Regulation of Law Firms Flashcards
What types of legal services business need to be authorised?
-reserved legal services
-immigration services
-claims management services
-regulated financial activities
What are the reserved legal activities under S12 Schedule 2 Legal Services Act 2007?
-rights of audience
-conduct of litigation
-reserved instrument activities
-certain probate activities
-administration of oaths
What are the 3 categories the SRA have for legal services organisations?
Sole practice
Legal services body (all lawyers)
Licensable body (lawyers and non-lawyers)
What are the types of legal services organisations that are not authorised by the SRA or an approved regulator?
Law centres and legal advice centres
In-house practice
Multi-national law firms
What are the key risks published by the SRA Risk Outlook in recent years?
-Artificial intelligence
-Money laundering
-Client money
-Diversity
-Cyber security
-Integrity and ethics
Outline the nature and scope of professional indemnity insurance for SRA regulated law firms.
The SRA also requires law firms to take out professional indemnity insurance to protect firms and clients.
The insurance should provide appropriate and adequate cover. If a firm is notified of a claim, they must notify their insurer immediately.
What does AFR 8.1 require all SRA regulated firms to have?
A Compliance Officer for Legal Practice (COLP) and a Compliance Officer for Finance and Administration (COFA).
What responsibilities does a COLP have?
-ensure the firm complies with all the terms and conditions of authorisation by the SRA
-ensure the firm complies with its statutory obligations
-record any failures to comply with the firm’s obligations and make records available to the SRA
-report any material failure to the SRA as soon as is practicable
What responsibilities does a COFA have?
-ensure that the firm complies with the SRA Accounts Rules 2019;
-report any serious breaches of the SRA Accounts Rules 2019 to the SRA promptly
What criteria must be satisfied for a person to be eligible to be a COLP/COFA?
-be a manager or employee of the authorised body
-consent to the designation
-not be disqualified from acting as a Head of Legal Practice/Finance and Administration under s99 Legal Services Act 2007
-in the case of a COLP, be an individual who is authorised to carry on reserved legal activities by an approved regulator
Can a person be a COLP and a COFA?
Yes, it is possible provided the person has the necessary skills and fulfils all the criteria. This is likely in the case of small firms/sole practitioners.
Who does compliance ultimately rest with in a law firm?
Compliance is ultimately the responsibility of the owners and managers of the Firm. COLPs and COFAs do not have sole responsibility for compliance.
What must firms ensure is in place in relation to supervision of the business of the firm as a whole>
A firm must have at least one manager or employee or must procure the services of an individual who:
-is a lawyer of England and Wales and has practised as such for a minimum of three years; and
-supervises the work undertaken by the authorised body (9.4(a) and (b) AFR).
What are the three most common ways of structuring a law firm?
-Partnerships
-LLPs
-Incorporated companies
What are the advantages of running a law firm as a partnership?
-flexible structure
-partnership ‘culture’
-profit sharing
-privacy (no filing requirements)
-control and decision making rests with the partners
