Regulatory and Legal Environment

Question 1

What are the 7 SRA Principles?

Answer 1

In a way that upholds the constitutional principle of the rule of law and the proper
administration of justice (Principle 1);
* In a way that upholds public trust and confidence in the solicitors’ profession and in legal
services provided by authorised persons (Principle 2);
* With independence (Principle 3);
* With honesty (Principle 4);
* With integrity (Principle 5);
* In a way that encourages equality, diversity and inclusion (Principle 6); and
* In the best interests of each client (Principle 7).

Question 2

What is the Code of Conduct for Solicitors?

Answer 2

The CCS sets out the standards that the SRA and the public expect from individuals authorised by the SRA to provide legal services, including solicitors, paralegals and apprentices.
The CCS is a brief document, approximately eight pages long. It sets out a framework for ethical and competent practice which applies irrespective of your role or the environment or organisation in which you work. It is important to be aware that conduct does not need to take place in the
workplace in order to relate to your practice. Any conduct which touches realistically upon your practice of the profession, in a way that is demonstrably relevant, will be captured by the CCS.
You as a legal professional must exercise your judgment in applying the standards to your situation and deciding on a course of action. You are personally responsible for compliance with the CCS and must always be prepared to justify your decisions and actions. The consequences of failing to meet the standards expected may be serious and the SRA could take regulatory action against you. CCS 7.3 requires you to cooperate with the SRA and other regulators when they investigate concerns relating to legal services.

Question 3

What is the Code of Conduct for Firms?

Answer 3

The CCF sets out the standards and business controls the SRA expects of firms with the aim of creating and maintaining the right culture and environment for the delivery of competent and ethical legal services to clients.

The CCF contains all the standards set out in the CCS plus additional standards about the way firms run their businesses, including rules relating to:
* The systems and controls firms must have in place to comply with the SRA’s rules.
* The responsibilities of managers of a firm.
* The requirement to have a Compliance Office for Legal Practice (‘COLP’) and a Compliance Officer for Finance and Administration (‘COFA’).
The consequences of failing to meet the standards set out in the CCF can be serious. The SRA may take regulatory action against the firm itself, or its managers or compliance officers. They may also take action against any employees for any breaches for which they are responsible.

Question 4

What requirements are there for legal professionals to mitigate risks associated with the profession?

Answer 4

To keep client money safe (CCS 4.2);
* Not to take unfair advantage of clients (CCS 1.2);
* To ensure solicitors’ instructions reflect their client’s wishes (CCS 3.1);
* To address equality, diversity and inclusion (CCS1.1, CCF 1.5);
* To provide a clear complaints procedure (CCS 8.2-8.5); and
* To provide clear information the client can understand about the service they will receive and
how much it will cost (CCS 8.6 and 8.7).

Question 5

What does it mean that solicitors should keep their knowledge up to date?

Answer 5

• CCS 3.2: You ensure that the service you provide to clients is competent and delivered in a timely manner.
• CCS 3.3: You maintain your competence to carry out your role and keep your professional knowledge and skills up to date.
• CCS 7.1: You keep up to date with and follow the law and regulation governing the way you work.
  The following is imposed on firms under CCF:
• CCF 4.3: You ensure that your managers and employees are competent to carry out their role, and keep their professional knowledge and skills, as well as understanding of their legal, ethical and regulatory obligations up to date.

Question 6

Is supervision part of the code of conduct?

Answer 6

Ensuring that the work of junior lawyers is properly supervised is very important to ensure that clients are provided with a good standard of service. There are a number of provisions in the CCS and CCF that relate to this:
* CCS 3.5: Where you supervise or manage others providing legal services:
(a) You remain accountable for the work carried out through them; and
(b) You effectively supervise work being done for clients
* CCS 3.6: You ensure that the individuals you manage are competent to carry out their role, and keep their professional knowledge and skills, as well as understanding of their legal, ethical and regulatory obligations, up to date.
* CCF 4.4: You have an effective system for supervising clients’ matters
A Firm is responsible for ensuring that the Firm has a system in place for supervising client’s matters in order to achieve CCF 4.4.This means that appropriate procedures need to be in place for suitable persons to check the quality of work undertaken for clients regularly. Although most persons supervising client files will have a legal qualification, such persons do not necessarily have to be legally qualified. As long as they have suitable experience, knowledge and competence to deal with any issue which may arise and such persons have clear guidance as to when and to whom issues outside their competence or authority should be referred ‘upwards’, they are permitted to supervise client matters.

Question 7

To whom can a client complain?

Answer 7

• Law Firm
• Legal Ombudsman
• SRA
• Solicitors Disciplinary Tribunal

Question 8

Legal Ombudsman (‘LO’)

Answer 8

If the firm’s internal complaints procedure is exhausted, individuals, small businesses, charities, clubs and trusts can refer complaints about poor service and fees/bills from solicitors to the LO.

The LO can require the solicitor to:

• apologise;
• pay compensation;
• correct or put right an error or omission;
• take specific action in the interests of the complainant;
• pay for the costs of the complaint;
• limit the firm’s fees.

Crucially the LO has no powers to discipline or fine a lawyer; the LO’s primary function is to resolve complaints.

Question 9

SRA

Answer 9

The SRA sets the principles and code of conduct that solicitors and lawyers regulated by the SRA must comply with.

If the client has a complaint that is concerning misconduct, dishonesty or breaches of the SRA’s rules, they can complain to the SRA. The SRA has the power to:

• issue a warning to the firm;
• impose a disciplinary sanction, eg a fine;
• reprimand the solicitor for professional misconduct;
• order the solicitor to repay or refund the whole or part of the costs to the client;
• impose restrictions on a lawyer’s ability to practise;
• institute disciplinary proceedings before the Solicitor’s Disciplinary Tribunal;
• revoke recognition of a firm; and
• close down a firm.

Question 10

Solicitors Disciplinary Tribunal (‘SDT’)

Answer 10

The SDT is an independent statutory body. It deals with serious breaches of the SRA’s rules and disciplines solicitors. Its powers include power to:

• strike a solicitor off the roll;
• suspend a solicitor from practice for a fixed or indefinite period;
• reprimand a solicitor;
• impose a fine;
• award costs against a party to proceedings; and
• make a restriction order, imposing a restriction on the area in which a solicitor can practice.

The SDT does not have power to award compensation.

Ultimately the only option left if the client is not happy would be court action.

Question 11

What’s the difference between acting with honesty and acting with integrity?

Answer 11

Integrity is about being scrupulous, careful and accurate.

The SRA might take action against an individual for lack of integrity where they have:

Taken unfair advantage of a client or a member of the public

Allowed another person to take unfair advantage of someone else

Misled another person or stood by and allowed another person to be misled

Question 12

CCS: maintaining trust and acting fairly

Answer 12

The first section of CCS relates to maintaining trust and acting fairly. It is about upholding the trust that the public needs to have in the legal profession. The following paragraphs of CCS are relevant:

CCS 1.1 ‘You do not unfairly discriminate by allowing your personal views to affect your professional relationships and the way in which you provide your services.’

CCS 1.2 ‘You do not abuse your position by taking unfair advantage of clients or others.’

CCS 1.4 ‘You do not mislead or attempt to mislead your clients, the court or others, either by your own acts or omissions or allowing or being complicit in the acts or omissions of others (including your client).’

Question 13

Equality Act 2010

Answer 13

The Equality Act 2010 protects people from discrimination in the workplace and in wider society against the following protected characteristics:

• age
• disability
• gender reassignment
• marriage and civil partnership
• pregnancy and maternity
• race
• religion or belief
• sex
• sexual orientation

Question 14

Guidance on the SRA’s approach to EDI

Answer 14

The SRA has issued a guidance note to help firms and individuals understand their obligations on EDI. You must:

Provide reasonable adjustments to disabled clients and employees to make sure they are not at a substantial disadvantage compared to those that are not disabled.

You must not pass on the costs of providing these adjustments to others. Encourage diversity at all levels of the workforce.

Collect, report and publish data about the diversity of your workforce.

Uphold the reputation of the profession in your professional and personal life and treat people fairly and with dignity and respect.

You should ensure your personal views do not have a negative impact on others. This includes expressing extreme personal, moral or political opinions on social media.

Be fair and inclusive in your interactions with people you meet and deal with in the course of your work.

Firms must:

· have a complaints procedure and make sure complaints including those of discrimination, harassment and victimisation are dealt with promptly, fairly and effectively.

Firms and other employers may wish to:

· produce a statement about EDI for their workforce, clients and the people they work with.

Monitor and analyse the diversity of their staff and clients.Draft and implement an EDI policy outlining the employer’s approach to recruitment, retention and progression and to encourage equality of opportunity and respect for diversity.Attract the best staff: have a recruitment policy and fair process for promotions to maximise the chances of getting and retaining the best people for each role.

Question 15

Types of discrimination

Answer 15

The Act identifies different types of discrimination and unlawful conduct, including:

Direct discrimination

Indirect discrimination

Harassment

Victimisation

Question 16

Direct discrimination

Answer 16

Direct discrimination occurs where “because of a protected characteristic, A treats B less favourably than A treats or would treat others” (section 13(1) Equality Act 2010)

An example of direct discrimination would be:

A club that organises salsa evenings deletes a woman from their list as soon as they learn that she is pregnant, on the assumption that during her pregnancy she will not want to come to salsa evenings. This decision resulting in unfavourable treatment based on a stereotype is likely to be pregnancy discrimination.

Note that, under section 13(6)(b) of the Act, in considering discrimination against a man, it is not relevant to take into account any special treatment given to a woman in connection with pregnancy or childbirth.

Question 17

Indirect discrimination

Answer 17

Indirect discrimination is concerned with acts, decisions or policies (broadly speaking) which are not intended to treat anyone less favourably, but which have the effect of disadvantaging a group of people with a protected characteristic. Under the statutory definition of indirect discrimination in section 19 of the Act:

A discriminates against B where:

• A applies to B a provision, criterion or practice (‘PCP’)
• B has a protected characteristic
• A also applies or would apply that PCP to persons who do not share B’s protected characteristic
• The PCP puts or would put persons with whom B shares the characteristic at a particular disadvantage compared to others
• The PCP puts or would put B to that disadvantage
• A cannot show the PCP to be a proportionate means of achieving a legitimate aim.

Indirect discrimination: example

A classic example of indirect discrimination is an employer requiring an employee to work full-time.

This requirement could disadvantage women as a group, since women in society as a whole bear a greater part of domestic and childcare responsibilities than men and are more likely to want (or need) to work part time.

Unless the employer can objectively justify the need for a full-time worker to do the job, the requirement could be indirectly discriminatory against a woman with child care responsibilities.

Question 18

Harassment

Answer 18

There are three definitions of harassment in section 26 of the Act:

• the general definition of harassment related to a protected characteristic,
• conduct of a sexual nature, and
• less favourable treatment because of a person’s rejection of or submission to harassment of a sexual nature or harassment related to sex or gender reassignment.

We will focus on the general definition of harassment in this element.

General definition of harassment

A harasses B if A engages in unwanted conduct related to a relevant protected characteristic which has the purpose or effect of either:

• violating B’s dignity, or
• creating an intimidating, hostile, degrading, humiliating or offensive environment for B (section 26(1)).

In deciding whether conduct shall be regarded as having the required effect, the following must be taken into account:

• B’s perception
• the other circumstances of the case
• whether it is reasonable for the conduct to have that effect (section 26(4))

General definition of harassment

An example of harassment would be:

• Two male shop assistants loudly commented on the size of a female shopper’s breasts. This could amount to harassment. Such comments could self evidently be unwanted and she would not have to object to it before it was deemed to be unlawful harassment.

Question 19

Victimisation

Answer 19

The Act’s victimisation provisions protect individuals who do (or might do) protected acts such as bringing discrimination claims, complaining about harassment or becoming involved in another person’s discrimination complaint.

Victimisation occurs where A subjects B to a detriment because either:

• B has done a protected act, or
• A believes B has done, or may do, a protected act (section 27(1)).

The following protected acts are list in section 27(2):

• bringing proceedings under the Equality Act 2010;
• giving evidence or information in connection with proceedings under the Equality Act 2010, regardless of who brought those proceedings;
• doing any other thing for the purposes of or in connection with the Equality Act 2010;
• alleging (whether expressly or otherwise) that A or another person has contravened the Equality Act 2010.

Victimisation: Example

A gay man sues a publican for discrimination on the basis that she makes persistent derogatory remarks to other customers about his sexuality. Because of this, the publican bars him from the pub altogether. This would be victimisation.

Question 20

Duty to make reasonable adjustments

Answer 20

The duty to make reasonable adjustments aims to make sure that a disabled person can use a service as close as it is reasonably possible to get to the standard usually offered to non-disabled people. When the duty arises, a service-provider is under a positive duty to take steps to remove or prevent these obstacles.

Anyone providing goods, facilities or services to the public or a section of the public, or carrying out public functions, or running an association who finds that there are barriers to disabled people in the way they do things must consider making adjustments. If those adjustments are reasonable they must be made.

The duty is ‘anticipatory’. This means a service provider cannot wait until a disabled person wants to use the service. They must think in advance (and on an ongoing basis) about what disabled people with a range of impairments (such as people who have a visual or hearing impairment, a mobility impairment or a learning disability) might reasonably need.

Many adjustments will not be particularly expensive and a service-provider is not required to do more than is reasonable. What is reasonable depends, among other factors, on the size and nature of the organisation, the nature of the goods, facilities or services provided and the resources available.

If a disabled person can show that there were barriers that should have been identified and reasonable adjustments that could have been made, they can bring a claim if they have received a poor or inferior service because those adjustments were not made. The service-provider may be ordered to pay compensation and may also be ordered to make the reasonable adjustments.

The duty contains three requirements that apply in situations where a disabled person would otherwise be placed at a substantial disadvantage compared with people who are not disabled.

The first requirement involves changing the way things are done (equality law calls this a provision, criterion or practice). This relates to rules or ways of doing things, whether written or unwritten, that could present barriers to disabled people. It might be reasonable to stop the practice completely, or to change it so that it no longer has that effect.

The second requirement involves making changes to overcome barriers created by the physical features of premises, if these are open to the public or a section of the public.

Where a physical feature puts disabled people using a service at substantial disadvantage, the service provider must take reasonable steps to:

• remove the feature, or
• alter it so that it no longer has that effect, or
• provide a reasonable means of avoiding the feature, or
• provide a reasonable alternative method of making the service available to disabled people.

It is better to remove or alter the physical feature or find a way of avoiding it (such as replacing steps with a ramp or, if it is reasonable, a lift) before looking at providing an alternative service. An alternative service may not give disabled people a similar level of service.

The third requirement involves providing extra aids and services such as providing extra equipment or providing a different, or additional, service (which equality law calls auxiliary aids or auxiliary services). A service provider must take reasonable steps to provide auxiliary aids or services if this would enable (or make it easier for) disabled people to make use of the service.

Question 21

Your service and competence

Answer 21

CCS 3.2: You ensure the service you provide to clients is competent and delivered in a timely manner.

An important part of providing a good service to your clients is to ensure that you are competent to do so.

You need to ensure that you are competent to carry out the work you are required to do:

• You should not send work to a client unless it has been checked by your supervisor.
• If you do not know how to do the work, you must get help from someone.
• You also need to ensure that you keep your legal knowledge up to date in order to comply with CCS 3.3 and CCS 7.1.

CCS 3.3: You maintain your competence to carry out your role and keep your professional knowledge and skills up to date.

CCS 7.1: You keep up to date with and follow the law and regulation governing the way you work.

CCS 3.4: You consider and take account of your client’s attributes, needs and circumstances.

Your managers also have an obligation to ensure that you are competent to carry out your work.

CCS 3.5: Where you supervise or manage others providing legal services:

(a) you remain accountable for the work carried out through them; and

(b) you effectively supervise work being done for clients

CCS 3.6: You ensure that the individuals you manage are competent to carry out their role and keep their professional knowledge and skills, as well as understanding of their legal, ethical and regulatory obligations, up to date.

Question 22

Safeguarding money and assets

Answer 22

CCS 4.2: You safeguard money and assets entrusted to you by clients and others.

As a solicitor or legal professional, you may be entrusted with money or assets belonging to another person.

You might be entrusted with client’s money – in which case you need to comply with the SRA Accounts Rules to ensure that you protect that money. You will also need to comply with other legal obligations, eg anti- money laundering regulations

Question 22

Undertakings

Answer 22

In addition, as a trusted third party, there are often situations where you give another party your word or promise that you will do something. If the other party relies on your promise, you have to do what you promised to do. This is called an ‘undertaking’.

Undertakings are often used to overcome practical difficulties in transactions. Undertakings are given and accepted because solicitors are professionals whose word can be relied on.

An example of an undertaking is an undertaking to the court that a document will be filed on behalf of a client by a particular date.

CCS 1.3: You perform all undertakings given by you, and do so within an agreed timescale or, if no timescale has been agreed, then within a reasonable amount of time

Failing to comply with an undertaking can be a serious disciplinary offence, with the solicitor being investigated by the SRA for professional misconduct. Most law firms have strict procedures that must be followed before an employee gives an undertaking

Question 22

Dealing with the court

Answer 22

In order to comply with Principles 1 and 2, solicitors and legal professionals must act with integrity when dealing with the court.

Principle 1: act in a way that upholds the constitutional principle of the rule of law, and the proper administration of justice.

Principle 2: act in a way that upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons.

CCS 2 contains more detailed provisions regarding your duty to the court. For example:

CCS 2.1: You do not misuse or tamper with evidence or attempt to do so.

CCS 2.2: You do not seek to influence the substance of evidence, including generating false evidence or persuading witnesses to change their evidence.

Question 23

CCS requirements in relation to publicity

Answer 23

The SRA’s key concern is that firms’ publicity is not misleading.

CCS 8.8: you ensure that any publicity in relation to your practice is accurate and not misleading, including that relating to your charges and the circumstances in which interest is payable by or to clients.

Publicity is defined in the SRA Glossary as including:

‘all promotional material and activity, including the name or description of your firm, stationery, advertisements, brochures, websites, directory entries, media appearances, promotional press releases, and direct approaches to potential clients and other persons, whether conducted in person, in writing or in electronic form, but does not include press releases prepared on behalf of a client’.

Question 24

Unsolicited approaches

Answer 24

Solicitors are not permitted to publicise their firm by making unsolicited approaches in person or telephone calls to members of the public, with the exception of current or former clients:

CCS 8.9: you do not make unsolicited approaches to members of the public, with the exception of current or former clients, in order to advertise legal services provided by you, or your business or employer.

The types of marketing approaches which would tend to demonstrate non-compliance with 8.9 CCS (adopted for Firms) are where you approach people:

• in the street
• at ports of entry (i.e. to the UK)
• at hospitals
• at the scene of an accident.

Question 25

SRA Transparency Rule 1 - costs information

Answer 25

Authorised bodies who publish the availability of certain services to individuals and businesses must publish certain costs information on their websites. The services to individuals are listed in Rule 1.3 and include:

• conveyancing of residential property
• collection and distribution of assets following a person’s death
• immigration applications
• immigration matters
• road traffic offences
• certain advice to employees on unfair and wrongful dismissal.

The services in relation to businesses are listed in Rule 1.4 and include:

• certain advice to employers on unfair dismissal and wrongful dismissal;
• debt recovery up to the value of £100,000; and
• certain advice in relation to licensing applications for business premises.

Question 26

What costs information must be published?

Answer 26

The costs information which must be published is listed in Rule 1.5 and includes:

• the total cost of the service or, where not practicable, the average cost or range of costs;
• the basis for the charges, including hourly rates or fixed fees;
• the experience and qualifications of anyone carrying out the work, and their supervisors;
• a description of, and the cost of, any likely disbursements;
• whether any fees or disbursements attract VAT, and if so, the amount of VAT;
• details of what services are included in the price displayed, including the key stages of the matter and the likely timescales for each stage and details of any services that might be expected to be included in the price displayed but are not; and
• if the firm uses conditional fee or damages based agreements, the circumstances in which clients may have to make any payments themselves for the services.

The cost information published must be clear and accessible and in a prominent place on the website (Rule 1.6).

Question 27

SRA Transparency Rule 4 - regulatory information

Answer 27

What costs information must be published?

• An authorised body must display in a prominent position on its website, its SRA number and the SRA’s digital badge (Rule 4.1).
• An authorised body’s letterhead and emails must show its SRA authorisation number and the words ‘authorised and regulated by the Solicitors Regulation Authority’ (Rule 4.2).

Question 28

Introductions and referrals

Answer 28

CCS 5.1

CCS 5.1 applies to introductions, referrals and fee sharing arrangements. The SRA’s main concern is to preserve the independence and integrity of the solicitor and/or the firm.

CCS 5.1: in respect of any referral of a client by you to another person, or of any third party who introduces business to you or with whom you share your fees, you ensure that:

(a) clients are informed of any financial or other interest which you or your business or employer has in referring the client to another person or which an introducer has in referring the client to you;

(b) clients are informed of any fee sharing arrangement that is relevant to their matter;

(c) the fee sharing agreement is in writing;

(d) you do not receive payments relating to a referral or make payments to an introducer in respect of clients who are the subject of criminal proceedings; and

(e) any client referred by an introducer has not been acquired in a way which would breach the SRA’s regulatory arrangements if the person acquiring the client were regulated by the SRA.

Question 29

Introductions

Answer 29

An introduction is where:

• a third party introduces a client to you, in return for which you make a payment (or agree to make a payment) to that third party (either within your firm or outside);
• in most cases, the payment is a fixed fee or calculated with reference to the amount being charged to the client as a percentage of your gross or net fees; and
• the third party may be another lawyer, but not necessarily so.

Introduction arrangements will often take the form of express, contractually binding written agreements, but even informal or tacit arrangements are caught by CCS 5.1.

The SRA’s main objective is the preservation of the firm’s / individual solicitor’s independence.

Question 30

Referrals

Answer 30

Applying Principle 7, you must only act in your client’s best interests when referring a client to a third party. The SRA’s concern is whether you are or may be motivated to make the referral because of some financial or other benefit, rather than because the third party is the best person to advise or support the particular needs and circumstances of your client.

Question 31

Personal injury cases

Answer 31

Section 56(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (‘LASPO’) prohibits solicitors from referring or receiving referrals in respect of a claimant’s claim for damages in respect of personal injury or death to each other in consideration for a referral fee. The prohibition includes making or receiving referrals through intermediaries, like claims management companies, unless the payment is genuinely for services provided.

CCS 5.2: Where it appears to the SRA that you have made or received a referral fee, the payment will be treated as a referral fee unless you show that the payment was not made as such.

A ‘referral fee’ is defined as ‘a referral fee as defined within section 57(7) LASPO’, which is essentially a prohibited referral fee under section 56 LASPO.

The onus is on you/the law firm/the referrer to prove that any such payment was made/received in consideration for the provision of services or for any genuine reason other than a referral fee (s 57(7) LASPO).

Question 32

Commissions received from third parties

Answer 32

If you gain any tangible benefit by making the referral (financial or otherwise), there is a danger of an own interest conflict (see CCS 6.1). You need to satisfy yourself (and it is likely that your firm’s Compliance Officer for Legal Practice (‘COLP’) will also need to be satisfied) that the referral is motivated purely for the benefit of the client and that any financial benefit to you/your firm is very much a by-product of the process.

General commissions

Under CCS 5.1(a), you must properly inform your client of any financial or other interest (including an introduction fee) which you or your business or employer has in referring the client to another person.

Question 33

Rules re introductions and referrals

Answer 33

Clients must be:

• informed of any financial or other interest which the introducer has in referring the client to you: CCS 5.1(a)
• informed of any fee sharing arrangement which is relevant to their matter: CCS 5.1(b)

In addition:

• you are not permitted to pay to an introducer a fee for referring clients who are the subject of criminal proceedings or whose costs are partly or wholly being publicly funded: CCS 5.1(d).
• arrangements with introducers must be in writing: CCS 5.1(c).

Any client introduced by a third party must not have been acquired in a way that would breach the SRA’s regulatory arrangements, if the person acquiring the client were regulated by the SRA.

Question 34

Introductions and referrals: good practice

Answer 34

When managing and monitoring an introduction or referral, it is good practice to:

• make a statement to your client, preferably in writing, that your advice will be independent;
• provide confirmation to your client that any information disclosed to you will be confidential (especially confidential from the introducer/fee sharer); and
• where you may also be acting for the introducer on the same matter, you regularly monitor any potential client conflict issues as they might mean you will have to cease acting for one of the parties.

Question 35

Bribery Act 2010

Answer 35

• Under the Bribery Act 2010 (‘BA 2010’) it is an offence for a UK citizen or resident to pay or receive a bribe directly or indirectly.
• Companies and partnerships (including LLPs) can also commit offences where a bribe is paid on their behalf.
• Many law firms have anti-bribery policies designed to prevent their staff committing offences under BA 2010. The next slide sets out examples where there could be a risk of a member of staff committing an offence.

How does BA 2010 affect solicitors?

Due diligence: law firms must ensure that the firm’s business contacts have an anti-bribery policy, and that they understand and comply with it. For example, if your firm retains an enquiry agent or ‘private detective’ to obtain information or evidence on your behalf/on behalf of a client, your firm needs to be satisfied that such information is not obtained as the product of a bribe, or the firm and/or the instructing fee earner(s) may be guilty of an offence.

Corporate hospitality/gifts and entertainment: organisations should seek to prevent giving or receiving gifts, hospitality or payments dressed-up as ‘expenses’, in situations where such payment or receipt influences a business decision (eg to instruct a firm). There is a fine line between what is permitted to legitimately develop a business relationship and what amounts to a bribe. To mitigate the risk of committing an offence under the BA 2010, law firm and other organsations should ensure that their staff understand and implement its anti-bribery policy. Such policy should, for example, contain clear guidance as to the financial limit of any such gift or payment.

Question 36

Data Protection Act 2018

Answer 36

The Data Protection Act 2018 controls how ‘personal data’ about individuals is used by organisations.

Personal data’ means information about a particular living individual. This might be anyone, including a customer, client, employee, partner, member, supporter, business contact, public official or member of the public.

It doesn’t need to be ‘private’ information. Information which is public knowledge or is about someone’s professional life can be personal data.

‘Personal data’ does not include truly anonymous information. However, if you could still identify someone from the details, or by combining it with other information, it will count as personal data.

Question 37

Data Protection Principles

Answer 37

The Data Protection Act contains rules called the ‘data protection principles’. The Act requires that everyone responsible for using personal data must ensure that it is:

· used fairly, lawfully and transparently

· used for specified explicit purposes

· used in a way that is adequate, relevant and limited to only what is necessary

· accurate and, where necessary, kept up to date

· kept for no longer than is necessary

· handled in a way that ensures appropriate security, including protection against unlawful or unauthorised processing, access, loss, destruction or damage

Question 38

Duty of Confidentiality

Answer 38

As a solicitor or legal professional, you owe a duty of confidentiality to your clients.

CCS 6.3: You keep the affairs of current and former clients confidential unless disclosure is required or permitted by law or the client consents

This duty applies to current and former clients. Former clients include clients of a firm you used to work for and clients that used to instruct you but now instruct a different firm. It also continues to apply after a client’s death.

Duty of Confidentiality: Exceptions

There are some exceptions to the duty of confidentiality:

CCS 6.3: You keep the affairs of current and former clients confidential unless disclosure is required or permitted by law or the client consents

The duty does not apply where disclosure is required or permitted by law. A number of statutes empower the government and other bodies to require disclosure of documents, eg HMRC or the National Crime Agency, when investigating money laundering. You might also need to disclose information to comply with a court order.

Question 39

Duty of Disclosure

Answer 39

The duty of disclosure is set out in CCS 6.4

This is the principle that you make your client aware of any information material to their case of which you have knowledge.

There are exceptions to this duty, including if you believe that disclosing the information could cause serious physical or mental harm to your client or another person, or disclosure is prohibited by legal restrictions, or by the duty of disclosure to another client.

Question 40

Duty of confidentiality: exceptions

Answer 40

There are a number of exceptional circumstances in which the duty of confidentiality can be breached. They include:

certain statutes empower government and other bodies, such as HMRC, to require disclosure of documents and information;

the duty of confidentiality is sometimes overridden by statutory or regulatory reporting requirements, eg those provided in the Money Laundering Regulations 2017, Proceeds of Crime Act 2002 and anti-terrorism legislation;

cases where you need to reveal the information to support a defence in either a civil claim brought against you by a client (eg in relation to a claim for negligence against the firm by your client) or in a criminal prosecution; cases involving children, where you discover that a child has been sexually or physically abused, even if the client who imparts the information refuses to permit disclosure, if you believe that the child’s health (mental or physical) is in danger, you may have grounds to breach your duty of confidentiality by revealing the details to an appropriate authority.

Compliance with the above obligations can often be a difficult judgement call and it is recommended that you consult closely with your firm’s Compliance Officer for Legal Practice before proceeding. The SRA has issued some guidance in this area.

Question 41

Duty of Disclosure: Exceptions

Answer 41

There are certain situations in which the duty of disclosure does not have to be complied with, which are set out in the following sub paragraphs of CCS and CCF 6.4:

a) the disclosure of the information is prohibited by legal restrictions imposed in the interests of national security or the prevention of crime;

(b) the client gives informed consent, given or evidenced in writing, to the information not being disclosed to them;

(c) you have reason to believe that serious physical or mental injury will be caused to the client or another if the information is disclosed; or

(d) the information is contained in a privileged document that you have knowledge of only because it has been mistakenly disclosed.

• It will be more common for a solicitor to find themselves in the position where their duty of confidentiality to another current or former client (X) prevents them from disclosing material information that they obtained in relation to X’s case to a new client (Y). In these circumstances, the solicitor must not act for Y unless they obtain Y’s informed consent to the information not being disclosed to them.
• Informed consent means that the client must have some understanding of the importance of the information to their case, and any prejudice there may be in non-disclosure. This will mean giving some indication of at least the broad nature of the information to be withheld and its relevance to the matter.
• Even if the solicitor does obtain Y’s informed consent, they should only continue acting for Y if it is in Y’s best interests to do so. In practice, the solicitor is only likely to be able to continue acting for Y if the non-disclosure does not cause them any real prejudice.

Question 42

Duty of Disclosure: Material

Answer 42

CCS 6.4: Where you are acting for a client on a matter, you make the client aware of all information material to the matter of which you have knowledge…

‘Material’ is not defined in the 2019 Standards and Regulations. However the 2007 SRA Code of Conduct said that it must be information which ‘might reasonably be expected to affect the client’s decision-making with regard to their matter in a way which is significant having regard to the matter as a whole’.

CCS 6.4 exists to protect clients. It will be difficult for clients to give informed instructions to their solicitor if they are not aware of all matters relevant to their case. However in the exceptions listed in 6.4(a) – (d) the solicitor will not be permitted to disclose material information to the client. In practice the circumstances set out in paragraph 6.4(a), (c) and (d) will be rare.

Question 43

What if the duty of confidentiality and the duty of disclosure conflict?

Answer 43

There can be problems in situations when you owe a duty of confidentiality to one client and a duty of disclosure to another client in respect of the same information. In such cases, where there is a conflict between the duties of confidentiality and disclosure, the duty of confidentiality takes precedence.

Question 44

CCS 6.5: Adverse Interests

Answer 44

CCS and CCF 6.5 provide:

You do not act for a client in a matter where that client [Client A] has an interest adverse to the interest of another current or former client [Client B] of you or your business or employer, for whom you or your business or employer holds confidential information which is material to that matter”, unless:

(a) effective measures have been taken which result in there being no real risk of disclosure of the confidential information; or

(b) the current or former client, B, whose information you or your business or employer holds has given informed consent, given or evidenced in writing, to you acting, including to any measures taken to protect their information.

‘Adverse interest’ is not defined in the 2019 Standards and Regulations, but the 2007 SRA Code of Conduct suggests that this arises ‘where one party is, or is likely to become, the opposing party on a matter, whether in negotiations or some form of dispute resolution’.

CCS 6.5: Adverse Interests

The SRA Guidance on Confidentiality of client information, gives an example of CCS 6.5 in action:

‘You work for X and Co. Client A has been served with a claim for breach of contract by a supplier and wishes to instruct you in the case. The search of X and Co’s database reveals that another employee of X and Co gave advice to the supplier, client B six months ago on possible issues with their supply contract.’

It is likely that A will have an interest which is adverse to the former client B for whom the firm holds confidential information. This will prevent you from acting for client A, unless either of the exceptions on 6.5(a) or (b) apply.

Question 45

CCS 6.5 (a)

Answer 45

CCS 6.5(a):effective measures have been taken which result in there being no real risk of disclosure of the confidential information.

The SRA guidance states that the test for such measures, sometimes known as information barriers, is quite high. The measures must protect one client’s information from the other client, and you as their solicitor. Examples of effective measures include a combination of:

• Systems that identify the potential confidentiality issues.
• Separate departments handling the cases, at all levels, including non fee earning staff.
• Separate servers (and printers) so that information cannot be cross accessed.
• Information being encrypted and password protected.
• Individuals in the firm being aware of who else in the organisation is working on the respective matters so that they know who they can and cannot discuss the matter with.
• Appropriate organisational policies and training for staff.

Question 46

CCS 6.5 (b)

Answer 46

Or 6.5(b): the current or former client, [B], whose information you or your business or employer holds has given informed consent, given or evidenced in writing, to you acting, including to any measures taken to protect their information.

In order to give informed consent, B will need an understanding of any possible prejudice that could occur.

If the firm puts in placed measures to protect B’s information, it would be necessary for someone else in the firm to seek that consent, as you will be unable to do so without B’s confidential information being disclosed to you.

Question 47

Duty of disclosure: personal knowledge

Answer 47

Note that the duty of disclosure under CCS 6.4 relates to information ‘of which you have knowledge’ – ie the duty is personal.

• In the example of Mr and Mrs Smith, another lawyer at your new firm, who does not have the knowledge about Mr Smith’s conviction could act for Mrs Smith on her divorce, provided “effective measures were taken which result in there being no real risk of disclosure of confidential information” (CCS 6.5(a)).
• Some firms would allow another lawyer to act for Mrs Smith.
• Some firms might take the view that in all the circumstances, it is not reasonable for the firm to continue acting for Mrs Smith. They might consider for example that they cannot guarantee compliance with CCS 6.5(a), and refer Mrs Smith to another firm.