Wrong MCQ's Flashcards
Question
A solicitor works for a charity for elderly people, providing advice to its clients on legal matters including preparing probate documents and court proceedings relating to probate matters. The solicitor believes that he does not have to comply with any Solicitors Regulation Authority requirement for professional indemnity insurance in these circumstances.
Is the solicitor correct in his belief?
No, because he is carrying out a reserved legal activity so must ensure that the charity has taken out adequate and appropriate insurance cover.
A newly qualified solicitor decided to work freelance. The solicitor is not authorised by the Financial Conduct Authority to carry on a ‘regulated activity’ as defined in the Financial Services and Markets Act 2000 (‘FSMA’) and related secondary legislation.
Which of the following would constitute ‘advising’ under FSMA?
(D) Under the general prohibition of FSMA, a solicitor may not carry on regulated activity in the UK unless they are authorised or exempt from authorisation. A regulated activity is defined as an activity specified in the Regulated Activities Order relating to an investment specified in the Order, which is carried out in the course of business, and to which no exclusions apply. The specified activities might be remembered with the mnemonic device ‘ADAMS’. Activities = Advising, Dealing as an agent, Arranging, Managing, and Safeguarding. Advising is giving advice to an investor or potential investor on the merits of buying, selling, subscribing for, or underwriting a particular investment. Here, by counselling a client company about the sale of its shares, the solicitor is giving advice on the merits of selling a particular investment (company shares), which constitutes advising. (A) is incorrect because it describes managing, which involves managing assets belonging to another person in circumstances which involve the exercise of discretion (here, the client’s portfolio of shares). (B) is incorrect because it describes arranging, that is, making arrangements for another person to buy, sell, or subscribe for a particular investment (here, selling shares via a stockbroker). (C) is incorrect because it describes safeguarding, that is, administering or safeguarding (looking after) assets belonging to another person. This specified activity usually relates to probate and trust work. Here, the solicitor is acting as a trustee and looking after assets, such as shares and debentures, which belong to the client. (E) is incorrect because it describes the activity of dealing as agent, that is buying, selling, subscribing for, or underwriting investments (here, an insurance policy) as agent for a client. QUESTION ID: LGS102
An unemployed man is involved in a housing dispute with his landlord. The man approaches a solicitor as to whether the solicitor may represent them and have their costs funded by Legal Aid.
Which one of the following statements best describes the advice the solicitor should give in relation to Legal Aid?
The client may be eligible for Legal Aid on the basis housing disputes are covered, so long as they qualify under a means test and pass a merits test.
A firm of solicitors is not authorised by the Financial Conduct Authority to carry on a ‘regulated activity’ as defined in the Financial Services and Markets Act 2000 (‘FSMA’) and related secondary legislation.
Which of the following activities would the firm be able to conduct in its business if no FSMA exclusion or exemption applies?
(D) The client may be eligible for Legal Aid on the basis housing disputes are covered, but they will need to qualify under a means test and pass a merits test. Civil Legal Aid is available only in a limited number of specific situations, such as for housing disputes, family, or debt issues. To secure Legal Aid funding, the client must satisfy both a financial eligibility (means) test and a merits test (that is, the claim must have good prospects for success). Note that even if eligible, the client might still have to make a partial contribution toward costs. (A) is incorrect as being unemployed does not make the client exempt from the means and merits test. (B) is incorrect as even if the client qualifies under the means test, the case must still be assessed on the merits test. (C) is incorrect because even if the client passes the merits test, they still must qualify under the means test. (E) is incorrect as Legal Aid is available for housing disputes.QUESTION ID: LGS015
A firm of solicitors is not authorised by the Financial Conduct Authority to carry on a ‘regulated activity’ as defined in the Financial Services and Markets Act 2000 (‘FSMA’) and related secondary legislation.
Which of the following activities would the firm be able to conduct in its business if no FSMA exclusion or exemption applies?
(A) The necessary mental state for the solicitor to have committed the offence of concealing under POCA is that the solicitor must have actually known or suspected the purchase money represented a benefit from criminal conduct. To be guilty of the offence of concealing, the offender has to subjectively know or suspect that the criminal property represents a benefit from criminal conduct. (B) is incorrect because this answer choice describes an objective test, not the subjective test that must be used for concealing. The objective test is used in relation to the indirect offence of failure to report. (C) is incorrect because it does not include that the solicitor can have the necessary mental state if they suspect that the criminal property represents a benefit from criminal conduct. (D) and (E) are incorrect because they describe an objective test, and they are incomplete in that there can be knowledge or suspicion for the test to apply.QUESTION ID: LGS049
A firm of solicitors pays for continuing professional development training for its female employees but requires its male employees to fund the training themselves. The rationale behind this decision is to help female employees progress in the profession after taking time out for childcare.
Under the Equality Act 2010, is the firm’s policy discriminatory?
Yes, the policy is directly discriminatory on the grounds of sex which cannot be justified by the employer.
Generally, there is no justification for direct discrimination. The exceptions are for age and disability discrimination, neither of which are relevant here
A solicitor has been working at a firm for 10 years. One of the partners at the firm called the solicitor into a meeting. The solicitor was told that she was shortlisted for becoming the firm’s nominated officer.
Which of the following statements best describes the duties or requirements of a law firm’s nominated officer?
The nominated officer acts as a central point of contact between the firm and the National Crime Agency.
A solicitor is discussing with her client the funding of a personal injury claim resulting from a car accident. The solicitor suggests that the client check their car insurance policy before they make any agreement on funding.
Which of the following best describes why the solicitor has made this suggestion?
The client may have purchased before the event insurance as part of the car insurance policy.
Question
A solicitor is bringing a claim against her firm for direct discrimination on the grounds of age because she was passed over for promotion due to being too young.
Can the firm seek to justify the age discrimination under the Equality Act 2010?
(B) Direct discrimination on the grounds of age can be justified if the firm can show it used proportionate means to achieve a legitimate aim. Generally, there is no justification for direct discrimination, but the exceptions to this are age and disability discrimination. Note that for age discrimination, the legitimate aim must have some wider public policy implications rather than just being focused on the business’s needs.
Question
A solicitor has been asked by a client to assist in the setting up of a company. The solicitor has become suspicious that the client is involved in criminal activity and that the company may be a front for further criminal activity. The solicitor is trying to understand her liability under the Proceeds of Crime Act 2002 (‘POCA’) if she proceeds with the client’s matter.
Which of the following best describes the direct offence under POCA which the solicitor may be committing by assisting the client?
(D) If the solicitor assists the client, she may be committing the direct offence of arrangement under POCA. Arrangement covers a wide range of involvement in money laundering offences, usually at the layering and integration stages. It covers arrangements which the defendant knew or suspected facilitated (by whatever means) the acquisition, retention, use, or control of criminal property by or on behalf of another person. Here, the solicitor suspects that setting up the company for the client will facilitate the client’s use of criminal property, which constitutes the offence of arrangement.
A claimant in a breach of contract claim approaches a solicitor about whether the solicitor will take the case on. The solicitor presents various funding options to the client, including a conditional fee agreement. The client expresses interest in the conditional fee agreement.
Which of the following statements best describes the advice the solicitor should give in relation to funding the case through a conditional fee agreement?
C) The solicitor may take the case on, but the client should understand that if successful, the solicitor may charge a percentage uplift on her fee. The success fee recoverable from the client under a conditional fee agreement cannot exceed 100% of the normal fees charged. If unsuccessful, the client will not pay any fee to their solicitor, though they will be liable to pay the other side’s costs and disbursements and their own disbursements.
Question
A firm of solicitors is not authorised by the Financial Conduct Authority to carry on a ‘regulated activity’ as defined in the Financial Services and Markets Act 2000 (‘FSMA’) and related secondary legislation.
Which of the following activities would the firm be able to conduct in its business if no FSMA exclusion or exemption applies?
Under the general prohibition of FSMA, a firm of solicitors may not carry on regulated activity in the UK unless they are authorised or exempt from authorisation. A regulated activity is defined as an activity specified in the Regulated Activities Order relating to an investment specified in the Order, which is carried out in the course of business, and to which no exclusions apply. The specified activities and investments might be remembered with the mnemonic device ‘ADAMS F.M.DIPS’. Activities = Advising, Dealing as an agent, Arranging, Managing, and Safeguarding. The specified investments most relevant to a solicitor = Funeral plans, Mortgage contracts, Debentures, Insurance contracts, Pension schemes, and Shares in a company. The firm would be able to contract for a client to enter into a settlement in an employment dispute because, while contracting on someone’s behalf is dealing as an agent (a specified activity), a settlement agreement is not a specified investment. (A), (B), (C), and (D) each clearly involve specified activities (arranging, safeguarding, managing and advising, respectively) and specified investments (mortgage contract, debenture, shares in a company, and funeral plans, respective
A solicitor is looking after the files of a colleague while the colleague is on holiday. The solicitor takes a call from one of her colleague’s clients who is concerned about the lack of progress on their matter. The colleague’s client wants an urgent update as to why there has been a delay. The solicitor flicks through the file and notices that her colleague has filed a suspicious activity report about the client with the firm’s nominated officer. The solicitor passes this information on to the client to explain the delay and returns to working on her own clients’ matters.
Which of the following best describes whether the solicitor has committed an offence under the Proceeds of Crime Act 2002 (‘POCA’)?
The solicitor may have committed the offence of tipping off because the disclosure she made might prejudice any investigations into the client. The indirect offence of tipping off can arise where there is a disclosure to a third person that a suspicious activity report has been made to the police, HM Revenue and Customs, the National Crime Agency, or the firm’s nominated officer if that disclosure might prejudice any investigation that might be carried out. Here, the solicitor disclosed to the client that the solicitor’s colleague had made a suspicious activity report about the client to the firm’s nominated officer. As this disclosure might prejudice any investigation into the client, the solicitor may have committed the offence of tipping off
Neither a solicitor nor his firm are authorised by the Financial Conduct Authority to carry on a ‘regulated activity’ as defined in the Financial Services and Markets Act 2000 (‘FSMA’) and related secondary legislation.
Which of the following would constitute ‘arranging’ under FSMA?
Under the general prohibition of FSMA, a solicitor may not carry on regulated activity in the UK unless they are authorised or exempt from authorisation. A regulated activity is defined as an activity specified in the Regulated Activities Order relating to an investment specified in the Order, which is carried out in the course of business, and to which no exclusions apply. The specified activities might be remembered with the mnemonic device ‘ADAMS’. Activities = Advising, Dealing as an agent, Arranging, Managing, and Safeguarding. Arranging is making arrangements for another person to buy, sell, or subscribe for a particular investment. Here, the solicitor has arranged for the client to obtain advice from a third party, a stockbroker, and will then make arrangements to implement the stockbroker’s advice on the sale of shares. (
A solicitor works at a firm regulated by the Solicitors Regulation Authority (‘SRA’). The solicitor is advising a client company in relation to an unfair dismissal claim brought by one of the client’s former employees. The client has an insurance policy covering the cost of bringing employment tribunal claims like this and asks the solicitor to make a claim under that insurance policy.
Will the solicitor need to be authorised by the Financial Conduct Authority to make the claim?
The solicitor will not need to be authorised by the Financial Conduct Authority to make the claim because he can rely on the Designated Professional Bodies exemption. Under the general prohibition, a person may not carry on regulated activity in the UK unless they are authorised or exempt from authorisation. If there is a regulated activity, the Financial Services and Markets Act 2000 exempts incidental activity of members of certain Designated Professional Bodies, including those supervised by the SRA. Under this limited exemption, if a solicitor provides financial services which arise out of or are complementary to the legal services provided, the manner and scale of their provision is incidental to the provision of legal advice, and the solicitor does not receive compensation for this from anyone else without accounting to the client for it, the services will be exempted. Here, the solicitor has been asked to make a claim (the specified activity of arranging) in relation to an insurance policy (a specified investment). No exclusion is available because the arranging relates to an insurance policy. However, because the firm is supervised by the SRA, the solicitor can rely on the Designated Professional Bodies exemption. Making the claim on the insurance policy is incidental to the solicitor’s main advice on the merits of the employee’s claim. Therefore, the solicitor does not need to be authorised. (
