SQE1 FLK1 Legal Services Sample Questions July 2024

The correct answer is A. Solicitors have an ethical obligation to protect their client's (the company) best interests, which includes reporting internal fraudulent activities that could harm the company, even if discovered during unrelated tasks.

Option B is incorrect because while preventing fraud is important, the key point is acting in the client's best interests which mandates disclosure in this case, not just the prevention of fraud itself.

Option C is incorrect because the duty of confidentiality does not extend to covering up fraud; solicitors must prioritize the client's overarching interests, which in this case is the company, not the individual executive.

Option D is incorrect because, while the solicitor is working on a particular matter, their overall duty to the company includes reporting evidence of fraud that could harm the company.

Option E is incorrect because, although verifying information is important, the solicitor has an immediate duty to report the potential risk, and verification can follow subsequently.

The correct answer is C. As a solicitor, Emma is obligated to act in the best interests of her client, respecting the client's right to access justice while adhering to professional principles, including providing a proper standard of service irrespective of the financial gain to the firm or potential media attention the case could attract.

Option A is incorrect because declining a case based solely on the potential for negative media attention does not align with the SRA principles, which demand integrity and a commitment to justice.

Option B is incorrect because while solicitors can discuss fees, demanding an upfront payment to cover 'potential extra costs' without a clear basis could contravene the transparency and fairness expected in client financial arrangements as per the SRA Code of Conduct.

Option D is incorrect because the responsibility to the client, especially within the context of access to justice, should not be circumvented by directing them elsewhere simply due to resource implications or the nature of the case.

Option E is incorrect as discouraging a client from pursuing a case based on potential reputational implications alone, without considering the client's legal rights and interests, could betray a lack of commitment to the client’s best interests and fail to uphold the principle of access to justice.

The correct answer is D. A conditional fee arrangement with a solicitor is suitable for Thomas's situation. It allows him to receive legal representation in his employment tribunal claim without upfront fees, where fees are payable only upon winning the case. This arrangement is oriented towards individuals who cannot afford traditional legal fees and need critical legal support for cases with merit.

Option A is incorrect because Thomas is facing financial difficulties, making private funding without legal aid an unfeasible option for securing representation.

Option B is incorrect because while legal aid for advice and assistance might provide Thomas with preliminary guidance, it would not comprehensively cover the scope of representation needed to bring a claim against his employer at an employment tribunal.

Option C is incorrect because Thomas's situation does not indicate membership in a trade union that could provide him with funded legal representation.

Option E is incorrect as crowdfunding is highly uncertain and may not generate the necessary funds for comprehensive legal representation in time for his claim.

The correct answer is A. In the context of a Damages-Based Agreement (DBA) related to family law, the legal framework stipulates a cap of 25% of the financial settlement as the maximum fee a solicitor can claim. Therefore, even though Kevin and Jennifer agreed on a 30% fee, the regulation caps Jennifer's fee at 25% of the £50,000 settlement, making the maximum she can legally claim £12,500.

Option B is incorrect because 30% exceeds the legal cap for solicitors' fees under a DBA in family law matters, which is set at 25% of the financial settlement.

Option C is incorrect because 35% not only exceeds the agreed percentage between Jennifer and Kevin but also surpasses the legal maximum, making it non-compliant with the DBA regulations in family law.

Option D is incorrect because, although 20% is within legal limits, it inaccurately represents the maximum percentage allowed under the DBA regulations, which is 25%.

Option E is incorrect because 50% far exceeds any allowed percentage under the DBA regulations, making it an unlawfully high proportion of the financial settlement.

The correct answer is D. Reporting the observations to the firm's Money Laundering Reporting Officer (MLRO) is the most appropriate action. It aligns with internal procedures for managing AML risks and ensures that the suspicions are assessed properly within the legal framework.

Option A is incorrect because ignoring suspicious transactions is against AML compliance obligations and can lead to legal and reputational damages for the firm.

Option B is incorrect because, while being proactive is generally positive, handling the legal assessment of AML issues without proper authority or knowledge could lead to incomplete or incorrect interpretations.

Option C is incorrect as the senior partner may not be versed in AML compliance procedures, which could delay or misdirect necessary investigative and reporting processes.

Option E is incorrect as it bypasses the firm's internal procedures for handling AML concerns, potentially causing regulatory and procedural complications.

The correct answer is D. Referring the family member to a colleague or another solicitor who specialises in charity law is the most appropriate action, as it ensures that the family member receives expert legal advice while the solicitor avoids acting outside their area of competence.

Option A is incorrect because offering advice based on limited knowledge and assumption poses a risk of misinformation and does not align with the SRA's Principle of providing a proper standard of service.

Option B is incorrect because, despite the solicitor's lack of expertise in charity law, simply declining to assist without suggesting alternative support fails to consider the interests of the family member adequately.

Option C is incorrect because, while charging the usual fee and committing to research is a diligent approach, it could lead to delays and possibly inaccurate advice if the solicitor cannot acquire the necessary expertise promptly.

Option E is incorrect because providing an overview based on general knowledge without ensuring the family member understands the need for specialist advice might result in incomplete or misleading information being acted upon.

The correct answer is B. Enhanced due diligence is necessary in this situation as it involves a more thorough investigation into the client's transactions and business activities, especially when the client is flagged for operating in sectors prone to money laundering. This is in line with the AML regulations that mandate a risk-based approach to due diligence.

Option A is incorrect because immediate termination of the business relationship without conducting an enhanced review could be premature and unnecessary.

Option C is incorrect because relying solely on standard due diligence ignores the heightened risk presented by the new information.

Option D is incorrect because reporting to the authorities should follow an internal review and not replace the need for enhanced due diligence.

Option E is incorrect because a letter of good standing does not substitute for an in-depth investigation required by enhanced due diligence.

The correct answer is C. Discussing the situation with a senior partner in her firm to assess whether there is a conflict of interest is the appropriate action. This aligns with the SRA principles of acting with integrity and in the best interests of the client while also ensuring that any potential conflict of interest or confidentiality issues are identified and addressed appropriately.

Option A is incorrect because merely having a past relationship with an opposing party does not automatically necessitate declining to represent a new client. The correct step is to first assess the situation for any actual conflict of interest.

Option B is incorrect as proceeding without notifying the firm or assessing the potential conflict of interest violates the solicitor's duty of transparency and could undermine trust.

Option D is incorrect because merely documenting interactions does not address the issue of a potential conflict of interest or the need to inform the firm and potentially the client about the solicitor's past relationship with the opposing party.

Option E is incorrect as it misrepresents the SRA principles. The correct approach is to assess the situation carefully, not to automatically divert the client elsewhere without a proper understanding of the potential conflict.

The correct answer is D. Alex should consult the firm’s nominated officer to discuss the findings and consider making a report to the National Crime Agency (NCA), as this approach is consistent with procedures outlined in the Proceeds of Crime Act 2002 and adheres to SRA Principles of professional conduct and reporting obligations.

Option A is incorrect because immediate termination without following proper internal review and reporting procedures does not address the potential compliance breach and might violate employment laws.

Option B is incorrect because ignoring the findings disregards the legal and ethical obligations to report suspicious activities, potentially implicating the firm in money laundering activities.

Option C is incorrect because reporting Jamie to the police without internal review or consideration of proper reporting channels may be premature and not in line with prescribed procedures for handling suspicions of money laundering.

Option E is incorrect because advising Jamie to make a retrospective report, while excluding further internal action or consideration, neglects the firm’s collective responsibility to ensure compliance and proper reporting.

The correct answer is C. Under the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, solicitors are obliged to report any transaction that they suspect may be involved in money laundering to the National Crime Agency (NCA) as soon as possible. The buyer's reluctance to provide detailed information about a significant source of funds, combined with the intention to pay a large amount in cash, raises legitimate suspicions necessitating immediate reporting.

Option A is incorrect because while refusing to proceed without satisfactory evidence is a cautious approach, it does not fulfill the legal obligation to report a suspicious transaction immediately.

Option B is incorrect as it undermines the due diligence and reporting obligations imposed by anti-money laundering regulations, potentially making the solicitor complicit in money laundering activities if the funds are indeed suspicious.

Option D is incorrect because while it involves reporting, doing so only to the firm's compliance officer may delay or prevent the necessary immediate notification to the NCA, which is required by law for suspicious transactions.

Option E is incorrect because it suggests an alternative method of payment without addressing the need to report the suspicious circumstances around the initial proposition, thereby potentially bypassing anti-money laundering protocols.