Regulation Flashcards
(83 cards)
1
Q
why are services regulated?
A
- Services are regulated by an independent regulator to protect the public
2
Q
what legal services are not regulated?
A
will writing, family law and employment advice
3
Q
what are the reserved legal activities?
A
OILPAN:
o Administration of oaths
o Reserved instrument activities
o Conducting litigation
o Probate activities
o Exercise of the right of audience (ROA)
o Notarial activities
4
Q
who can carry out RLAs?
A
Only those authorised or exempt can carry out RLAs.
5
Q
give an example of administration of oaths
A
when an affidavit needs to be sworn
6
Q
explain reserved instrument activities
A
preparing and lodging legal documents dealing with the transfer of land or an instrument relating to court proceedings
NB: does not include wills, POA or agreements not intended to be executed as a deed
7
Q
explain notarial activities
A
certifying and authenticating documents
8
Q
what happens if someone carries out an RLA and they are not authorised or exempt?
A
- It is a criminal offence if the person is not authorised or exempt
- Exercising rights of audience or conducting litigation could also place someone in contempt of court
9
Q
who is an authorised person?
A
o Authorised person = someone authorised to carry out the activity by an approved regulator
10
Q
who can carry out unreserved legal activities?
A
i.e. activities which do not fall in the definition of the above
Unreserved legal activities (i.e. anything outside the definition of the above) can be carried out by anyone
11
Q
who are exempt persons?
A
- The legislation defines a list of exempt persons for each RLA
12
Q
what are the most common exempt persons?
A
The LSB says the most common are:
Conducting litigation:
Permission has been granted by the court
They have ROA under an enactment
They are party to the proceedings
Exercising ROA:
The same as above +
They are assisting with the conduct of litigation and are supervised by an authorised person
13
Q
what is the role of the LSB?
A
- Oversees regulation of legal services
- LSB approves regulators
- The LSB can make recommendations for improvement, impose penalties and withdraw approval from an approved regulator
14
Q
what are the objectives the LSB and approved regulators must promote?
A
LSB and ARs must promote and comply with the regulatory objectives:
o Protecting and promoting the public interest and interests of consumers
o Supporting the rule of law
o Improving access to justice
o Promoting competition in the provision of legal services
o Encouraging an independent, strong, diverse and effective legal profession that maintains adherence to professional principles
o Increasing public understanding of citizen’s rights
15
Q
give some examples of approved regulators
A
a firm may be regulated by more than one:
o Solicitors SRA
o Barristers Bar Standards Boards
o Costs Lawyers Costs Lawyers Standards Boards
16
Q
what do approved regulators do?
A
They authorise firms/individuals
17
Q
what is the firm/individual subject to once authorised?
A
- Once authorised, the firm/individuals are then subject to regulation in relation to all legal services they provide and they can carry out RLAs
18
Q
who does the SRA regulate?
A
- Regulates firms and solicitors (inc. REFLs and RFLs)
19
Q
what is the role of the SRA?
A
Roles of the SRA:
o Controls training and admission into the profession
o Makes StaRs
o Supervises firms
o Takes enforcement action where necessary
o Authorises solicitors and firms to carry out RLAs
20
Q
what can authorised firms/individuals do?
A
- Only authorised firms and authorised individuals can perform RLAs and provide immigration advice
21
Q
re: risk assessment
what should firms do?
A
- Firms should have their own risk management
22
Q
re: risk assessment
what approach does the SRA take to regulation/risk management?
A
- SRA take a risk-based approach to regulation
- Each firm will have a risk profile to understand the risk they present to the regulatory objectives.
- The risk profile will then rate and rank each firm. The SRA will then seek to mitigate the risks created by ‘high impact’ firms.
23
Q
re: risk assessment
what are risk assessed on?
A
o Probability i.e. the likelihood of a negative impact occurring; and
o Impact i.e. the potential size of the negative impact
24
Q
re: risk assessment
what are the potential sources of risk?
A
Sources of potential risk inc.:
o Structure, systems of internal processes of the firm
o The firm or an individual being involved in fraud of dishonesty
o Political, economic or legal change
25
re: risk assessment
what steps do the SRA take to mitigate risk?
Steps the SRA may take to mitigate risk:
o Raising awareness
o Changing the StaRs
o Place limitations on an individual’s practising certificate
o Sanctions i.e. fines, closing the firm down
26
re: risk assessment
where are the most significant risks recorded?
* The SRA’s annual Risk Outlook identifies the most significant risks
27
re: authorisation of firms
how does a firm become authorised?
* The firm will need to apply to the SRA for authorisation
28
re: authorisation of firms
what will the SRA do in response to an authorisation application?
* The SRA will check eligibility requirements are met and investigate the firm
The SRA will either:
o Grant blanket authorisation;
o Authorise selected legal services; or
o Refuse the application
29
re: authorisation of firms
who is eligible to apply for the SRA for authorisation?
o Sole practitioners
o Legal services bodies
o Licensed bodies
30
re: authorisation of firms
what is a sole practitioner called once authorised?
a recognised practitioner
31
re: authorisation of firms
what is a legal services body?
i.e. a firm where all the managers/interest holders are lawyers
o At least 75% of the body’s managers are legally qualified; and
o At least 75% of the shares and voting rights are held by legally qualified persons; and
o Managers who are not legally qualified are approved by the SRA; and
o At least one manager must be a practising solicitor or REL
32
re: authorisation of firms
what is a licensable body?
a firm where the managers/interest holders include lawyers and non-lawyers
must have at least 1 lawyer manager and 1 non-lawyer manager/interest holder
33
re: authorisation of firms
which firms need to apply for authorisation?
they only need to be authorised if they want to deliver RLAs or provide immigration advice
34
re: authorisation of firms
what is a legal services body called once authorised?
Once authorised, it will be known as a ‘recognised body’ (RB)
35
re: authorisation of firms
once authorised, what must the recognised body have in place?
a COLP & COFA approved by the SRA
36
re: authorisation of firms
when can a licensable body apply for authorisation?
A body will be a licensable body (LB) eligible to apply for SRA authorisation if:
o A non-authorised person is a manager of / has an interest in the LB or;
o Another body (A) is a manager of / has in interest in the LB and non-authorised persons are entitled to exercise 10% of the voting rights in A
In either case, the LB must have at least one manager authorised by the SRA or another approved regulator
This is referred to as an alternative business structure.
Typically used where a business offers legal and non-legal services.
37
re: authorisation of firms
once authorised, what must the licensed body have in place?
* There must be compliance officers Head of Finance and Administration and a Head of Legal Practice
38
re: authorisation of firms
what is a licensable body called once approved?
a licensed body
39
re: authorisation of individuals
a person cannot act as a solicitor unless...
A person cannot act as a solicitor unless:
o They have been admitted as a solicitor;
o They are on the roll; and
o They have a practising certificate
By virtue of these requirements, practising solicitors are regulated by the SRA
40
re: authorisation of individuals
what is a person who doesn't satisfy the 3 requirements called?
o Any person who doesn’t satisfy the above is an ‘unqualified person’
41
re: authorisation of individuals
what is the consequence of practicing without a certificate?
* It is a criminal offence to practice without a practising certificate
42
re: authorisation of individuals
what does admission mean?
* Admission = the below is satisfied and the individual is placed on the roll
43
re: authorisation of individuals
how is someone admitted?
o Individuals must apply for admission to the roll
44
re: authorisation of individuals
when will someone be eligible for admission?
A person is eligible for admission as a solicitor if the SRA is satisfied:
o They have attained the required qualifications;
o They have undertaken the necessary training;
o They are proficient in English or Welsh; and
o Of their character and suitability to be a solicitor
45
re: authorisation of individuals
who do the character and suitability rules apply to?
* The SRA character and suitability rules apply to those seeking admission to the role and those applying to be the COLP and COFA
46
re: authorisation of individuals
what are the elements of the character and suitability rules?
1) The overriding need to protect the public and maintain public trust and confidence in the profession
2) Conduct.
3) Aggravating and mitigating factors in relation to conduct (non-exhaustive)
47
re: authorisation of individuals
what do the SRA look at when considering 'the overriding need to protect the public and maintain public trust and confidence in the profession'?
The SRA will look at the applicant’s role and individual circumstances
48
re: authorisation of individuals
what are the heads of term under 'conduct'?
criminal conduct & other conduct and behaviour
49
re: authorisation of individuals
how does the SRA approach criminal conduct?
The SRA will categorise the criminal conduct:
i. Most serious application likely to be refused.
ii. Serious application may be refused.
50
re: authorisation of individuals
give examples of 'most serious' criminal conduct
* Conviction of a criminal offence resulting in a custodial or suspended sentence involving: perjury, obstructing the course of justice, fraud, dishonesty, bribery, violent/sexual nature, discrimination or terrorism
* Caution accepted for an offence which is dishonest, violent, discriminatory or sexual
* On the Violent and Sex Offender register
51
re: authorisation of individuals
give examples of 'serious' criminal conduct
* Conviction or caution accepted for a criminal offence which does not fall within ‘most serious’ and the individual is subject to a conditional discharge or bind over by a court.
52
re: authorisation of individuals
give examples of 'other conduct and behaviour'
i. Behaviour that is dishonest, violent, threatening, harassing or discriminatory;
ii. Determination the individual has committed a deliberate assessment offence (i.e. plagiarism or cheating)
iii. Financial behaviours i.e. bankruptcy, cannot or has dishonestly managed their finances, avoided responsibility for debt
iv. Subject to serious disciplinary/regulatory findings or sanctions
53
re: authorisation of individuals
what is the ongoing obligation?
* There is an ongoing obligation to inform the SRA promptly if one of the above occurs once admitted
54
re: authorisation of individuals
when can a solicitor apply for a practising certificate?
* A solicitor can apply to the SRA for a PC if their name is on the roll and they are not suspended from practice as a solicitor
55
re: authorisation of individuals
what does a practicing certificate allow?
PC authorises the solicitor to carry on RLAs (not inc. notarial activities and noting they cannot exercise ROA in higher courts until they have completed further training)
NB: even though the PC is personal to the solicitor, they can only deliver RLAs through an authorised body (i.e. RSP, RB, LB), unless an exception applies
56
re: authorisation of individuals
how frequently is a practicing certificate applied for?
* Solicitors must apply to have their PC renewed each year. They are due for renewal on 31 October and a fee is payable.
57
re: authorisation of individuals
what power do the SRA have over practicing certificates?
* The SRA must refuse an application for a PC if it is in the public interest
* The SRA can impose any conditions it sees fit on an existing certificate if the solicitor
58
re: authorisation of individuals
when might the SRA impose conditions on the practicing certificate?
o Is unsuitable to undertake certain activities;
o Is putting, or is likely to put, the interest of clients, third parties or the public at risk;
o Will not comply with, or requires monitoring of compliance with StaRs
o Should take steps conducive to the regulatory objectives
59
re: authorisation of individuals
what conditions might the SRA impose on a practicing certificate?
o Requirements for certain steps to be taken
o Restrict carrying on of certain activities
o Holding of certain roles
o Prohibit taking of steps without the SRAs approval
60
re: authorisation of individuals
what can an individual do if they have contest the SRA's decision regarding the practicing certificate?
* If an application is refused or conditions are imposed, an application for review can be made to the SRA or appealed to the High Court
61
re: authorisation of individuals
can a solicitor provide legal services through an unregulated body?
* A solicitor can provide legal services to the public through an unregulated body, but they cannot carry out RLAs, immigration advice etc , unless:
1. they are a freelance solicitor which meets the requirement
2. they are an in-house solicitor
3. they are a solicitor working for a non-commercial organisation
62
re: authorisation of individuals
when can a free-lance solicitor carry out RLA not through a regulated body?
They are a free-lance solicitor which:
a. Has practised for at least 3 years
b. In self-employed and practises in their own name
c. Has indemnity insurance for all the services they provide
d. Does not have any employees
e. Only holds limited categories of client money
f. Has informed the SRA of their intention to practise in this capacity
63
re: authorisation of individuals
when can a in-house solicitor carry out RLA not through a regulated body?
They can deliver RLAs to their employer but not the general public
64
re: authorisation of individuals
when can a solicitor working for a non-commercial organisation carry out RLA not through a regulated body?
give examples
i.e. not-for-profits, charities, community interest groups, trade unions
They can provide RLAs to the public on behalf of the organisation
65
re: authorisation of individuals
if a solicitor is carrying on RLAs not through a regulated body and they are relying on an exception, what insurance must they have in place?
* The SRA does not specify a level of cover but the solicitor must have PII that is ‘adequate and appropriate’ for the work they do
66
re: authorisation of individuals
If a solicitor has a practicing certificate, can they use this to carry on regulated legal activities outside of work?
no.
Example - a solicitor works for an RB, he can deliver RLAs through the RB. He wants to undertake pro bono work outside of work. He cannot use his PC to deliver RLAs in the pro bono work unless an exception applies
67
re: insurance
what is professional indemnity insurance?
* PII = insurance covering loss/damage to a third party caused by the insured’s breach of professional duty
o Will usually also cover the solicitor’s legal costs and o/s legal costs if they lose and are ordered to pay
68
re: insurance
what does PII cover?
Covers civil claims made against a solicitor due to their practice (usually negligence)
PII does not absolve them of liability
69
re: insurance
what happens if the insurer does not accept the claim / there is a shortfall?
the solicitor must pay
70
re: insurance
how often is this renewed?
yearly. Firms must put a new policy in place as the current policy period comes to an end so there is continuous insurance in place
71
re: insurance
to whom do the SRA indemnity insurance rules apply?
* These apply to SRA-authorised firms only
o In other words, they do not apply to solicitors that practise outside of SRA authorised firms
o But employees of the firm will be covered by the firm’s PII
72
re: insurance
what is the obligation on SRA-authorised firms?
* All SRA-authorised firms must take out and maintain qualifying insurance (QI) which is adequate and appropriate and delivered by a participating insurer
73
re: insurance
what is qualifying insurance?
o QI = insurance on the SRA’s minimum T&Cs (MTCs)
74
re: insurance
what is 'adequate and appropriate'?
The MTCs may not provide sufficient cover for the firm’s needs and would need to top this up
They will need to consider past and current practice to decide what is adequate and appropriate i.e. type of clients, history or claims, estimate level of claims (applicable to solicitors and firms).
This will need to be kept under review
75
re: insurance
explain 'participating insurer'
o Participating insurer = regulated by the FCA and agreed to provide insurance to the SRA on particular terms
76
re: insurance
what are the key minimum terms and conditions?
o The sum insured for one claim (exclusive of defence costs) must be at least £3m for RBs & LBs and at least £2m in all other cases.
o Insurance cannot exclude, or attempt to exclude, liability below the minimum level of cover (but they can cap liability above the minimum)
o The policy must allow cover to be extended for an additional 90 days after the policy period has expired. This is made up of two periods:
Extended policy period (EPP) = 30 days from the renewal date
Cessation period (CP) = 60 days from the end of the EPP
77
re: insurance
what must a firm do if they cannot obtain new qualifying insurance before the expire of the police period?
* If the firm cannot obtain QI before the expiry of the policy period (i.e. their current insurance is too expensive and they need to find a new insurer) then:
o Within EPP the firm can continue to practice as usual, but they must inform the SRA they have entered the EPP and source new QI.
o Within CP the firm can only work on existing instructions and cannot take on new work. They must inform the SRA.
o After CP the firm must cease practising.
78
re: insurance
which solicitors do not need to obtain PII?
o Solicitors that work for an SRA-authorised firm (unless they are doing additional work outside of the firm)
o Solicitors that do not provide RLAs
79
re: insurance
which solicitors do need to obtain PII?
o Freelance solicitors that are providing RLAs to the public
o Solicitors in non-commercial organisations providing RLAs to the general public (the body will take out the cover, but the obligation is on the solicitor
80
re: insurance
if an individual solicitor needs to obtain PII, what are the requirements?
The insurance does not need to adhere to the SRA’s MTCs but must be ‘adequate and appropriate’
Even though only solicitors that provide RLAs to the public need to have PII, it must be adequate and appropriate for all the services they provide, not just RLAs
81
re: insurance
what's the statutory obligation in regards to client information?
firms must inform clients about the compulsory layer of PII inc. details of the insurance and territorial coverage
82
re: insurance
what information must clients be told according to the SRA transparency rules?
freelance solicitors providing RLAs must inform their clients they are not required to meet the SRAs MTCs
83
re: insurance
what information must clients be told according to the general STaRs?
o Must be open with clients about PII
o Must be given information about the services they need in order to make informed decisions in a way they can understand
Example - client might be unwilling to instruct a firm in respect of a £10m claim if the firm’s cover is only £5m. They will want to know about the firm’s policy.
