understand about service they receive and how much it will cost
What must you do when supervising or managing others providing legal services?
- Remain accountable for the work they carry out
- Effectively supervise work done for clients
Must someone supervising client files be legally qualified?
No - as long as they have suitable experience, knowledge and competence to deal with potential issue and they have clear guidance re when/to whom issues outside their authority should be referred upwards they are permitted to supervise client matters
What are the roles of the COLP (Compliance Officer for Legal Practice) and the COFA (Compliance Officer for Finance and Administration)?
- COLP = ensure firm complies with all T&Cs of authorisation by SRA/statutory obligations, record failures to comply with authorisation and make available to SRA, and report any material failure to SRA as soon as is practicable
- COFA = ensure firm complies with Accounts Rules and reports breaches of such to SRA promptly
Do COLPs and COFAs report breaches to the managers or to the SRA?
SRA
What type of system must COLPs and COFAs put in place?
Not prescribed - requirements vary depending on size and type of firm
But most will implement risk/financial management policy
What is the criteria for being a COLP or COFA? What must a COLP be in particular?
- Be a manager or employee of authorised body
- Consent to designation
- Not be disqualified from acting as a Head of Legal Practice
- For COLP: be an individual authorised to carry on reserved legal activities
Manager = sole principal, member of LLP, director of company, partner in partnership
Authorised body = body licenced by SRA to practice as a licensed body/SRA-recognised sole practice
Must the COLP and COFA always be different people?
Can be same person provided they have necessary skills and meet criteria, but likely that this will only be the case for sole practicioners and some small firms
Do COLPs and COFAs have sole responsibility for compliance?
No - compliance is ultimately the responsibility of owners/managers of firm (managers have responsibility for compliance by firm with CCF) who share responsibility joint and severally
But COLPs and COFAs still have pivotal functions in their organisation
I.e. if a COLP/COFA decides not to take any further action after you alert them of serious breach, you should still pursue matter further
