Professional Conduct MCQs

Your law firm, based in Kent, has a referral agreement with another firm based in Southampton under which if one firm (the 'Introducer') refers a client to the other firm (the 'Recipient'), the Recipient will pay the Introducer 7% of the net fees paid by the client in the matter ('Referral Fee'). In which ONE of the following circumstances would your firm be able to accept instructions from the client referred by the other firm and pay the Referral Fee?

A client seeking advice on a dispute against their former landlord.

Which of the following types of work would require your firm to carry out customer due diligence pursuant to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 ('MLR').

Agreeing to act as the business address for a Bermuda-based corporate client which has customers in England and wants to have an English address in case its customers need to contact it.

You are representing a client as a solicitor-advocate. The trial of the client's claim started yesterday. Last night, you were reading through the law reports in a national newspaper when you realised that one of the reported cases appears to be highly prejudicial to your client's claim. You believe that neither the court nor the defendant's legal representatives are aware of this reported case (the 'Case'). Which ONE of the following statements is CORRECT?

Although the Case is prejudicial to your client's claim, you should provide the court with details of it. You do not need your client's prior consent to do this.

You are a solicitor in a form of solicitors who act for Kent limited. Your firm has been holding the proceeds of sale of a property in Nottingham (the 'Net Proceeds of Sale') pending the purchase of alternative premises by Kent Limited. Your firm has been holding the Net Proceeds of Sale in the firm's general client account. In relation to the Net Proceeds of Sale, how should any interest to be paid to the client, Kent Limited, be calculated?

As a fair sum of interest on any client money held on the client's behalf.

Your firm is acting for a client in connection with a litigation matter. Proceedings will be issued next week and court fees of £250 will be due to be paid at the time of issue. No bill has been sent to the client. You have just received a cheque for £250 from the client, made payable to your firm, for the court fees (the 'money'). Which one of the following best sets out the position in relation to this money?

As the court fees have not yet been paid and a bill has not been delivered to the client for them, the money is client money.

Your firm is acting for a client in connection with a litigation matter. Proceedings will be issued next week and court fees of £340 will be due to be paid at the time of issue. No bill has been sent to the client. You have just received a cheque for £340 from the client, made payable to your firm, for the court fees (the 'money'). Which one of the following best sets out the position in relation to this money?

As the court fees have not yet been paid and a bill has not been delivered to the client for them, the money is client money.

You work in a firm of solicitors which receives a cheque for £4,500. The cheque is made payable to the firm and is drawn on the client account of Elford & Partners (another firm of solicitors). The cheque arrives with a covering letter from Elford & Partners, stating that it represents payment of damages owed by one of their clients to one of your clients, Sonia Jones, who you represented in her claim for damages. The partner in your firm who has been dealing with the matter is away from the office for one week on holiday and cannot be contacted. Sonia Jones is out of the country on a business trip. Which one of the following sets out the best course of action your firm should take?

Bank the cheque immediately in the firm's client account and notify Sonia Jones that the money has been received.

A father wishes to apply for a court order to gain access to his child who is 12 years old. However he is concerned that he will not have enough money to pay for the legal costs. What is the best advice to give him about civil Community Legal Service ('CLS') funding?

Civil CLS funding may be available, but only if his case is sufficiently strong and he meets the means test.

You are a solicitor at a firm of solicitors acting for the buyer of a property. The buyer has already sent you the deposit monies prior to exchange. At exchange of contracts, you send the deposit monies to the seller's solicitor. The contract states that the deposit is to be held as stakeholder. Which one of the following pairs of double entries shows how the payment of the deposit at exchange should be recorded by you?

Credit cash sheet client account Debit client ledger client account

You are a solicitor in a firm of solicitors. Your firm issued a bill of costs for £2,500 plus VAT to one of its clients. The client disputed the amount of costs and your firm agreed to an abatement of costs of £500 plus VAT. Which one of the following should be included in the entries made to record this abatement in your firm's accounts?

Credit client ledger business account £500 Debit profit costs £500

A client of a firm of solicitors (the 'firm') owes the firm £7,500 which represents an unpaid bill of costs for £6,250 plus VAT of £1,250 dating back over a year. The client is insolvent and the firm learns that it is unlikely they will receive any money from the liquidation of the company's assets. The client has no client money in the client account. The firm therefore decides to write off the full amount of the debt as irrecoverable. Which one of the following should be included in the entries made to record writing off the debt in the firm's accounts?

Credit client ledger business account £6,250 Debit bad and doubtful debts account £6,250

A firm of solicitors is acting on behalf of a client who are selling their property and purchasing a new property. A deposit of £14,000 has been received in respect of the sale and is held as agent. Which one of the following pairs of double entries shows how the receipt of the deposit cheque should be recorded?

Credit client ledger client account Debit cash sheet client account

You are a solicitor at a firm of solicitors and the firm's bank has notified you that your general/main client account has earned interest. The interest has already been paid into the firm's business account and the firm decides to pay £120 of it to one of their clients which is a fair sum of interest on the client money held by the firm for the client. Which one of the following pairs of double entries should be included in the entries that record the payment of the fair sum of interest to the client?

Credit client ledger client account Debit cash sheet client account

Your firm is acting in the administration of the estate of John Smith (deceased). The deceased held an account with New Birmingham Building Society ('NBBS'), which you closed. NBBS has sent your firm a cheque (made payable to your firm) in respect of the closing balance of £2,000 in that account. Which pair of double entries shows how the receipt of the cheque from NBBS should be recorded in your firm's accounts?

Credit client ledger client account: John Smith (deceased), Debit cash sheet client account

A firm of solicitors is acting on behalf of a client who is selling his property and purchasing a new property. A deposit of £25,000 has been received in respect of the sale and is held as stakeholder. Which pair of double entries shows how the receipt of the deposit should be recorded?

Credit stakeholder ledger, Debit cash sheet client account

You are a solicitor in a firm of solicitors. Your firm submitted a bill of costs to a client 9 months ago for fees of £2,000 plus VAT of £400. The client has moved abroad without paying their bill and your firm has decided to write off the amount owed as a bad debt. Which one of the following correctly sets out the double entry/ entries needed to record the write-off of the bad debt in your firm's accounts?

Debit bad and doubtful debts account £2,000 Credit client ledger business account £2,000 Debit VAT account £400 Credit client ledger business account £400

You have been instructed to wind up and distribute the estate of a deceased client. You pay a disbursement on the file when there is no money for the client in the client account. What are the correct entries to record payment of the disbursement?

Debit client ledger business account, credit cash sheet business account.

A client of a firm of solicitors (the 'firm') has recently sold a flat for £350,000. The firm have received an invoice from the estate agent addressed to the client. The client has asked the firm to pay the estate agent's fees out of the client account as the firm are holding sufficient client money for the client to cover this disbursement. The estate agent's fees amount to £5,000 plus VAT of £1,000. Which one of the following correctly shows how the payment of the estate agent's fees should be recorded in the firm's accounts?

Debit client ledger client account £6,000 Credit cash sheet client account £6,000

A client instructs you on the purchase of a new property. You receive a cheque for £500 from the client on account of costs. Two days later you carry out a search for the client at the Land Registry and pay a fee of £120. You have not issued a bill to your client for your fees or for any disbursements. Which one of the following correctly sets out the entries to record payment of the Land Registry fee?

Debit client ledger client account, credit cash sheet client account

You are a solicitor in a firm of solicitors. Your firm issued a bill of costs to a client for fees of £20,000 plus VAT. It subsequently reduces its fees by £1,000. Which one of the following correctly sets out the double entry/entries needed to record this abatement in your firm's accounts?

Debit profit costs £1,000 Credit client ledger business account £1,000 Debit VAT account £200 Credit client ledger business account £200

A case is heard in the Court of Appeal. Which of the following statements most accurately represent the decisions by which the Court of Appeal should consider itself bound?

Decisions of the Court of Appeal, the Supreme Court and the House of Lords (court decision binds all courts below it)

A potential new client has been referred to you by one of the firm's longest-standing and most trusted clients. You meet the man at your offices, and he explains that he would like you to act for him on the purchase of a property in London. The seller is the man's cousin. The man is buying the property at a discount with cash. He wants to complete the transaction within the next few days. He asks for your client account details to transfer the purchase funds. Which of the following statements best describes what you should do?

Do not accept the monies into the firm's client account and make an authorised disclosure to your firm's Money Laundering Reporting Officer without alerting the man to your concerns.

A law firm has just won a landmark settlement in a divorce case for a client which was reported in the legal press. The firm would like to refer to its involvement in the case in its marketing literature. Which ONE of the following methods of marketing the firm's involvement in the case is PROHIBITED under the Code of Conduct for Solicitors, RELs and FRLS ('CCS')?

Handing out leaflets referring to the case to individuals leaving the local family law court.

You are on the panel interviewing candidates for a role as solicitor at your firm. Your office is a modern three storey building. A candidate of exceptional quality presents herself for interview. Her CV is impressive and she answers the panel's questions extremely well. She is blind and, at the end of the interview, mentions that she would need a small ramp outside the entrance of the building and railings on the stairs to the upper floors in order to be able to access the building safely. After all the candidates have all been interviewed, the committee is deciding who should be offered the job. You are very keen on the blind candidate, but the others are not keen on offering it to her as this would involve paying for a ramp and railings. The ramp and railings would require minimal cost and disruption to the business of the firm. How should you advise the committee?

If the candidate is the best person for the role, the law firm must appoint her and must provide the ramp and railings.

You work at a large international firm and have been asked to go to the reception of your firm's offices to meet Aarya, a prospective client. Aarya has never been to your firm before and your firm has never acted for her. You have been asked to bring her to a meeting room for a preliminary meeting with your supervisor. Bearing in mind the different factual scenarios set out below, which ONE of the following statements is CORRECT?

In the meeting Aarya reveals she is transgender and she has been denied the right to compete as a female at her local archery club and she would like to challenge the decision. Your supervisor believes that women who are transgender should not be able to compete in such circumstances and refuses to act for her. It is likely your supervisor will be found to be in breach of the requirement not to unfairly discriminate in the Code of Conduct for Solicitors.

A new client has instructed you to act for her on the purchase of a hotel. She informs you that she is buying the property from her father who is based in the British Virgin Islands. She is paying £800,000 in cash which is 20% below the value of the property which is £1 million. What is the best course of action you should take?

Inform your firm's Money Laundering Reporting Officer about the transaction. Do not work on the file until they have carried out the relevant checks.

You work in the corporate department of a large national firm. Arshad wishes to instruct your firm in connection with the acquisition of a small abattoir business which processes and supplies Halal meat to butchers who serve the Islamic community. The purchase price for the business is to be £750,000 and the agreement will be governed by English law. Which ONE of the following reasons would your supervisor be able to rely on to refuse to accept Arshad's instructions?

It is your firm's policy not to accept instructions in relation to corporate acquisitions where the purchase price is less than £1 million

A solicitor acts for a client in relation to the acquisition of a private limited company. Two days before the transaction is due to complete the solicitor suspects that his client will be using the transaction to launder money. The solicitor reports this to the nominated officer who makes a suspicious activity report to the relevant authority.

Proceed with the transaction only after receiving authorisation from the relevant authority.

Your client is 25 years old and has been charged with murder. Which one of the following options is correct?

Proceedings will be commenced in the magistrates' court and the case will be sent to the Crown Court.

Your client is 40 years old and has been charged with common assault. Which one of the following statements describes where proceedings should most appropriately be commenced, heard and appealed?

Proceedings will be commenced, tried and sentenced in the Magistrates' Court. Any appeal will be made to the Crown Court.

Client money ledgers

Repaying client money / Withdrawing money from a client account Credit Cash Sheet Client Account Debit Client Ledger Client Account Paying money into client account: Credit Client Ledger Client Account Debit Cash Sheet Client Account

You receive instructions from a client, a Russian national living in London, to set up a trust for his grandchildren. The client informs you he will deposit £500,000 into your firm's account for the trust. A day later your accounts department informs you that the client has deposited £600,000 into the firm's account. The client sends you an email asking you to transfer the over-payment of £100,000 to his cousin at an account registered in Russia.

Report the matter to the Money Laundering Reporting Officer ('MLRO') at your firm. Undertake no further work on the matter until you hear back from the MLRO and ensure that you do not alert the client to your suspicions.

You receive instructions from a client to set up a trust for her grandchildren. The client informs you she will deposit £250,000 into your firm's account for the trust. A day later your accounts department informs you that the client has deposited £350,000 into the firm's account. The client sends you an email asking you to transfer the over-payment of £100,000 to her brother at an account registered in Bermuda. What is the most appropriate action you should take?

Report the matter to the Money Laundering Reporting Officer ('MLRO') at your firm. Undertake no further work on the matter until you hear back from the MLRO, and ensure that you do not alert the client to your suspicions.

You are a 7 year qualified solicitor in the property department of a busy law firm. You have been doing a lot of work selling flats for a large property developer client. Three months ago, when preparing bills for the client you noticed that regular payments had been made out of the client account to a partner who joined your department a year ago. You raised your concern with your firm's Compliance Office for Finance and Administration ('COFA') at the time and have heard nothing further from him. He is also a busy partner in your department. When preparing bills for the same client at the end of the month, you notice that the payments out of client account to the partner have continued. You can think of no explanation for the payments and suspect a breach of the SRA Accounts Rules.

Report your concerns to the SRA.

A solicitor has agreed a fixed fee of £500 to draft a will for a long standing client of the firm. Some of the provisions in the will were complex and took more time for the solicitor to draft than she originally anticipated. When preparing a bill for the client, the solicitor notices that she has recorded fees of £700 based on her hourly rate for the time she spent on the matter. Which of the following best states the action she should take?

She must invoice the client £500 and write off the additional £200.

Nisha appointed a law firm to administer the estate of her mother. A year after appointing the firm, the administration has not been completed and the Nisha has become increasingly frustrated at the length of time it takes the solicitor to respond to her questions and requests for action. Nisha follows the law firm's complaints procedure but eight weeks after making the complaint, the issue has not been resolved to her satisfaction. Which option best sets out the action Nisha should take next?

She should refer her complaint to the Legal Ombudsman

Issuing bills to clients

Step 1: issue the bill Credit Profit Costs Debit Client Ledger Business Account Step 2: record the VAT element Credit VAT Account Ledger Debit Client Ledger Business Account

Paying interest to a client on money earned from the client account (2)

Step 1: withdraw money from Business Account Debit Interest Paid Credit Cash Sheet Business Account Step 2: pay money into Client Account and update relevant Client Ledger Credit Client Ledger Client Account Debit Cash Sheet Client Account

Which ONE of the following statements about the Compliance Officer for Finance and Administrations ('COFA') and the Compliance Officer for Legal Practice ('COLP') of a law firm is CORRECT?

The COFA and the COLP must be approved by the Solicitors Regulation Authority. Unlike the COFA, the COLP must be an individual who is authorised to carry on reserved legal activities by an approved regulator.

Your colleague is considering applying for the role of Compliance Officer for Legal Practice ('COLP') in your law firm. Which ONE of the following statements about the responsibilities of the COLP and the Compliance Officer for Finance and Administrations ('COFA') of a law firm is CORRECT?

The COLP must take all reasonable steps to ensure compliance by the firm, its managers, employees or interest holders with the SRA's regulatory arrangements which apply to them.

Which one of the following is correct?

The SRA requires that a firm must have at least one manager or employee or must procure the services of an individual who is a lawyer of England and Wales and has practised as such for a minimum of three years to ​supervise the work undertaken by the authorised body.​

You are a solicitor in the corporate department of Price Prior. You recently acted for Herbert in connection with the sale of his personal training business and that sale has now concluded. Today Herbert has come to see you. Herbert tells you that following the sale, he now has £50,000 cash and he would like some advice about how to invest this money. He is considering using all the money to buy shares in Magwitch Enterprises PLC ('MEP'). He would like your advice on whether shares are generally a good investment at the moment and, in particular, whether or not he should buy the shares in MEP. Which ONE of the following statements is CORRECT in relation to the above scenario?

The advice to Herbert would be incidental under s.327 FSMA but would not arise out of or be complementary to the provision of professional services to Herbert under Scope Rule 2. You would not be able to advise Herbert on whether he should buy the shares in MEP without being authorised by the FCA.

Your client wishes to bring a breach of contract claim against a software company. The claim is valued at £120,000. What is the best advice to give the client about where to issue the claim?

The claim can be issued in the High Court or the County Court.

You are instructed on behalf of the claimant in a breach of contract claim which is legally and factually very complicated. The claim is worth approximately £150,000 and, amongst other issues, the court will be invited to interpret a particular term of the contract in order to decide the case. This particular term is a common term within the context of contracts of this nature and the outcome of the case will have important implications for a large number of other businesses which use contracts with the same term. What is the best advice to give the claimant in relation to where to start proceedings?

The claimant could issue the claim in the High Court or County Court, but the High Court is more appropriate.

A client of your firm has been found guilty of theft following a trial in the Magistrates' Court. She wants to appeal her conviction, and the sentence of imprisonment which was imposed. Which one of the following statements is TRUE?

The client can appeal both her conviction and sentence to the Crown Court. If her appeal against conviction fails, she can still appeal the sentence passed by the Magistrates' Court.

In an appeal before the Court of Appeal, the appellant relies in argument on an earlier decision of the Judicial Committee of the Privy Council (JCPC) which indicates that the appeal should be allowed. The respondent relies in argument on an earlier decision of the Court of Appeal which indicates that the appeal should not be allowed. How should the Court of Appeal treat the two decisions to which it has been referred?

The court should consider itself bound by the earlier decision of the Court of Appeal.

A firm of solicitors is acting on behalf of the executors of a will. The administration of the estate will be completed shortly and the executors have asked the firm to pay the legacies due under the will. As a separate matter the firm also acts for one of the beneficiaries of the will in connection with the beneficiary's purchase of a property. The beneficiary is entitled to a legacy of £20,000 from the will. The beneficiary intends to use this £20,000 legacy to repay the £2,000 the firm has already incurred in surveyor's fees and searches (for which the firm has billed the beneficiary) and intends the balance of £18,000 to be retained by the firm as part of the purchase price. Which of the following statements best explains the action the firm should take?

The firm can transfer £20,000 from the executors' client account ledger to the beneficiary's client account ledger and then transfer £2,000 to the firm's business account.

A firm of solicitors holds £13,000 in their client account and £25,000 in their business account. A large proportion of the client money in the client account belongs to the firm's client Mr X, who the firm hold £10,000 for. Of the remaining £3,000, £2,500 was sent to the firm generally on account of costs by A Ltd, a client who is purchasing a property and £500 was sent to the firm generally on account of costs by Ms Z, a client who the firm are defending in an employment law case. The firm needs to pay £800 in court fees for Ms Z. Which one of the following best sets out the steps the firm will take to pay the court fees?

The firm will pay the court fees from the business account.

A junior solicitor was preparing a first draft of a contract and made an error in a clause. If the contract was signed in its draft form, the clause would be unenforceable following a recent case. The law firm held training on the case which the junior solicitor did not attend. The junior solicitor's supervisor, who is five years qualified, missed the error when he sent the draft contract to the client. The partner responsible for the work of the junior solicitor and the supervisor identified the error when reading the draft contract two days later and took action to rectify it. Which one of the following statements best sets out the correct position regarding the Code of Conduct for Solicitors ('Code')?

The junior solicitor and the supervisor have both breached the Code.

Aron is a solicitor specialising in immigration law in a law firm. He volunteers one day a week in a law centre advising clients on immigration appeals and appearing before immigration tribunals.

The law centre must be authorised by the SRA because Aron is carrying out reserved legal activities.

A litigation solicitor volunteers one day a week in a law centre defending clients on debt claims. Which one of the following statements is CORRECT?

The law centre must be authorised by the SRA because the conduct of litigation is a reserved legal activity.

A man has been arrested for assault occasioning actual bodily harm contrary to s.47 Offences Against the Person Act 1861. He is a solicitor, earning £100,000 per year. He had lost his temper with a difficult client and punched him, chipping one of his teeth. He has no previous convictions. Will the man be entitled to publicly funded legal representation in connection with the defence of his case?

The man will be eligible for publicly funded legal representation by the duty solicitor at the police station. He will not be able to get a representation order in the magistrates' court, because even if he passes the interests of justice test, he will fail the means test which applies in the magistrates' court.

A man has been arrested on suspicion of common assault by battery. He is a professional football player earning £180,000 per year. It is alleged that the man punched a photographer who was trying to take a picture of him whilst he was having a drink with a woman in a bar. The man has never been in trouble with the police before. Will the man be entitled to publicly funded legal representation in connection with the defence of his case?

The man will be eligible for publicly funded legal representation by the duty solicitor at the police station. He will not be able to get a representation order in the magistrates' court, because even if he passes the interests of justice test, he will fail the means test which applies in the magistrates' court.

Bell Ambrose LLP is a two partner firm of solicitors providing residential conveyancing services. Which of the following costs information is the firm NOT required to publish on its website:

The qualifications and experience of all the staff employed by Bell Ambrose LLP.

A solicitor specialising in civil law, who has been practising for five years, has been asked to represent a client at a hearing in the County Court because the barrister on the case has been taken ill. Which one of the following options best states the solicitor's position?

The solicitor can represent the client at the hearing because solicitors can carry out advocacy in the County Court.

A solicitor acts for a company that is selling all the shares in its wholly owned subsidiary by way of auction. The solicitor is preparing the information memorandum to send to potential buyers, some of whom are companies, some of whom are wealthy individuals. Neither the solicitor nor the firm is authorised by the Financial Conduct Authority ('FCA').

The solicitor can send the information memorandum to the potential buyers without getting it approved by an authorised person because the transaction is to sell 50% or more of the shares in the subsidiary.

A solicitor in a law firm has received a phone call from the managing director of a private limited company incorporated in the UK, which is a new client. The managing director wants to know why the solicitor's firm is asking for documents to verify the identity of the company's shareholder. The company's shareholder lives in Russia and owns and holds the entire shareholding of the company. Which of the following responses best explains the advice the solicitor should give to the managing director?

The solicitor is under an obligation to identify and verify the identity of the company's shareholder because the shareholder owns more than 25% of the shares.

A colleague qualified into the private client department of your law firm five years ago and wishes to leave the firm and set up a business on his own as a self-employed solicitor drafting wills and administering the estates of deceased clients. Which ONE of the following options is CORRECT?

The solicitor will need to be authorised by the SRA and comply with the SRA's rules including the Code of Conduct for Solicitors and the SRA Accounts Rules because probate activities are reserved legal activities under the Legal Services Act.

A colleague qualified into the property department of your law firm five years ago. He wishes to leave the firm and set up a business on his own as a self-employed solicitor advising clients on property transactions including selling and leasing land.

The solicitor will need to be authorised by the SRA because he will be carrying out reserved legal activities under the Legal Services Act. He will also need to comply with the SRA's rules including the Code of Conduct for Solicitors and the SRA Accounts Rules

A firm of solicitors during its most recent accounting period has held client money. 90% of that client money is from the Legal Aid Agency. During that accounting period the average balance on the firm's client account has not exceeded £8,000 and the maximum balance was £45,000. The firm is ceasing to operate as an authorised body. They have asked you whether the SRA will require them to obtain an accountant's report for their most recent accounting period. Which one of the following is the best advice to your client?

They are not required to obtain an accountant's report as an exemption applies because the amounts of client money held in the accounting period do not exceed the limits set out in the SRA Accounts Rules. (12.2(b) exemption because the client money held during the accounting period does not exceed an average of £10,000 nor does it exceed a maximum of £250,000.)

You are acting for an existing client in relation to the sale of a property in London for £750,000. The purchaser is buying the property in cash. The day before completion, you receive £1,200,000 in your firm's client account from a bank in the Cayman Islands. This is a lot more money than you were expecting to receive. Your client calls you to say that he agreed to sell some furniture to the purchaser at the last minute and the monies relate to the sale of both the property and the furniture. Your client instructs you to transfer the full amount to a bank account in the British Virgin Islands. Which offences are you at risk of committing under the Proceeds of Crime Act 2002 if you follow your client's instructions?

Transferring criminal property; becoming concerned in an arrangement which you suspect facilitates the use of criminal property; using or possessing criminal property; failure to disclose your suspicions to your firm's nominated officer.

VAT Costs

VAT account ledger

Your client, a successful entrepreneur, instructs you to act for them in purchasing the entire issued share capital of a private limited company. The client wants you to prepare and negotiate all the necessary documentation to carry out the share purchase. Neither you nor your firm are authorised by the Financial Conduct Authority to carry on a 'regulated activity' as defined in the Financial Services and Markets Act 2000 and related secondary legislation. Are you able to carry out these instructions without breaching the general prohibition on providing financial advice under FSMA?

Yes, because an exclusion applies if the transaction involves at least 50% of the voting shares in the company.

A firm of solicitors is acting on behalf of a client who is purchasing a new property and is preparing for completion. The mortgage advance of £80,000 has been received from the mortgage company's solicitor in readiness for completion. The firm of solicitors has not sent a bill of costs to the client yet. Which one of the following best explains whether the £80,000 is client money?

Yes, it is client money.

Your client is seeking to retire and to sell their 50% shareholding in a family business, which is a private limited company, and seeks your advice in relation to this. The shares are to be sold to the client's brother, who is already involved in the company and currently holds 15% of the shares. The client asks you to prepare the necessary documentation for the sale of the shares. Neither you nor your firm are authorised by the Financial Conduct Authority to carry on a regulated activity. Are you able to provide the advice the client seeks?

Yes, since the transaction here is the sale of a body corporate. No authorisation is therefore required to provide the advice.

You are a solicitor in the corporate department of a law firm. You recently acted for your client on the sale of his business for £50,000. The client would like to invest the sale proceeds in shares in a company being set up by his son. He would like you to advise him on the purchase of 60% of the shares in the company. Neither you nor your firm are authorised by the Financial Conduct Authority to carry on a 'regulated activity' as defined in the Financial Services and Markets Act 2000 and related secondary legislation. Which ONE of the following statements is CORRECT?

You can advise the client on the purchase because the client is purchasing 50% or more of the shares in the company.

Your client has decided to purchase bonds in a public listed company on the advice of her FCA authorised financial advisor. She has instructed you to make the necessary arrangements for her to purchase the bonds. You will not receive any commission for arranging the purchase. Neither you nor your firm are authorised by the Financial Conduct Authority to carry on a 'regulated activity' as defined in the Financial Services and Markets Act 2000 and related secondary legislation. Which ONE of the following statements best states the CORRECT position?

You can arrange for the client to purchase the bonds because the client is entering the transaction on the advice of an authorised person.

You work in the pensions department of a law firm. Your client is thinking of investing in a pension as she has recently started a new job. She tells you that she does not really understand the key differences between a stakeholder pension and a personal pension. She asks you to explain this to her. She also asks for your advice on whether she should invest in the pension provided by her new employer. Neither you nor your firm are authorised by the Financial Conduct Authority to carry on a regulated activity. Can you give the advice requested by the client?

You can give generic advice on the difference between different types of pensions, but you cannot give specific advice on the merits of investing in the pension provided by the new employer.

You meet with a client who has instructed the firm for over 20 years. He is approaching retirement and has asked you to assist him with financial planning for the future. He is seeking advice on two issues: 1. Whether he should give his collection of vintage cars to his nephew, and2. He would like your opinion regarding whether he should purchase shares in a start-up company run by his niece. She has invented a computer coding game for children. He would like to support her by buying some shares in the business. Neither you nor your firm are authorised by the Financial Conduct Authority to carry on a regulated activity. Are you able to provide the advice the client seeks?

You can only advise the client about gifting the vintage cars. You must not provide advice in relation to the purchase of the shares.

Your client recently sold a business for a substantial profit. She is now seeking advice regarding what to do with the monies from the sale. She is seeking advice on two issues. Firstly, she would like you to assist her with a cash purchase of a holiday cottage in Cornwall. Secondly, she would like some advice in relation to setting up a personal pension scheme. Neither you nor your firm are authorised by the Financial Conduct Authority to carry on a regulated activity. Are you able to give the client the advice requested?

You can only advise the client about purchasing the holiday cottage, provided you are competent to do so.

You are acting for an individual in relation to the acquisition of a property. Prior to completion, the individual sends you a large overpayment to your firm's client account. You have a concern about money laundering, so you report the overpayment to your firm's Money Laundering Reporting Officer who makes a suspicious activity report to the NCA. Which of the following options best describes the circumstances in which you can proceed with the transaction?

You can proceed with the transaction provided you are authorised to do so by the NCA.

Your firm has a referral agreement with another law firm under which, if one firm (the 'Introducer') refers a client to the other (the 'Recipient'), the Recipient will pay the Introducer 5% of the fees paid by the client in the matter ('Referral Fee'). A partner in the other firm has referred a client toyou. The client is seeking to bring a claim for damages for personal injury arising from a car accident. Which one of the following options is correct?

You cannot pay the Referral Fee to the other firm. You could act for the client without paying the Referral Fee if this was agreed with the other firm.

You have just qualified into the litigation department at your firm and have been working there for two weeks. You are asked to represent a client at a hearing in the High Court as a more senior member of the team has been taken ill. Which one of the following options best states the correct position?

You cannot represent the client at the hearing because, as you are two weeks' qualified, you will not have completed the additional assessment requirements to obtain Higher Rights of Audience.

You are in the company commercial department of a law firm and you receive instructions from a new client, A Limited, on its purchase of a business division from a company, B Limited. Which ONE of the following statements regarding customer due diligence ('CDD') is CORRECT?

You need to check whether any individual owns more than 25% of the shares in A Limited and if so, carry out standard CDD on such beneficial owners and on A Limited itself.

You are the only apprentice solicitor working in the property department. Last week a new client, James, specifically asked to speak to you. James told you that he is currently living in Manchester and that his close friend, Raj, has offered to give him £750,000 in cash to help James buy his first property. This sum will cover the purchase price, together with all legal costs and disbursements. James has now found a suitable property in Manchester and he would like you to act for him on the purchase. James told you Raj will send the £750,000 to your firm's client account within seven days. Earlier today you were contacted by your firm's accounts department regarding the sum of £7,500,000 which had arrived from Raj. You have just received an email from James apologising that his friend has made an overpayment, requesting that the sum of £6,750,000 is transferred to Raj's solicitors in Birmingham.

You need to report the matter to the Money Laundering Reporting Officer ('MLRO') at your firm. You must ensure that you do not inadvertently alert James to your suspicions.

You receive instructions to act for Company A in relation to the sale of a portfolio of properties. All the shares in Company A are owned by a man who is a UK resident. You have not acted for Company A before. Which of the following statements best explains what customer due diligence ('CDD') you must undertake?

You should carry out standard CDD on Company A and identify and verify the man as he is the beneficial owner of Company A.

You have received instructions from a new client who wants to buy a holiday apartment in Wales. The client lives in France and is funding 50% of the purchase in cash from the sale of some shares and 50% by a mortgage from a UK bank. You expect that this will be a one-off transaction for the client. Which of the following statements best explains the customer due diligence you must carry out before proceeding with the transaction?

You should carry out standard customer due diligence because there is nothing to suggest the client presents a high risk of money laundering.

Two years ago, at your previous firm, you acted for Andrew in connection with his claim for unfair dismissal. Andrew had been dismissed for turning up to work drunk and the Employment Tribunal found in favour of Andrew's employer. You are now an employment lawyer at another firm. A new client of the firm, BCD Limited ('BCD') is seeking your advice in relation to a disciplinary hearing it is about to hold in relation to one of its employees. The employee in question is Andrew. BCD alleges that Andrew has repeatedly returned to work after his lunch break smelling of alcohol and appearing drunk.

You should not act for BCD on this matter because you are unlikely to be able to fulfil the conditions set out in CCS 6.5.

You are a trainee solicitor in the Real Estate team of a firm of solicitors. Your firm is acting for a long-standing and highly valued client. This morning the client has had an offer for the purchase of a leisure centre accepted on the basis that unconditional exchange of contracts takes place no later than close of business tomorrow. The client has promised to transfer to your firm the deposit for exchange plus an amount on account of costs, but this will not be received until tomorrow. Your supervisor has instructed you to arrange the searches in connection with the purchase without delay. The cost of the searches is £680. You check the client's ledger and there is no money on client account.

You should pay the search fees immediately out of the firm's business account.

You are a solicitor in the employment law department and receive a telephone call from a new client who is seeking advice regarding an unfair dismissal claim against her former employer. She tells you she is blind and will need you to load some new software onto your computer so that any documents that you send her are compatible with her voice activation software. She will also need some documents to be translated into braille. You do have the capacity to take on more work and it sounds like this client has a good case. However, you are concerned about the client's additional needs. Making the adjustments will involve moderate expense. In addition your firm will have to install the software onto their IT systems. Your IT department is not particularly helpful and you know that you will have to spend a large amount of time liaising with them. Translating documents into braille will also involve extra time. What sho

You should take on the new client despite your concerns.

You are acting for a client in a commercial transaction. As a result of taking detailed instructions and negotiating with the other side's lawyers, it becomes clear to you that costs in the case will be significantly more than the estimate set out in the client care letter that was sent to the client at the start of the transaction. Which of the following best describes what you should do?

You should write to the client giving them a revised cost estimate as soon as practicable.

You are a solicitor in the corporate department of Price Prior. Your client Ruth wishes to buy 50% of the shares in a company set up by her sister, Patricia, as an investment. Ruth will be buying the shares from Patricia and has instructed you to advise her on the acquisition (including on the merits). Price Prior is not directly authorised by the Financial Conduct Authority ('FCA') to carry out any regulated activities. It does not hold itself out as carrying out regulated activities separate to other professional services it provides and only a small proportion of its work comprises regulated activities. However, some of the solicitors in the firm occasionally carry out exempt regulated activities.

You will not need to be authorised by the FCA to act for Ruth because Ruth will be buying 50% or more of the shares in the company.

You recently acted for a client in connection with the sale of their 20% shareholding in a construction business. The client received £75,000 from the sale. They are thinking about buying a small shareholding in a large multinational plc and have asked you: 1. To review the articles of the company and advise about the rights attaching to the shares; and 2. Whether the shares represent a good investment in the current climate. Neither you nor your firm are authorised by the Financial Conduct Authority to carry on a regulated activity. Are you able to give the client the advice requested?

You would be only able to review the articles of the company and advise about the rights attaching to the shares.

You are a solicitor in the corporate department of Price Prior. You recently acted for Herbert in connection with the sale of his personal training business and that sale has now concluded. Today Herbert has come to see you. Herbert tells you that following the sale, he now has £50,000 cash and he would like some advice about how to invest this money. He is considering using all the money to buy shares in Magwitch Enterprises PLC ('MEP'). He would like your advice on whether shares are generally a good investment at the moment and, in particular, whether or not he should buy the shares in MEP.

You would not be able to advise Herbert without being authorised by the FCA because the advice would not arise out of or be complementary to the provision of professional services to Herbert.

You are an apprentice solicitor in the corporate department of a firm. Your firm has been instructed to act for Kurtz Cars Limited ('KCL') which is interested in buying the shares in Bill's Spares ('BS'), a company which sells car parts. The shares in BS are being sold by way of auction. Neither you nor your supervisor has acted for KCL in the past. Speedy Motors Ltd ('SML') has been reported in the press as being interested in acquiring the shares in BS and has contacted another partner in your firm with the intention to instruct him on their bid to buy the shares in BS. Your firm has never acted for SML.

Your firm may be able to act for SML because both SML and KCL are competing for the same objective. However in order to do so, both KCL and SML must give informed consent to your firm acting; you must put in place effective safeguards to protect KCL and SML's confidential information; and you must be satisfied it is reasonable for you to act for both KCL and SML.

You are an apprentice at Price Prior, and your friend is an apprentice at Mynett Ruby Solicitors. Both firms have 10 partners. You are having lunch with your friend before attending Price Prior's Equality, Diversity and Inclusion Policy ('EDIP') training course in the afternoon. Your friend says she has never heard of an EDIP and is sure that Mynett Ruby does not have any such policy in place. In addition, she has certainly never had any training on the matter. Which ONE of the following statements is CORRECT?

Your friend should make an enquiry when she returns to the office as to whether the firm has an equality, diversity and inclusion policy. She should ask her employers for training in this area because the Code of Conduct for Solicitors contains a requirement not to unfairly discriminate which binds not only the partners and managers of the firm, but also the rest of the staff, including apprentices.

You are an apprentice solicitor in the litigation department. Peter is an apprentice solicitor at the firm which is acting for the other side in a litigation matter. Yesterday, you said the following to Peter in a telephone conversation: "I promise to forward the witness statement of X to you by first class post today". On the basis Peter is acting reasonably in placing reliance on what you said, which ONE of the following statements is CORRECT?

Your words amount to an enforceable undertaking and you must therefore do what you have promised to do.

You are an apprentice in a law firm. You work in a team comprising Rav, the partner who leads the team, Amy, who qualified as a solicitor three years ago, and Kirk a paralegal who has been in the team for four years. Which ONE of the following statements is correct?

Your work on client files can be supervised by Kirk provided Kirk has suitable experience, knowledge and competence to deal with any issue that may arise and he has clear guidance as to when and to whom matters outside his competence or authority should be referred.

Paying disbursements using the agency method

Client Money going out Credit Cash Sheet Client Account Debit Client Ledger Client Account

Your client wishes to bring a personal injury claim against a restaurant following an accident. The claim is valued at £40,000. What is the best advice to give the client about whether to issue a claim in the County Court or the High Court?

County Court

Paying Interests to a client on money earned from the client account (1)

Credit Interest received Debit Cash Sheet Business Account

Paying disbursements using the principal method

Step 1: pay the principal sum Debit Client Ledger Business Account Credit Cash Sheet Business Account Step 2: pay the VAT Debit Cash Sheet Business Account Credit VAT Account Ledger

Profit Costs

Ledger for all bills

Holding deposit as stakeholder

On exchange: Credit Joint Stakeholder Ledger Debit Cash Sheet Client Account On completion: Credit Client Ledger Client Account Debit Joint Stakeholder Ledger

Which ONE of the statements below, when added to the phrase in the box below, combine to create a CORRECT sentence? The Code of Conduct for Solicitors, RELs and RFLs ('CCS') requires solicitors to:

ensure clients' complaints are dealt with promptly, fairly and free of charge

You are an assistant solicitor in the corporate department of a law firm. Your firm has recently taken instructions to form a new company - Lightyear (WC2) Limited ('Lightyear'). Which ONE OR MORE of the following would be regarded as a 'beneficial owner' for the purposes of Regulation 5 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 ('MLR'): i) Lightyear ii) Ayhan who owns 40% of the voting shares iii)Agnes who owns 25% of the voting shares iv) Avril who owns 26% of the voting shares v) Aman who owns 9% of the voting shares

ii) and iv)

A claim for damages for breach of contract is settled on terms that the defendant must pay the claimant damages of £50,000 together with the claimant's legal costs, to be assessed on the standard basis (unless the parties can agree the amount to be paid). The claimant has a written conditional fee agreement with her solicitor which provided for a success fee of 80% of the fees charged by the firm. The solicitor has calculated their professional fees at £20,000 before the addition of the success fee and VAT. What sum may the solicitor charge the client for their professional fees, net of VAT?

£36,000

A claim for damages for professional negligence is settled on terms that the defendant surveyor must pay to the claimant damages of £60,000 together with the claimant's legal costs, to be assessed on the standard basis. In 2018 the claimant had entered into a written conditional fee agreement with her solicitor which provided for a success fee of 90%. The solicitor has calculated his professional charges at £20,000 before addition of the success fee and VAT. What sum may the solicitor charge the client for his professional fees, net of VAT?

£38,000

A claimant brings a breach of contract claim seeking £150,000. The claimant has a damages based agreement ('DBA') with her solicitor which provides for the solicitor to be paid 50% of the damages in the event the claim succeeds. The claimant is awarded £120,000 at trial, which counts as 'success' under the terms of the DBA. The solicitor's fees recoverable from the other side, calculated on the basis of a reasonable hourly rate, are £20,000.

£60,000 (50% of damages) Conditional Fee Agreement would be £80,000 (60,000+20,000)