Managing client relationships & the three Cs

Question 1

What are the 3 Cs?

Answer 1

• Customer Due Diligence
• Client Conflict Check
• Client Care Letter

Question 2

When do you conduct Customer Due Diligence (CDD)?

Answer 2

1. Establishing a business relationship
2. Carrying out an occasional transaction
3. If you suspect money laundering or terrorist financing

Question 3

How do you carry out CDD?

Answer 3

• Identify your client (told/coming to know client’s details)
• Verify identify (passport or Companies House to check for directors if company, electronic verification, obtain from other regulated people)

Follow firm’s policy. If don’t know, ASK

DO NOT ACT until correct checks are carried out

Question 4

How do you carry out a conflict check?

Answer 4

No set procedure, check firm’s procedure

Question 5

Is sending a client care letter a requirement under CCS and CCF?

Answer 5

No, but it is good practice. Helps demonstrate you have met the SRA code requirements

Question 6

If you are acting for a husband and wife on a matter you need to be sure that you have authority to act for both of them. So if your instructions come from one spouse, what do you do?

Answer 6

Ensure that you have confirmation in writing from the other spouse that they are happy for you to act on their behalf.

If you have reason to believe that the instructions do not represent the wishes of your client, you cannot act.

Question 7

Can you act if there is an own interest conflict?

Answer 7

No

Examples include:
- A financial interest of yours or someone close to you
- A personal or business relationship of yours
- Your role as an employee: (a client asks for advice in relation to a dispute involving your employer or a fellow employee)
- Your own conduct as a firm or individual (where the wrong advice has been given to a client or a wrong action taken on their behalf)

Question 8

When will you be caught by CCS/CCF 6.2 regarding a conflict of interest?

Answer 8

‘A situation where your separate duties to act in the best interests of two or more clients in relation to the same or related matters conflict’.

If there is a significant risk of this, this is enough

Question 9

What are the exceptions to the conflict of interest rule?

Answer 9

• Substantially common interest (CSI) (clear common purpose and strong consensus !!look out for as soon as negotiation is involved!!
• Competing for same objective (CSO) (which, if attained by one client, will make that asset/contract/business opportunity) unattainable to the other client or clients (RARE - Sophisticated clients)

Question 10

What criteria needs to be satisfied in order for SCI of CSO exceptions to apply?

Answer 10

1. All the clients have given informed consent (given or evidenced in writing)
2. Put in place effective safeguards where appropriate to protect information (can be tricky if it’s not appropriate)
3. You are satisfied it is reasonable to you to act (bargaining power, need to negotiate, benefits to client)

Question 11

What does a conflict check involve? What should the search be carried out against?

Answer 11

• Client name, it’s parent and subsidiary companies
• Client’s company number
• Counter party name, parent and subsidiaries
• Directors of client and counter party

Can be more information. Each firm has their own procedure.

Question 12

What might be a ‘good reason’ to terminate a client’s retainer?

Answer 12

• You cannot obtain clear instructions
• Carrying on acting would break the law/codes
• Client has failed to pay its bills

Question 13

When should information as to likely costs be provided?

Answer 13

At the time of engagement and also during the matter as appropriate.

CCS requires you to provide the best possible information. Pre-warn client and keep their expectations realistic.

Question 14

When must you inform your client of the complaints procedure?

Answer 14

At the time of engagement. Must be in writing.

(a) their right to complain to you about your services and your charges;

(b) how a complaint can be made and to whom; and

(c) any right they have to make a complaint to the Legal Ombudsman and when they can make any such complaint

Question 15

When should you send a client care letter?

Answer 15

At the beginning of a matter, then ongoing duty to keep client informed about all aspects of their matter/changes to client care letter info

Question 16

What is a solicitors obligation regarding discussing funding options?

Answer 16

Draw to the client’s attention any funding options that might be available, try and ensure client ends up with appropriate one

Question 17

Is civil CLS funding available to a company?

Answer 17

No - very rare

Question 18

What types of civil claim usually get CLS funding?

Answer 18

Children/family/domestic abuse/homelessness

Question 19

Does CLS funding require the applicant to pass a merits and means test?

Answer 19

Yes

Question 20

What is a Conditional Fee Arrangement (CFA)?

Answer 20

If successful:

• Normal fee
• Success fee (‘uplift’) up to 100% of the normal fee (can’t recover from opponent, so comes out of claimant’s damages)

Personal injury - success fee must not exceed 25% of PSLA and damages for pecuniary loss

Often used with ATE

Question 21

What are Damages Based Agreements (DBAs)?

Answer 21

Solicitor is paid a proportion of the damages. Maximum amount is capped at:

• 25% of the damages (excluding damages for future care and loss) in personal injury cases,
• 35% of damages in employment tribunal cases and
• 50% of damages in all other cases.

(does not cover disbursements or opponents costs)

Question 22

What is After the Event Insurance (ATE)?

Answer 22

Taken out once a dispute has already arisen. Usually to covers disbursements and opponent’s costs

Availability depends on merits of case (whether insurance company wants to cover)

Can be v expensive

Insurance policy premium cannot be recovered from other side

Question 23

What is the arrangement if a third party funds civil proceedings?

Answer 23

Third party pays. If successful they get funds back plus uplift

Question 24

What free legal advice is someone entitled to at the police station for non-imprisonable offences?

Answer 24

Telephone only (accessed through Defence Call Centre)

Question 25

What level of qualification must the person have who attends a police station to give free legal advice?

Answer 25

An accredited representative

Question 26

Which test must be passed by a defendant in order to obtain public funding for a criminal offence?

Answer 26

Merits test (interests of justice test) and Means test (different for Mag and CC)

Question 27

Which defendants are ‘passported’ through the means test?

Answer 27

Defendant’s under 18 and/or those on specified welfare benefits.

Question 28

What does being ‘passported’ mean in the context of the means test?

Answer 28

The defendant does not need to complete the Financial Statement for Legal Aid in Criminal Proceedings

Question 29

What is the means test in the Magistrates Court?

Answer 29

Work out ‘weighted gross annual income’ (added to partner’s income and takes into account number of people living in household)

If £12,475 or less = eligible

If more than £12, 475 and less than £22,325 then disposable household income is checked against threshold (£3,398 or less)

If £22, 325 or more = not eligible

Applicants can apply for a review if they fail.

Question 30

What is the means test in the Crown Court?

Answer 30

Household disposable income:

£37,500 or more = ineligible

eligible for public funding without any contribution- if below the threshold i.e. £3, 398 or less at present.

eligible for public funding with a contribution- if in between the thresholds i.e. between £3,399 and £37,499.99 at present.

The income based-contribution is 90 percent of disposable income for a maximum of six months in instalments and subject to a maximum based on the type of offence (refunded with interest if the defendant is acquitted). The applicant can apply for an eligibility review if they have failed the means test or a hardship review if subject to a contribution order e.g. if the applicant suspects an error or circumstances have changed.