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professional conduct > Managing Client Relationships: The 3 Cs > Flashcards

Managing Client Relationships: The 3 Cs Flashcards

1
Q

What are the 3 Cs?

A
  1. CDD (client/customer due diligence)
  2. Conflict check
  3. Client care letter
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2
Q

In what 3 situations must customer due diligence be conducted?

A

When:
* Establishing a business relationship; or
* Carrying out an occasional transaction; or
* If you suspect money laundering or terrorist financing

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3
Q

What are the 2 parts of CDD?

A
  1. Identification = being told/coming to know a client’s identifying details (name and address)
  2. Verification = obtaining evidence supporting claim of identity (original docs e.g. passports, electronic verification)
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4
Q

When can you start acting for a client?

A

After correct checks have been carried out

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5
Q

What is the standard conflict check procedure?

A

There is not one - must know firm’s

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6
Q

What does a client care letter do and what does it satisfy?

A
  • Sets out the terms on which solicitor will carry out work for the client
  • Satisfies CCS 3 (competence) and 8 (complaints and client information)

NOT A REQUIREMENT but helps satisfy SRA codes

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7
Q

What reasons might you be unable to accept instructions from a new client?

Other than 3 Cs

A
  • Client asking you to commit a fraud
  • If a solicitor is not competent or does not have time for the client’s work
  • If you are not authorised on client’s behalf (e.g. cannot act for wife on instruction of the husband)
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8
Q

Is there no situation in which you can accept instructions from someone on behalf of another person?

E.g. A client telephones a solicitor to instruct her to draft wills for himself and his brother. They both wish to leave their estates to each other.

A

Can act on someone’s instructions if they are properly authorised

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9
Q

What are the 2 types of conflict of interest and which has exceptions?

A
  1. Own interest conflict - conflicts with own interests (no exceptions)
  2. Conflict of interest - duty to one client conflicts with another (2 exceptions)
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10
Q

Must there actually be a conflict to trigger the rule?

A

No - a significant risk is enough

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11
Q

What are the two exceptions to a conflict of interest?

A
  1. Substantially common interest (SCI) - clear common purpose and consensus of how it is achieved (no negotiation!)
  2. Competing for the same objective (CSO) - objective = if attained by one client, will make objective unattainable to other (objective = asset, contract or business opportunity seeking to acquire through insolvency process or auction/tender)

SCI - e.g. Divorcing couple in sale of matrimonial home. Share a clear and common purpose (sale of house) and a strong consensus on how to achieve it (obtaining sale proceeds in full and as quickly as possible) CF seller and buyer in property transaction: have a clear and common purpose (want deal agreed ASAP) but lack a strong consensus on how it is achieved (seller wants quick as possible, buyer does not) = cannot act for both sides

CSO - In practice this exception only applies to sophisticated clients. Although you would be acting for two or more clients at the beginning of the process, the nature of the process is that at the end of the process, you will only have one client.

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12
Q

What 3 conditions must apply for either the SCI or CSO exceptions to apply?

A
  1. Clients have given informed consent in writing
  2. Appropriate effective safeguards where necessary (a) separate fee earners and structural separation or b) same lawyer represents but clients agree which information can and cannot be shared)
  3. You are satisfied it is reasonable for you to act for all clients
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13
Q

What should be considered before deciding you are satisfied for you to act for all clients?

A
  • Respective knowledge and bargaining parties (if one vulnerable, maybe should not act for both)
  • Extent to which there will need to be negotiation between clients (negotiation = likely conflict)
  • Any particular benefits to clients (e.g. limited number of people with specialist knowledge and situation requires it)
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14
Q

What happens in a conflict check?

A

Before you take on a new instruction - must check whether work for client will conflict with any work your firm is doing for another client or if it conflicts with own interests - including work for existing client in another office/country

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15
Q

What are the requirements re level of service expected by the SRA from legal professionals?

A
  • Service provided is competent and delivered in timely manner
  • Maintain competence to carry out role and keep knowledge and skills up to date
  • Consider and take account of client’s attributes, needs and circumstances
  • Where you supervise others you a) remain accountable for work carried out through them and b) effectively supervise work being done for clients
  • Ensure individuals you manage are competent and keep knowledge up to date
  • Only act for clients on instructions from the client
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16
Q

What are good reasons to terminate a client’s retainer/relationship?

A
  • Cannot obtain clear instructions (e.g. partners from two-partner firm give you conflicting instructions)
  • Carrying on acting would breach the codes or break the law (e.g. conflict of interest)
  • Your client has failed to pay bills

CANNOT TERMINATE ON GROUNDS OF SELF-INTEREST

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17
Q

What is the best way to be transparent with your client re what you are going to do for them and ensure a timely delivery of this?

A

Provide a suitably detaild client care letter as soon as is practicable after receiving instructions on new matter

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18
Q

What are the rules on information on costs?

A
  • Clients should receive ‘best possible information’ on how matter will be priced
  • Costs information should be provided at time of engagement and during course of matter as appropriate
  • Publicity of costs should be accurate and not misleading
  • Full costs information should be availabe on website without need for further inquiries
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19
Q

Regarding complaints, what should be made clear in a client care letter?

A
  • Their right to complain to you about your services/charges
  • How a complaint can be made and to whom
  • Rights they have to complain to the Legal Ombudsman and when they can make such a complaint

Complaints procedure should be explained at time of engagement

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20
Q

What must you do if a complaint made to you by a client has not been resolved to client’s satisfaction within 8 weeks following making of complaint?

A

Inform client of right they have/how to complain to legal ombudsman

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21
Q

What is there an obligation to keep your client informed about as the matter progresses?

A

All aspects of their matter esp if any information in letter becomes superseded e.g. costs estimate needs updating; update client as soon as is practicable

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22
Q

When will a full client care letter not be appropriate?

A

The client is established and you are carrying out repeat work on agreed terms - client will not need all (costs) information repeated each time new file opened

Some firms will send annual client care letters - shorter ones upon new instructions

23
Q

What general information on each party’s responsibilities is included in the client care letter?

A
  • Explanation of both sides’ responsibilities
  • Explanation of anything which may limit steps you can take on their behalf e.g. conflict of interest
  • Advice to client that you may be entitled to lien in respect of files if there are any unpaid costs
24
Q

What costs information should be detailed in a client care letter?

A
  • How you will charge client (fixed, hourly)
  • If hourly - rates of all individuals working on that matter
  • Intervals at which you will notify the client of the fees
  • VAT, disbursements and additional fees
  • Agreed limit on fees (and circumstances on which it can be exceeded)
  • Fee estimates
25
Q

How should client care letters be presented?

A

In a way that is easy to understand; avoids complicated legalistic language

26
Q

What are the types of funding available to fund legal work?

A
  • Private funding
  • Professional funding
  • Before the event insurance (BTE)
  • Community Legal Service
  • Conditional fee agreements (CFAs)
  • After the event insurance (ATE)
  • Third party funding
27
Q

What is the responsibility of solicitors re funding of a client’s work?

I.e. what lengths should they go to

A

Should conduct reasonable and proportionate search to establish what options client has - not expected to embark on a ‘treasure hunt’

28
Q

What is before the event (BTE) insurance, what will it typically cover, and what are its limitations? Can this be recovered from the other side?

A
  • Insurance taken out before need for legal work arises - low premium because many holders will never have to call on it
  • Will typically cover litigation
  • Limits: will have financial limit on amount that can be incurred and premiums generally not recoverable from other side
29
Q

What type of claims is Community Legal Service limited to?

Previously legal aid

I.e. civil legal aid

A
  • Individuals (not companies)
  • Mostly children/family/domestic disputes/homelessness (does not cover most civil legal work)
  • Income/savings must come below certain level
  • Client’s position must be sufficiently meritorious
30
Q

What 2 different fees will a solicitor be paid in a conditional fee arrangement (CFA)?

A

The normal fee (basic fee) + success fee (uplift) of up to 100% on top of normal fee

I.e. solicitor’s fees + % of solicitor’s fees

No win-no fee

31
Q

Re limits of CFAs:

  • Can both types of fees be recovered from opponent?
  • What is the success fee limited to i PI cases?
  • Are solicitor’s costs, expert/court fees, or disbursements covered?
A
  • A party cannot recover success fee from opponent (will just come out of damages)
  • In PI cases, success fee cannot exceed 25% of general damages for pain, suffering and loss of amenity (other than future pecuniary loss)
  • Only provides funding for solicitor’s costs, not expert’s fees, court fees or other disbursements

Can be used in conjunction with other funding arrangements

A claimant brings a personal injury claim. The claim is funded by a CFA, which provides for a 50% success fee / uplift.
The solicitor records billable time of £40,000 to bring the claim to trial.
Let’s assume the client wins, and is awarded £300,000 at trial, of which £240,000 relates to future losses.
* The claimant has won, so it is liable to pay its solicitor the £40,000, plus a 50% uplift (£20,000). However, the success fee may not exceed 25% of the damages excluding damages for future loss.
* Damages here, excluding future losses, are £60,000, 25% of which is £15,000, so the success fee is capped at £15,000. So the claimant’s solicitor is entitled to £40,000 plus £15,000 - £55,000.in total.
* If the court also awards the claimant’s its costs, only the £40,000 can be sought from the other side, not the uplift. And the £40,000 will be assessed (see the elements relating to costs), meaning perhaps only £32,000 will be paid by the defendant.
* So the total recovered from the defendant is £332,000, of which £55,000 is paid to the solicitor, and £277,000 goes to the client.

32
Q

What will a solicitor be paid in damages based agreements (DBAs)?

A

Proportion of damages awarded to client by way of remedy (rather than charges and a success fee)

No win-no fee

33
Q

What are the limits to DBAs in PI, employment tribunal, and all other cases?

A
  • PI = 25% damages
  • Employment tribunal = 35% damages
  • All other cases = 50% damages

A claimant brings a breach of contract claim seeking £120,000, under a DBA which provides for the solicitor to be paid £50% of the damages (the maximum permitted).
* The claimant is awarded £100,000 at trial, which counts as ‘success’ under the terms of the DBA. The solicitor is entitled to 50% of the damages - £50,000.
* Note that the client would be able to seek an order that the opponent pays its costs in the normal way, but the court would decide what is recoverable based on the time spent by the solicitor, and in all likelihood the opponent would not be ordered to pay the full £50,000.

34
Q

Are CFAs limited in the same way as DBAs?

  • PI = 25% damages
  • Employment tribunal = 35% damages
  • All other cases = 50% damages
A

No!

Could charge up to 100%

35
Q

Is a solicitor’s fee paid in both CFA and DBA?

A

Only CFA (plus uplift) - DBA limited only to proportion of damages

36
Q

Can CFAs be used for family work?

A

No

37
Q

When is after the event (ATE) insurance used and what will it cover?

A
  • To cover costs of litigation once a dispute has already arisen
  • Usually covers client’s own disbursements and opponents’ costs in the event of losing their case
38
Q

What can ATE be used with and why?

A

Can be used in conjunction with CFA/DBA (cover solicitor’s costs), whilst ATE covers disbursements and opponent’s costs

39
Q

What is the availability of ATE like? Is it recoverable?

A
  • Dependent on merits of the case and level of cover required - expensive!
  • Not recoverable from other party (bar clinical negligence expert reports)
40
Q

How does third party funding work, what are the rules and when will it be used?

A
  • Funding is provided by banks/PE firms/hedge funds - if claim succeeds, funder will receive money bank plus uplift
  • Funders should have sufficient funds in place and must not try to take control of litigation away from lawyers involved
  • Generally limited to commercial cases of high value
41
Q

What are 3 different ways of charging a client?

A
  1. Hourly charging
  2. Fixed fees - for particular item of work e.g. drafting will, representing in small dispute
  3. Unbundled legal services - solicitor takes responsibility for very specific task (e.g. preparing bundle of documents) rather than representing client more generally
42
Q

What are suspects entitled to at police station regardless of their means?

A

Free, independent legal advice - can ask for station’s 24 hour, independent ‘duty solicitor’/access through Defence Solicitor Call Centre

Limited to telephone only advice for non-imprisonable offences

43
Q

What are the 2 tests to secure public funding?

A
  1. Means test
  2. Merits test (interests of justice)
44
Q

What defendants will be ‘passported’?

Automatically pass means test

A
  • Ds under 18 years of age; and/or
  • Those on specified welfare benefits e.g. UC or IJA
45
Q

What are the thresholds of weighted gross annual income (GAI) for the magistrates’?

Weighted GAI = income + partner’s (unless a co-D/witness)

A
  • £12,475 or less = eligible
  • £22,325 or more = not eligible
  • Between = must undertake full means test (establish annual household disposable income)

Applicant can apply for eligibility review if they have failed means test

46
Q

What is the combined capital and equity allowance for the Crown Court and what happens if applicants are above this?

Comined C+E allowance = income, capital, properties

A
  • £30,000
  • After this = applicants can be required to contribute any balance towards defence costs (may be all, some or none)
47
Q

If a contribution is required, how can this be paid?

A
  • Through income (payable throughout case); and/or
  • Through capital (payable at end if income contributions have not covered defence costs)
48
Q

What are the thresholds of annual household disposable income for the Crown Court?

A
  • £37,500 or more = ineligible
  • £3,398 or less = eligible without contribution
  • Between = eligible with a contribution
49
Q

What is the income-based contribution?

A

90% of disposable income for a max of 6 months in instalments and subject to a maximum based on type of offence

Refunded with interest if D is acquitted

50
Q

When will D automatically pass the interests of justice test?

A

If charged with an indictable-only offence or an either-way offence is later sent to the Crown Court

51
Q

What are the 10 propositions used to demonstrate that it is in the interests of justice for D to be legally represented?

A
  1. I will lose my liberty (not enough that offence is imprisonable)
  2. I have been given a sentence that is suspended or non-custodial. If I break this, the court will be able to deal with me for original offence
  3. It is likely I will lose my livelihood
  4. It is likely I will suffer serious damage to my reputation e.g. sexaul assault and teachers
  5. A substantial question of law may be involved
  6. I may not be able to understand the court proceedings or present my own case
  7. Witnesses may need to be traced or interviewed on my behalf
  8. Proceedings may involve expert cross examination of a prosecution witness
  9. It is in the interests of another person that I am represented
  10. Any other reasons
52
Q

What can a solicitor working on the case claim for once a public representation order is granted?

A
  • Preparation = taking instructions, interviewing witnesses, assessing prosecution case, advising on plea and mode of trial, preparing documents
  • Advocacy = applications for bail and other applications before court
53
Q

Is there a right of appeal if the means or merits test is failed?

A
  • Means test failed = no right of appeal, but can submit another form if circumstances change
  • Merits test failed = can submit another application - if unsuccessful can appeal to magistrates’
54
Q

When can the duty solicitor represent the applicant?

A

If they are charged with an imprisonable offence, they can consult with the duty solicitor on one occasion

Having failed to qualify for public funding

professional conduct (8 decks)

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