Professional Conduct: The Client Relationship

Question 1

When must customer due diligence (CDD) be carried out under the Money Laundering Regulations?

Answer 1

CDD must be carried out when establishing a business relationship, carrying out an occasional transaction, or when you suspect money laundering or terrorist financing

Question 2

What is the purpose of CDD?

Answer 2

The purpose of CDD is to identify your client and verify their identity using documents, data, or information from a reliable source

Question 3

Name three methods of verifying a client’s identity for CDD.

Answer 3

Obtaining or viewing original documents (e.g., passport), conducting electronic verification, obtaining information from other regulated persons

Question 4

What must you do before acting if your firm’s CDD policy is unclear?

Answer 4

You must confirm your firm’s CDD/know your client policy with your Compliance Officer before acting

Question 5

Why is a conflict check necessary before accepting new instructions?

Answer 5

A conflict check is necessary because SRA CCS 6.2 and CCF 6.2 prohibit acting where there is a conflict of interest, ensuring you comply with Principles 2, 3, and 7

Question 6

What does CCS 6.1 prohibit regarding conflicts of interest?

Answer 6

CCS 6.1 prohibits acting if there is an own interest conflict or a significant risk of such a conflict

Question 7

Under CCS 6.2, when may you act despite a conflict of interest?

Answer 7

You may act if all affected clients give written informed consent, effective safeguards are in place to protect confidential information, and it is reasonable to act for all clients

Question 8

List the three conditions required by CCS 6.2 to allow acting where a conflict exists.

Answer 8

1) Written informed consent from all affected clients; 2) Effective safeguards to protect confidential information; 3) It must be reasonable to act for all clients

Question 9

What are the two types of conflict under CCS 6.1–6.2?

Answer 9

An own interest conflict and a conflict of interest (significant risk of client interests conflicting)

Question 10

What must a client care letter include at the beginning of each new matter?

Answer 10

A client care letter must include confirmation of the client’s instructions and options, general information on responsibilities, costs information, explanation of who will be dealing with the matter, and the complaints procedure

Question 11

When is it permissible to send a shortened client care letter to an established client?

Answer 11

When the client is established and repeat work is on agreed terms, an annual client care letter may cover general requirements and a shorter letter may be sent for each new matter

Question 12

Name five items that should be included in the contents of a client care letter.

Answer 12

Identification of client objectives, explanation of issues/options, next steps, level of service and how progress will be reported, responsibilities of both parties

Question 13

What costs information must be provided in a client care letter?

Answer 13

How you will charge (fixed fee, hourly rates), rates of individuals, intervals for fee updates, VAT/disbursements/additional fees, any fee limits, fee estimates, circumstances in which fees may exceed estimates, and payment terms

Question 14

What information about staffing must a client care letter contain?

Answer 14

The name and status of the person dealing with the matter and who is supervising them

Question 15

What details about complaints must be in a client care letter?

Answer 15

How a client can complain, to whom complaints should be made, and details of the firm’s complaints procedure

Question 16

List three elements of the SRA checklist for a good client care letter.

Answer 16

Explaining what will happen and when, stating how much work will cost, clarifying what the client needs to do, providing contact details, ensuring the letter is concise and in plain English

Question 17

When should a client care letter be updated?

Answer 17

A client care letter should be updated in writing as soon as practicable if any information originally provided (e.g., costs estimate or scope of work) becomes superseded

Question 18

What does CCS 3.1 require when taking instructions from a client?

Answer 18

You must only act on instructions from the client or someone properly authorised by the client, and if you suspect instructions do not reflect the client’s wishes, you must confirm before acting

Question 19

What does CCS 3.2 require regarding service to clients?

Answer 19

You must ensure the service you provide to clients is competent and delivered in a timely manner

Question 20

According to CCS 3.3, what must legal professionals do to maintain competence?

Answer 20

You must maintain your competence to carry out your role and keep your professional knowledge and skills up to date

Question 21

What does CCS 3.4 require when advising clients?

Answer 21

You must consider and take account of your client’s attributes, needs, and circumstances when providing legal advice

Question 22

What are the duties of supervisors under CCS 3.5?

Answer 22

You remain accountable for work done through those you supervise and must effectively supervise their work

Question 23

What must managers ensure under CCS 3.6?

Answer 23

Managers must ensure those they manage are competent to carry out their roles and keep their professional knowledge, skills, and understanding of legal, ethical, and regulatory obligations up to date

Question 24

What does CCF 4.2 require regarding client service?

Answer 24

Firms must ensure that the service provided to clients is competent and delivered in a timely manner

Question 25

What does CCF 4.3 require of firms?

Answer 25

Firms must ensure that their managers and employees are competent to carry out their roles and keep their professional knowledge and skills up to date

Question 26

What system requirement does CCF 4.4 impose on firms?

Answer 26

Firms must have an effective system for supervising clients’ matters

Question 27

Give two reasons why you might need to terminate a retainer with a client.

Answer 27

If you cannot obtain clear instructions or continuing would break the law or breach the Codes (e.g., due to a conflict of interest)

Question 28

What information must you give clients under CCS 8.2 regarding complaints?

Answer 28

You must establish and maintain a procedure for handling complaints about the legal services you provide

Question 29

What three things must you inform clients of in writing at the time of engagement under CCS 8.3?

Answer 29

Their right to complain about services and charges, how to make a complaint and to whom, and any right to complain to the Legal Ombudsman and when

Question 30

What must you do if a complaint is unresolved after eight weeks under CCS 8.4?

Answer 30

Inform the client in writing of their right to complain to the Legal Ombudsman, an ADR-approved body, and whether you agree to use that ADR scheme

Question 31

What does CCS 8.5 require regarding handling complaints?

Answer 31

You must ensure complaints are dealt with properly, fairly, and free of charge

Question 32

According to CCS 8.6, how must information be provided to clients?

Answer 32

Information must be provided in a way clients can understand so they can make informed decisions about services, matter handling, and available options

Question 33

What does CCS 8.7 require about costs information?

Answer 33

Clients must receive the best possible information about how their matter will be priced at engagement and as the matter progresses, including likely overall costs and any costs incurred

Question 34

What does CCS 8.8 require about publicity?

Answer 34

Any publicity related to your practice must be accurate and not misleading, including charges and circumstances in which interest is payable

Question 35

Under CCS 8.10, what must clients understand about regulation?

Answer 35

Clients must understand whether and how the services provided are regulated, including which activities are SRA-regulated and ensuring no misrepresentation of regulation status

Question 36

What regulatory protections must be explained to clients under CCS 8.11?

Answer 36

Clients must understand the regulatory protections available to them, such as the Legal Ombudsman and SRA safeguards

Question 37

List four types of funding arrangements commonly used in legal work.

Answer 37

Hourly charging, fixed fees, professional funding (e.g., by a trade union), and conditional fee agreements (‘no win no fee’)

Question 38

What is a Conditional Fee Agreement (CFA)?

Answer 38

A CFA is a ‘no win no fee’ arrangement where, if successful, the solicitor receives the normal fee plus a success fee (up to 100% on top), subject to conditions and limits in certain cases

Question 39

What is a Damages-Based Agreement (DBA)?

Answer 39

A DBA is an agreement where the solicitor’s fees are a percentage of the damages recovered in civil litigation, subject to statutory limits

Question 40

What is third-party funding?

Answer 40

Third-party funding is where a funder (e.g., bank, hedge fund) finances a client’s claim in exchange for a return plus uplift if the claim succeeds

Question 41

What must you consider regarding authorization under SRA Principles when taking on a new client?

Answer 41

You must ensure you are authorised to act on the client’s behalf and not misrepresent regulation status, in line with Principles 1 and 2

Question 42

What duty under CCS 3.1 applies to spousal instructions?

Answer 42

If acting for both spouses, you must obtain written confirmation from each spouse that they agree to you acting on their behalf