legal services

Question 1

Recognised sole practitioner

Answer 1

Recognised sole practitioner: a normal sole practitioner, recognised by the SRA

Question 2

Recognised body

Answer 2

Recognised body: covers partnerships, Limited Liability partnerships and companies. At least 75% of the body’s managers must be legally qualified + one manager must be a solicitor.

Question 3

Licensed bodies

Answer 3

Licensed bodies: Alternative Business Structures ABS introduced in LSA 2007. Operates in similar ways as a conventional law firm but may offer both legal and non-legal services. One manager must be authorized by a regulatory body e.g. a conveyancer. A “licensed body” means that someone non-licensed is the manager or interest holder (e.g. share or voting rights holder) of a licensed, or another body A is a manager or interest holder of a licensed + non-authorised can control at least 10% of the voting rights in A.

Question 4

Can solicitors working outside of regulated firms carry out reserved legal activities?

Answer 4

SOlicitors working outside of authorized firms usually include freelance, in-house, non-commercial organizations. If a solicitor works for a commercial unregulated organization providing legal services, he cannot carry out reserved legal activities.

Question 5

Reserved legal activities

Answer 5

Exercise of a right to audience (right to appear in and address court)
Conduct of litigation (issue proceedings for a court in England and Wales, commence, prosecute and defend in proceedings and perform ancillary functions in relation to the proceedings
Reserved instrument activities (preparing and lodging formal legal documents (instruments))
Probate activities (prepare probate (skifte) papers)
Notarial activities (certify and authenticate docs)
Administration of oaths (e.g. when a document is required to be sworn)

Question 6

Requirements for professional indemnity insurance

Answer 6

Necessary requirement for solicitors and covers claims against them or their practice and must be “adequate and appropriate”. Applies to freelance solicitors and solicitors in non-commercial organizations that carry out reserved activities + SRA authorized firms (firms cannot limit or exclude liability to clients under a certain threshold.

Solicitors must be open to clients about insurance

SRA Indemnity Insurance Rules apply to firms authorized by the SRA, setting out minimum terms.

Question 7

notaries reg org

Answer 7

Master of facilities

Question 8

Equality act 2010 - what does it regulate

Answer 8

controls unjustified discrimination (does not ban discrimination)

Question 9

Direct discrimination

Answer 9

Direct discrimination (someone is treated less favorable than someone else in the same situation and the reason is one of the protected characteristics)
Comparator: treatment must be different from another person (a real or hypothetical person)
Less favorable: any disadvantage is sufficient
Protected characteristic: is the reason for the treatment. Must have influenced, but does not have to be the main or sole reason.

If the victim does not have any of the protected characteristics, it could be subject to victimization.

Question 10

Indirect discrimination

Answer 10

Indirect discrimination: same conditions are applied to everyone, but have the effect that it prejudices members of a particular group. Can be justified if it is proportionate for achieving a legitimate aim.

Question 11

Protected characteristics in Equality act

Answer 11

Race
Religion and belief
Sex
Age
Disability
Gender reassignment
Marriage/civil partnership
Pregnancy and maternity

Question 12

Who does equality act apply to?

Answer 12

anyone offering services to the public, incl. solictiors

Question 13

Risk activities for money laundering

Answer 13

Real estate, financial services, company and trust work, client accounts, sham litigation.

Question 14

Who must money laundering be reported to?

Answer 14

Nominated officer + NCA (national crime agency)

Question 15

After reporting to NCA about money launder, how soon can a solicitor continue work

Answer 15

An offence is not committed if the disclosure is made as soon as possible and prior to the transaction and consent from the nominated officer or the National Crime Agency (NCA) is obtained.

If the nominated officer reports to the NCA he cannot give consent unless he received consent from NCA, hears nothing for 7 working days or is granted 31 days by the NCA after their first refusal.

Possible defences: goods obtained in good faith for adequate consideration, authorised disclosure and obtaining appropriate consent, there is a reasonable excuse e.g. privileged information and there is a suspicion that money laundering could be happening.

Question 16

Activities that are and are not considered “tipping off” re money laundering

Answer 16

Tipping off: warn someone about investigations. soes not have to intend it to be an alert. incl. disclosure of disclosures.

Excluded: tell a client about NCA tip to dissuade client from engaging in money laundering. can tell fellow legal practisioners.

Question 17

what entails failing to give information about money laundering?

Answer 17

1. know, suspect(objective test) or have reasonable grounds to believe money laundering is taking place,
2. information comes to him as part of business in a regulated sector
3. information can assist in identifying the money laundered,
4. he fails to make a disclosure.

Question 18

money laundering and legal profession privilige

Answer 18

does not apply for the purpose of carrying out an offence.

Question 19

Standard due diligence

Answer 19

Standard due diligence: must verify ID based on documents or information from reliable and independent sources + take reasonable steps to understand the ownership and control structure of trusts and companies. Good practice to have government docs (e.g. passport).

Non limited liability partnership: must obtain information on all partners. Except if it is well-known, reputable with a long history: name, address and nature of business is enough.

Companies: name, number and address, proof of registration.Beneficial owners must be identified when they are not clients. FOr companies beneficial owners can exercise ultimate control, ultimately owns or controls or controls the corporate body (does not apply to companies listed on regulated market).

If there is beneficial owners, identify those who owns or controls over 25% of share of the capital or profits or more than 25% of the voting rights, or exercise control over management.

Trusts: beneficial owners means settlor, trustees, beneficiaries, individuals benefiting from the trust, individual that can control the trust

Question 20

Simplified due diligence

Answer 20

Simplified due diligence: if low risk e.g. registered on a regulated market. Solicitors must obtain and keep evidence that simplified DD is OK.

Question 21

Enhanced due diligence

Answer 21

Enhanced DD: where there is a high risk. List from Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 where this must be carried out:
Firms risk assessment or info from SRA or the Law society has identified risks
High risk third country client or counterpart
Client has provided false or stolen ID papers
Client is a PEP (head of state, minister, MP, Judge, member of the court of auditors, ambassadors and high-ranked officers in armed forces, state-owned enterprises.
A transaction is complex or unusually large
Other high-risk situations e.g. not met client face-to-face

Question 22

How to identify clients

Answer 22

Passport + 2 utility bills

If client cannot be identified, solicitor must terminate + report to NCA.

Question 23

FCA regulated activities def. + ROA exclusions

Answer 23

FSMA: any activity of a specific kind that is carried on by way of business and relates to an investment of a specified kind.

“specified investment”: securities (company shares, debentures, guilts, unit trusts OEICS), relevant investment (incl. insurance distribution activities + all contracts of insurance with or without investment element + derivatives) and miscellaneous investments (regulated mortgage contracts).

“specified activity”: solicitors can only carry out if relying on an RAO exclusion. most common exclusions:
- art. 5 accept deposit as a solicitor
- art. 14 deal with investments as principal (e.g solicitor selling investments as a PR, trustee or as long as the solicitor does not seem to provide services of a stock broker)
art. 21 deal with investments as an agent (acting as an agent for the owner of investment)
art. 22 Authorised third person: transaction is carried out using an authorised third person
art. 25 arranging deals in investments
art. 37 managing investments: take investment decisions, trustees + PR work
art. 40 safeguarding and administering investments
art. 53 advising on investment: trusts, PR, sale of companies

Question 24

How are breaches in providing financial services without FCA authorisation treated

Answer 24

criminal offence and any agreements made in contravention will be unenforceable against the other party without consent of the court.

Question 25

Unspecified/unregulated investments not generally caught by FCA regime

Answer 25

deposits, national savings and investments, rights under a pension scheme, chattels, art, gold, stamps, vintage cars.

Question 26

Exempt regulated activity from FCA

Answer 26

Conditions:
1. the regulated activity arises out of or is complementary to legal work,
2. the regulated activity is incidental to the legal work and
3. the solicitor must account to the client for all commissions (any sum)

Question 27

Can a law firm provide ancillary insurance?

Answer 27

Can be an ancillary insurance intermediary if:
1. principal profession activity is something else,
2. products are complementary to products and services
3. does not cover life or liability insurance, unless it’s complementary to the company’s goods and services

Must apply to be registered in the FSR, have an insurance distribution officer OR MLRO could be registered.

Question 28

Criminal legal aid eligibility

Answer 28

Criminal legal aid: public funding available for representation in Magistrates and crown court.
Advice at police station: single fixed fee
Duty solicitor scheme: rota to attend magistrates court, claiming costs under the Advocacy Assistance scheme
Application for legal aid: if a client has been charged they must apply for legal aid. Granting depends on merits of the case and financial means.

Merits/interest test: must demonstrate that it is in the interest of justice that they receive funding e.g they are likely to suffer serious damage, loose likelyhood or reputation, a substantial question of law, they are unable to state their own case, the proceedings could involve e.g. witnesses, it is in the interest of another person that the charged have representation.

Means test: under 18 and on welfare benefits automatically fulfills the test. Eligible if adjusted annual income is under 12 457, full means test must be undertaken if under 22 325 and not eligible in magistrates court if over 22 325, but a means test in the crown court.

Question 29

Civil legal aid eligibility

Answer 29

Civil legal aid: must demonstrate that their case has merit and only available in limited circumstances. Types:
Legal help: advice, controlled work.
Help at court: advice + assistance incl. Advocacy. Controlled work
Legal representation: available to a client starting proceedings. Licensed work.
Not available for e.g. personal injury, family and divorce. Not usually available is a CFA.
Merits test: clients prospects of success and cost-benefit
Means test: capital (not over 8000) and income (not over 2600 per month).
Statutory charge: if the client wins, the solicitor could still charge to get their fees covered.

Question 30

Can a lawyer accept or make referrals?

Answer 30

Yes, as long as SRA principles are adhered to (idependent, client’s best interest, public trust and uphold justice),

NO referral fees are allowed unless client must be informed about any financial or other interest (prohibited for cases regarding claims for damages due to personal injury or death)
Client is informed about any fee sharing arrangement,
agreement is in writing,
solicitor does not receive payment
client has not been acquired in a way that breaches SRA rules.

Question 31

Does a solicitor have a duty to disclose info to clients that is useful to them that the solicitor obtainde outside of business?

Answer 31

Yes. e.g. info overheard at the pub must be brought to the client if relevant for the clients case.

Question 32

Disability as covered under the equality act

Answer 32

Disability: can bring a claim under s. 13 or the separate s. 15 which prevents unfavorable treatment due to a disability.

Question 33

Victimisation as covered under the equality act

Answer 33

Victimization: does not need to have a protected characteristic to fall under s. 27 and be protected against detriment from discrimination. The victimiser must bring detriment on the victim, meaning that the victim is put at a disadvantage or worse situation.

Question 34

Harassment

Answer 34

Harassment under s. 26 occurs when an individual is subject to unwanted conduct (related to a protected characteristic or sexual) which violates their dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment.

Question 35

SRA Financial services rule Prohibited activities include:

Answer 35

SRA Financial services rule Prohibited activities

Firms (including sole practices) authorised by the SRA may carry on certain regulated financial services activities without being regulated by the FCA if they can meet the conditions in section 327 of FSMA. The purpose of these rules is to set out the scope of the regulated financial services activities that may be undertaken by firms authorised by us and not regulated by the FCA.

These rules do not apply to solicitors, RELs or RFLs practising outside firms authorised by us.

Prohibited activities include:
Activities under FSMA
Manage investments
Advertise insurance
Recommend personal pension scheme
Advice to be part of a Lloyds syndicate
Enter into a regulated credit agreement as a lender
Exercise lenders rights
Enter into a regulated consumer hire agreement as owner
Operate electronic system for lending
Provide credit reference
Insurance distribution activities
Create, develop, design or underwrite insurance contracts

Question 36

Regulated by Financial services and markets act FSMA + Financial services act

Answer 36

Regulated by Financial services and markets act FSMA + Financial services act
1. is the firm carrying out business
2. does the transaction involve a specific investment
3. is the investment regulated under part 2 and does an exclusion apply.

Question 37

Examples of specified investments under FSMA

Answer 37

Specified investment under FSMA:
1. Securities
Shares or stock
Instruments creating or acknowledging indebtness e.g. bonds
Government and public securities
Instruments giving entitlement to invest
Units in a collective investment scheme

2. relevant investments
   Long-term insurance contracts
   Options incl. buying and selling of securities
   Funeral plan contracts
3. structures deposits
4. Others
   Deposits
   Regulated mortgage contracts

From FSMA
Art. 5 accept Deposits: does not cover deposits to solicitors.
At. 10 affecting and carrying out contracts of insurance: a solicitor must not assist in the administration and performance of a contract for insurance. Cannot e.g. fill in claim form, notify an insurer of a claim on behalf of the client or received funds on behalf of the policy holder.
Art. 14 Buying or selling securities as a principal.
Art. 21 dealing in investments as agent
Art. 25 arranging deals in investments. Excluded: arrangement that does not lead to transactions, introducing a client to an authorised or exempt person
Exclusion for authorised third person: arranging a deal on behalf of a client after the client has received advice from an ATP (does not apply to insurance or life policies)
Exclusion for execution-only clients: arranging a deal through an ATP where the solicitor has refused assistance or the client has not sought advice from solicitor. (does not apply to insurance or life policies)
Art. 37 Managing investments. Exception for PRs, trustees and nominees that can manage investments as long as day-to-day tasks are managed by an authorised person.
Art. 40 Safeguarding and administration of investments. Exmptions for trustees, PRs and nominees for reasonably required work.
Art. 53 advising on investments. Exemptions: generic advise generally without specifying which particular investment would be suitable + obtaining advice on behalf of a client from an ATP
OBS insurance: neither the introducing nor APT exemptions above cover contracts of insurance or life policies. Separate exclusion in art. 72 where the solicitor can provide information that is incidental to his main profession, generic advice or rely on exception for arrangement that does not lead to a deal.
Art. 61 mortgage lending, administration, advice and arranging
Ar. 70 excludes activities for the sale of corporate bodies where:
The share are at least 50% of the voting shares (or if less if gives the buyer the day-to-day control over running the company’s affairs, e.g. the other shareholders are fragmented)
Each of the parties to the transaction are corporate bodies, partnership, single individual or a group of connected individuals

Exempt regulated activities (falling outside of the scope of the FSMA)
The general exemption in Part XX FSMA for professional firms whose activities are incidental to their main business or who provide services which do not require FCA protection for reasons of investor protection or market integrity, provided the profession is supervised by a designated professional body. The regulated activity must arise out of or be complementary to other professional services. If undertaken, you have a duty to account for any commission, activity cannot be prohibited by SRA.

Agent employed by an authorised person as the employers authorisation covers him
Tied agents that only sell products for a specific company as the autorised person (company) will be responsible for the work carried out by its agents.

Question 38

The general exemption in Part XX FSMA

Answer 38

Exempt regulated activities (falling outside of the scope of the FSMA)
The general exemption in Part XX FSMA for professional firms whose activities are incidental to their main business or who provide services which do not require FCA protection for reasons of investor protection or market integrity, provided the profession is supervised by a designated professional body.

The regulated activity must arise out of or be complementary to other professional services. If undertaken, you have a duty to account for any commission, activity cannot be prohibited by SRA.

Question 39

How are SRA breaches reported?

Answer 39

SRA or COLP (compliance officer for legal practice). If COLP chooses not to report to SRA but a lawyer believes there is a breach, the lawyer still has a duty to follow up further.