5 single best answer questions on Legal Services, written to the SRA specification. Pick an answer, then open the explanation: the correct option, why each of the others fails, and the authority behind it. No sign-up.
How legal services are regulated: the SRA's role, reserved legal activities and other regulated providers; the SRA Principles and Codes of Conduct; client care, costs information and complaints; professional indemnity insurance; financial services regulation as it affects solicitors; equality duties; and money laundering under the Money Laundering Regulations 2017 and the Proceeds of Crime Act 2002.
Legal Services is asked directly in FLK1 Session 1, but ethics and professional conduct run through every subject in both papers — a conduct point can decide a question about a share sale or a police interview.
Question 1
Private retainerMedium
A solicitor is instructed privately by a man in a boundary dispute with his neighbour. The client care letter gives an estimate of £3,000 plus VAT for work up to and including a mediation, charged at hourly rates, and asks for £1,000 on account. The dispute becomes more complicated: the neighbour instructs an expert surveyor and the mediation is adjourned twice. The solicitor carries on working and says nothing further about costs until the matter settles seven months later, and she then delivers a bill for £7,000 plus VAT. The client, who paid the £1,000 on account, complains about the bill for £7,000 plus VAT and says he was never warned the estimate would be exceeded.
Which of the following best describes the solicitor's position in relation to professional conduct?
Show the answer and explanationAnswer E+
E
Correct answer
The solicitor should have updated the client as soon as it was likely that the estimate would be exceeded.
An estimate is not a cap, but the client must be told promptly when it is likely to be exceeded.
The complications, the expert surveyor and the two adjournments made it clear that the £3,000 estimate would be exceeded. The solicitor's silence for seven months breached the duty to give the client the best possible information about the likely overall cost as the matter progressed.
The duty is to give the best possible information about likely overall cost throughout the retainer, so the client can decide whether to continue.
SRA Code of Conduct for Solicitors, RELs and RFLs, para 8.7 — Duty to give and update costs information.
Rule card
Estimate exceeded: update the client as soon as it becomes apparent, before the extra costs are run up. The bill may still be assessed, but that does not cure the conduct breach.
Why the other options fail
A
Right outcome, wrong reason
Once the bill has been delivered the solicitor may sue for the whole sum, so the earlier absence of costs information does not matter.
The right to sue on a delivered bill is a civil matter and does not remove the conduct breach in failing to update the client.
Solicitors Act 1974, s.69 — No action may be brought to recover costs until one month after delivery of a bill.
B
Surface reading
An estimate creates no obligation at all, so the client must simply pay the full £7,000 plus VAT as billed.
Although not a quotation, an estimate carries a duty to keep the client informed as costs develop, which was not done here.
SRA Code of Conduct for Solicitors, RELs and RFLs, para 8.7 — Costs information must be given at the outset and updated as the matter progresses.
C
Adjacent ruleClosest alternative
No conduct issue arises because the client may seek assessment of the bill.
The statutory right to assessment addresses the amount of the bill; it does not answer the separate conduct duty to keep the client informed about costs.
Ruled out by: The client's complaint is that he was never warned the estimate would be exceeded, which is a conduct failure distinct from the amount of the bill.
Solicitors Act 1974, s.70 — A client may apply for assessment of a solicitor's bill.
D
Civil-law intuition
The estimate is legally binding as a fixed fee, and the client need pay no more than £3,000 plus VAT in total.
An estimate given with hourly rates is not a fixed fee; it must, however, be kept under review and the client updated.
SRA Code of Conduct for Solicitors, RELs and RFLs, para 8.7 — Clients must receive the best possible information about likely overall cost; an estimate is information, not a cap agreed as a price.
Question 2
Fixed feesMedium
A firm advertises a fixed fee of £1,200 plus VAT for conducting an unfair dismissal claim in the employment tribunal. A dismissed sales manager instructs the firm on that basis. The engagement letter describes the fixed fee as "all-inclusive" for the work listed in a schedule, which covers preparation of the claim, one day of tribunal hearing and routine correspondence; work outside the schedule is to be charged at £250 per hour by separate agreement. Three months later the employer amends its response to allege gross misconduct, six additional witnesses are to be called and the hearing is relisted for three days instead of one. The fee earner estimates a further 30 hours of work. The firm writes to the client saying that it cannot continue on the original basis and proposes to re-bill the whole matter at £250 per hour.
Which of the following best describes the firm's position on charging?
Show the answer and explanationAnswer C+
C
Correct answer
It may charge hourly for work outside the schedule if the client agrees, but the fixed fee continues to cover the scheduled work.
A fixed fee is a contractual price for defined work; additional work outside that definition can be charged only by agreement, and the client must be kept informed about costs.
The engagement letter fixed the price of the scheduled work and provided for other work to be charged at £250 per hour by separate agreement. The firm may therefore seek the client's agreement to charge hourly for the extra hearing days and witness work, but the scheduled work remains covered by the fixed fee, and the client must be given information about the likely overall cost as the matter progresses.
The retainer priced the scheduled work at the fixed fee and allowed other work to be charged hourly by separate agreement; the client must agree the variation and be given information about the likely overall cost.
SRA Code of Conduct for Firms, para 7.1(c) — Client information standards, including costs information, apply to the firm.
SRA Principle 7 — Duty to act in the best interests of each client.
Rule card
Fixed fee = price for a defined scope. Work outside the scope may be charged only if the client agrees a variation; work inside the scope stays at the fixed fee. Keep the client informed about costs throughout.
Why the other options fail
A
Adjacent rule
Its only proper course is to cease acting, since it cannot perform the retainer at the agreed fixed fee.
Ceasing to act is not the only option: the firm may seek the client's agreement to charge for work outside the schedule, as the engagement letter envisaged.
SRA Principle 7 — Acting in the client's best interests includes exploring an agreed variation before abandoning the matter.
B
Right outcome, wrong reason
It may switch to hourly charging unilaterally, because the work now greatly exceeds what was contemplated.
The basis of charging is contractual; it cannot be altered without the client's agreement, whatever the increase in work.
SRA Principle 7 — A solicitor must act in the best interests of each client.
D
Outdated lawClosest alternative
It may re-bill the entire matter at £250 per hour, provided the client is given written notice of the revised charging basis before the hearing.
Notice is not agreement; work already covered by the fixed fee remains priced at that fee unless the client agrees otherwise.
Ruled out by: The engagement letter required work outside the schedule to be charged 'by separate agreement', so notice of a revised rate is not enough and the scheduled work cannot be re-billed.
SRA Principle 5 — A solicitor must act with integrity.
E
Surface reading
It is bound by the all-inclusive fixed fee and can charge nothing further, whatever the additional work.
The fee was all-inclusive only for the scheduled work; the engagement letter expressly contemplated charging for work outside the schedule by separate agreement.
SRA Code of Conduct for Firms, para 7.1(c) — The client information standards, including those on pricing and costs information, apply to the firm.
Question 3
Circumstances encountered in the course of practice where suspicion of money laundering should be reported in accordance with the legislationMedium
A solicitor is conducting due diligence on the sale of a company. Reviewing the management accounts, she notices that the trading income shown is substantially greater than the figures in the corporation tax returns for the same periods. The discrepancy relates to undeclared trading income of around £400,000. The figures were supplied directly by the company's external accountant. The solicitor is suspicious but cannot be sure the discrepancy is deliberate, and is considering putting the discrepancy to the finance director before doing anything else.
Which of the following best describes the solicitor's obligations?
Show the answer and explanationAnswer A+
A
Correct answer
She must make a disclosure, because she has grounds to suspect that another person is engaged in money laundering and the information came to her in the course of business in the regulated sector.
Suspicion arising from information received in the regulated sector triggers the s.330 duty to disclose.
The solicitor need not be certain: s.330 bites where information coming to her in the course of a business in the regulated sector gives grounds for knowing or suspecting money laundering, and the retained proceeds of tax evasion are criminal property.
Section 330 is engaged by suspicion, or reasonable grounds for suspicion, arising from information coming to the solicitor in the course of a business in the regulated sector.
Proceeds of Crime Act 2002, s.330 — Failure to disclose in the regulated sector where there are grounds to suspect money laundering is an offence.
Proceeds of Crime Act 2002, s.340 — Criminal property includes the benefit of criminal conduct such as tax evasion.
Rule card
s.330: regulated sector + suspicion or reasonable grounds + no required disclosure as soon as practicable = offence. Privileged circumstances exception is narrow; do not seek explanations that risk tipping off.
Why the other options fail
B
Adjacent ruleClosest alternative
She need not report, because the information came to her in privileged circumstances while advising the client.
The privileged circumstances exception is narrow and does not cover accounting records supplied by a third-party accountant for due diligence.
Ruled out by: The figures were supplied directly by the company's external accountant, not communicated to the solicitor for the purpose of giving legal advice, so the privileged circumstances exception does not apply.
Proceeds of Crime Act 2002, s.330(6) — There is no offence where the information came to the professional legal adviser in privileged circumstances.
C
Adjacent rule
She should put the discrepancy to the finance director and report only if no satisfactory explanation is given.
Seeking an explanation once suspicion has arisen risks tipping off and delays a disclosure that must be made as soon as practicable.
Proceeds of Crime Act 2002, s.333A — Disclosing information likely to prejudice an investigation is an offence.
D
Surface reading
She need not report unless and until she knows that the discrepancy results from deliberate tax evasion.
Knowledge is not required; suspicion, or reasonable grounds for suspicion, suffices.
Proceeds of Crime Act 2002, s.330 — The offence arises where the person knows or suspects, or has reasonable grounds to do so.
E
Right outcome, wrong reason
She need not report, because unpaid tax is not criminal property for money laundering purposes.
Retained proceeds of tax evasion constitute criminal property, so suspicion of evasion is reportable.
Proceeds of Crime Act 2002, s.340 — Criminal property is property constituting or representing a benefit from criminal conduct, which includes the proceeds of tax evasion.
Question 4
Other regulated providers of legal servicesMedium
A company authorised and regulated by the SRA provides legal services to consumers. Its managing director, who is a solicitor, wishes to widen the range of work offered by using outside providers and asks for advice on five proposals. Under the first, the transfer of a registered freehold house and the application to register it would be handled by a licensed conveyancer regulated by the Council for Licensed Conveyancers. Under the second, advocacy at a county court trial would be undertaken by a chartered legal executive authorised by CILEx Regulation to exercise rights of audience in the county court. Under the third, wills would be drafted by an unregulated will-writing business. Under the fourth, a personal injury claim in the High Court would be conducted by a costs lawyer. Under the fifth, applications for grants of probate would be made on executors' behalf by an unregulated estate administration business. All five providers would work under the solicitor's supervision.
How many of the five proposals could lawfully be carried out by the provider named?
Show the answer and explanationAnswer B+
B
Correct answer
Three, because drafting a will is not a reserved legal activity and the conveyancer and the legal executive are each authorised for the work proposed.
Three proposals are lawful: the licensed conveyancer's work, the legal executive's advocacy and the unregulated will drafting.
Will drafting is not a reserved legal activity, so anyone may do it. The licensed conveyancer and the chartered legal executive are each authorised by their approved regulator for the reserved activity proposed. Conducting a High Court personal injury claim and applying for grants of probate are reserved activities for which a costs lawyer and an unregulated estate administration business respectively are not authorised.
The first, second and third proposals are lawful; conducting the High Court claim and applying for grants of probate are reserved activities which those providers are not authorised to carry on.
Legal Services Act 2007, s.13 — Only an authorised or exempt person is entitled to carry on a reserved legal activity.
Rule card
Reserved legal activities may be carried on only by an authorised or exempt person (Legal Services Act 2007, ss.12–14); authorisation may come from any approved regulator, not only the SRA, but only for the activities covered.
Why the other options fail
A
Surface reading
Five, because reserved activities may be carried on by anyone working under a solicitor's supervision.
Supervision does not confer entitlement; carrying on a reserved activity without authorisation is an offence.
Legal Services Act 2007, s.14 — It is an offence for a person to carry on a reserved legal activity unless entitled to do so.
C
Adjacent rule
Two, since drafting a will for a client is a reserved instrument activity.
Drafting a will is not within the list of reserved legal activities, so an unregulated business may do it.
Legal Services Act 2007, s.12 — The reserved legal activities are those listed in the section; will drafting is not among them.
D
Adjacent ruleClosest alternative
Four, because a costs lawyer is authorised to conduct any form of civil litigation.
A costs lawyer's authorisation does not extend to conducting a personal injury claim in the High Court.
Ruled out by: The fourth proposal involves a costs lawyer conducting a personal injury claim in the High Court, which falls outside that provider's authorisation.
Legal Services Act 2007, s.13 — Entitlement depends on being authorised in relation to the particular reserved activity.
E
Surface reading
One, because only a person authorised by the SRA may carry on reserved legal activities.
Other approved regulators, such as the Council for Licensed Conveyancers and CILEx Regulation, also authorise persons for reserved activities.
Legal Services Act 2007, s.13 — A person authorised by any relevant approved regulator is entitled to carry on the reserved activity in question.
Question 5
The Equality Act 2010Harder
A firm's only offices are on the first floor of a building with no lift, and its lease forbids structural alterations. A wheelchair user telephones asking for an appointment to make a will. The receptionist, following the firm's standing practice, tells him the firm cannot see clients anywhere other than its offices, and suggests he instructs a firm nearby.
Which of the following best describes the firm's position under the Equality Act 2010?
Show the answer and explanationAnswer A+
A
Correct answer
The firm has failed to take such steps as are reasonable to avoid the disadvantage.
A service provider whose premises substantially disadvantage a disabled person must take such steps as are reasonable, and offering the service at another location is an obvious step.
The firm is a service provider subject to the anticipatory duty to make reasonable adjustments. The inaccessible first floor substantially disadvantages a wheelchair user, and because the firm refused to see clients anywhere else it has failed to take a step which was reasonably available.
As a service provider the firm owes an anticipatory duty to disabled people; where a physical feature causes substantial disadvantage it must take reasonable steps, and meeting the client elsewhere was plainly available.
Equality Act 2010, s 20 — Requires reasonable steps to avoid substantial disadvantage caused by a practice or a physical feature.
Equality Act 2010, s 29 — Applies the duty to those providing services to the public.
Rule card
Services: reasonable adjustments duty is anticipatory, owed to disabled people at large, and requires reasonable steps (including alternative methods of delivery) where a physical feature or practice causes substantial disadvantage. No justification defence.
Why the other options fail
B
Surface reading
There is no breach, because the client can instruct another firm nearby.
The availability of a competitor does not discharge a service provider's own duty to the disabled person requiring its services.
Equality Act 2010, s 29 — The duty to make reasonable adjustments is owed by each person concerned with the provision of services to the public.
C
Adjacent rule
The firm has directly discriminated, because a client who was not disabled would have been given an appointment at the offices.
The refusal results from the inaccessibility of the premises and the firm's blanket practice, not from treating him less favourably because of disability; the adjustments duty is the apt analysis.
Equality Act 2010, s 13 — Direct discrimination occurs where a person treats another less favourably because of a protected characteristic.
D
Adjacent ruleClosest alternative
The firm has indirectly discriminated by applying a practice which puts disabled persons at a particular disadvantage.
Indirect discrimination is capable of justification as a proportionate means to a legitimate aim; the disadvantage here falls squarely within the separate and unjustifiable adjustments duty.
Ruled out by: The receptionist told him the firm cannot see clients anywhere other than its offices, so a reasonable alternative step existed; the adjustments duty, which cannot be justified away, governs rather than indirect discrimination.
Equality Act 2010, s 19 — Indirect discrimination arises from a provision, criterion or practice which puts persons sharing a protected characteristic at a particular disadvantage and which cannot be shown to be a proportionate means of achieving a legitimate aim.
E
Surface reading
There is no breach, because the terms of the firm's lease prevent it from altering the premises.
The lease may make structural alteration unreasonable, but the duty is to take whatever steps are reasonable, such as providing the service by another means.
Equality Act 2010, s 20 — The duty is to take such steps as it is reasonable to have to take to avoid the substantial disadvantage.
Where candidates lose marks in Legal Services
After an authorised disclosure the firm must wait: it may proceed if consent is not refused within seven working days, and if consent is refused, only once the 31-day moratorium has ended (Proceeds of Crime Act 2002, s 335).
Telling the client, or anyone else, that a disclosure has been made can be the separate offence of tipping off (Proceeds of Crime Act 2002, s 333A).
Minimum professional indemnity cover is £2 million for each claim, and £3 million for a firm that is a company or an LLP (SRA Indemnity Insurance Rules).