ALA Regulatory Compliance 3 â Questions and Answers
Question 1: The Sarbanes-Oxley Act (SOX) provisions most relevant to law firms primarily concern:
- Attorney conduct regarding securities fraud and document retention obligations (Correct answer)
- Mandatory pro bono service hours for all attorneys
- Environmental compliance reporting for office facilities
- Immigration status of foreign national clients
Correct answer: Attorney conduct regarding securities fraud and document retention obligations
SOX imposed obligations on attorneys appearing before the SEC, including reporting up-the-ladder requirements and prohibitions against destroying documents relevant to securities violations.
Question 2: Which of the following best describes a 'hold' notice (litigation hold) in a compliance context?
- A court order preventing a law firm from accepting new cases
- An internal directive to preserve documents and data relevant to anticipated or pending litigation (Correct answer)
- A billing freeze imposed by the client pending dispute resolution
- A regulatory prohibition on disclosing client identity
Correct answer: An internal directive to preserve documents and data relevant to anticipated or pending litigation
A litigation hold is an internal communication requiring relevant personnel to preserve documents, electronically stored information, and other evidence related to actual or anticipated litigation.
Question 3: Under the Health Insurance Portability and Accountability Act (HIPAA), when does a law firm most commonly become a 'business associate'?
- When representing any healthcare provider or handling Protected Health Information on its behalf (Correct answer)
- When the firm employs more than 50 healthcare professionals
- When billing clients for medical malpractice matters
- When offering employee wellness programs
Correct answer: When representing any healthcare provider or handling Protected Health Information on its behalf
A law firm becomes a HIPAA business associate when it performs services for a covered entity and those services involve access to Protected Health Information (PHI).
Question 4: The Family and Medical Leave Act (FMLA) entitles eligible employees at covered law firms to take up to how many weeks of unpaid leave in a 12-month period?
- 6 weeks
- 8 weeks
- 12 weeks (Correct answer)
- 16 weeks
Correct answer: 12 weeks
FMLA provides eligible employees up to 12 weeks of unpaid, job-protected leave per year for qualifying family or medical reasons.
Question 5: A law firm's trust account is found to have a shortfall due to a bookkeeper error. The legal administrator's FIRST obligation is to:
- Quietly reimburse the account from operating funds and move on
- Report the shortfall to the managing partner immediately and initiate a reconciliation investigation (Correct answer)
- Notify the client that their funds were misappropriated
- Close the trust account pending an internal audit
Correct answer: Report the shortfall to the managing partner immediately and initiate a reconciliation investigation
Trust account shortfalls must be escalated to firm leadership immediately so that the cause can be identified, the account restored, and any required ethical disclosures evaluated.
Question 6: Which type of workplace harassment, if severe or pervasive enough to create a hostile work environment, violates Title VII of the Civil Rights Act?
- Harassment based on workload disagreements
- Harassment based on race, color, religion, sex, or national origin (Correct answer)
- Harassment based on job performance evaluations
- Harassment based on billing rate disputes
Correct answer: Harassment based on race, color, religion, sex, or national origin
Title VII prohibits harassment based on protected characteristicsârace, color, religion, sex, and national originâwhen it is severe or pervasive enough to create a hostile work environment.
Question 7: When a law firm implements a records retention policy, which factor is MOST important in determining minimum retention periods?
- The firm's available storage capacity
- Applicable statutes of limitations and regulatory requirements (Correct answer)
- Client preferences expressed verbally
- The cost of electronic storage systems
Correct answer: Applicable statutes of limitations and regulatory requirements
Retention periods must be based on applicable statutes of limitations, regulatory mandates, and ethical rulesânot storage costs or client verbal requests.
ALA Regulatory Compliance 3
The Sarbanes-Oxley Act (SOX) provisions most relevant to law firms primarily concern: