SQE Ethics and Professional Conduct 2 — Questions and Answers
Question 1: Under the SRA Accounts Rules, what is the key principle governing the handling of client money?
- Client money must be kept separate from the firm's own money in a designated client account (Correct answer)
- Client money may be held in the firm's office account for up to 30 days
- Client money can be used to cover firm expenses temporarily
- Client money rules apply only to conveyancing transactions
Correct answer: Client money must be kept separate from the firm's own money in a designated client account
The SRA Accounts Rules require that client money is promptly placed in a separate client account and never mixed with office money, to protect clients.
Question 2: What is a solicitor's duty of 'candour' to the court?
- A duty not to deceive or mislead the court, even if this conflicts with the client's interests (Correct answer)
- A duty to disclose all evidence including evidence harmful to the client
- A duty to provide all documents held to the court
- A duty to advise the court on the law
Correct answer: A duty not to deceive or mislead the court, even if this conflicts with the client's interests
Candour requires that solicitors do not make false or misleading statements to the court, and must correct any accidental misleading statement — this duty overrides client interests.
Question 3: Under what circumstances may a solicitor act for both buyer and seller in a conveyancing transaction?
- Only in limited circumstances, such as where the parties are established clients and the transaction is not at arm's length (Correct answer)
- Never — it is always prohibited
- Whenever both clients provide written consent
- Only in commercial transactions
Correct answer: Only in limited circumstances, such as where the parties are established clients and the transaction is not at arm's length
The SRA Code permits acting for both parties in limited situations (e.g., related parties, same lender, standard form contract) but not where there is a conflict or risk of one.
Question 4: What is the purpose of the SRA's 'Transparency Rules'?
- To require law firms to publish price and service information so clients can make informed choices (Correct answer)
- To regulate advertising by solicitors
- To govern disclosure of financial interests in client matters
- To mandate the publication of annual accounts
Correct answer: To require law firms to publish price and service information so clients can make informed choices
The SRA Transparency Rules require firms to publish information about their prices, service, and regulatory status to help consumers compare and choose legal services.
Question 5: What is 'tipping off' in the context of money laundering regulations?
- Alerting a suspect that they are under investigation for money laundering, which is a criminal offence (Correct answer)
- Reporting a suspicious transaction to the National Crime Agency
- Providing information to the police about a client
- Disclosing a client's file to a third party
Correct answer: Alerting a suspect that they are under investigation for money laundering, which is a criminal offence
Under the Proceeds of Crime Act 2002, tipping off (alerting a person under investigation that a Suspicious Activity Report has been made) is itself a criminal offence.
Question 6: Under the SRA Code of Conduct for Solicitors, what must a solicitor do if they identify that a client's instructions would require them to act dishonestly?
- Refuse those instructions and, if necessary, cease to act (Correct answer)
- Follow the client's instructions as the client is paramount
- Seek a second opinion before acting
- Report the client to the police
Correct answer: Refuse those instructions and, if necessary, cease to act
A solicitor cannot act dishonestly in any circumstances; if client instructions require dishonesty, those instructions must be refused and the solicitor must cease acting if the client insists.
SQE Ethics and Professional Conduct 2
Under the SRA Accounts Rules, what is the key principle governing the handling of client money?