Ethics and Professional Conduct – 4ed (2024) Chapter 3 Obtaining Instructions

• Chapter focuses on Ethics and Professional Conduct related to obtaining instructions within the SQE1 assessment.
• Ethics and Professional Conduct is a topic that may be examined across all subject areas.
• SQE1 candidates are not usually required to recall specific case names or cite statutory or regulatory authorities, cases are provided for illustrative purposes only.
• The goal is to demonstrate the ability to act honestly and with integrity, in accordance with SRA Standards and Regulations regarding client information, publicity, referrals, separate businesses, and client money and assets.

Introduction

• A solicitor's firm operates as a business similar to a high street store, needing a regular supply of clients to generate income, like a store needs customers.
• Advertising and referrals are the two most common ways for a store or firm to maintain and increase its market share

General Principles

• Solicitors are now only somewhat restricted in how they attract new clients, historically, there were severe restrictions.
• Marketing is now important, and individual solicitors are required to promote the firm.
• Financial pressures should not compromise a solicitor's professional conduct or SRA Principles, especially maintaining independence and acting in the client's best interests.
• Independence should not be compromised, nor should a solicitor be restricted from acting in the best interests of the clients.

Advertising

• Solicitors previously relied on personal reputation to get work, word of mouth remains valuable today.
• Firms have invested in attracting clients through newspapers, websites, and promotional literature.
• TV advertisements and social media is used.
• The goal of advertising is to increase public awareness of the firm and the services offered.
• Advertising also strives to improve the reputation of the profession, as seen in campaigns like the 'Solicitor Brand Campaign 2020.'
• Solicitors can publicise their practice if they comply with general law and professional conduct.

General Law

• Solicitors hold client information that must not be misused.
• The UK GDPR and the Data Protection Act 2018 (DPA 2018) regulate how "controllers" or "processors" of personal information handle it, with penalties for breaches.
• Personal information, controlling, and processing are identified by the GDPR.
• A data processor must comply with GDPR principles.
• A data controller is responsible for compliance with these principles.
• Personal data processing must be on legal grounds in the GDPR or DPA 2018.
• Data processors may need to obtain express consent from data subjects, who have rights over their data, including subject access requests and data erasure rights under certain conditions.
• The UK Code of Non-broadcast Advertising and Direct and Promotional Marketing (CAP Code) are legislative provisions on advertising and data protection.

Professional Conduct Requirements

• The SRA considers there to be a knowledge imbalance between the public and solicitors.
• Publicity regarding a firm must be accurate and not misleading, including information about charges and interest.
• Publicity includes all promotional material, such as names, stationery, websites, media appearances, and direct approaches, but does not include press releases prepared on behalf of a client.

SRA Transparency Rules

• The SRA Transparency Rules were created to ensure consumers have accurate information about legal services when making purchasing decisions.
• The rules require SRA-regulated firms and individuals offering specified services to publish information about the costs of those services, excluding publicly funded work.
• Firms are encouraged to give additional information, the rules set the minimum to be provided.
• Specified services for individuals include residential conveyancing, uncontested probate, motoring offences, employment tribunals, and immigration.
• Specified services for businesses include debt recovery (up to £100,000), employment tribunals, and licensing applications.
• Cost information must include the overall or average cost, the charges' basis, the services included, qualifications of those carrying out the work, VAT applicability, typical timescales, and conditional fees.
• Costs information must be easily accessible on the website.
• If a firm does not have website, the information must be made available on request.

Unsolicited Approaches

• Solicitors wishing to "cold call" must comply with data protection legislation and obtain necessary consents for marketing.
• Individuals can request their details not be used for direct marketing, which solicitors must comply with.
• Paragraph 8.9 prohibits unsolicited approaches to the public that may be unwelcome.
• Current or former clients and potential business contacts are exempt.
• Paragraph 8.9 targets direct approaches in person, by phone, and through other means.
• Newspaper and TV advertisements are not caught by Paragraph 8.9.
• SRA Guidance distinguishes between sending leaflets to all homes in a large area (permitted) and selectively distributing leaflets to specific homes (not permitted as a targeted approach.)

Letterheads, Websites, and Emails

• Solicitors must not be a manager, employee, member, or interest holder of a business using the word "solicitors" or implying it is a solicitors' firm unless SRA authorised.
• Clients must understand how the services provided are regulated.
• A body authorised by the SRA must display its SRA number and digital badge on its website, together with its complaints handling process and details about how to complain to the SRA and the Legal Ombudsman.
• The letterhead and emails must include SRA authorisation number and that they are regulated by the Solicitors Regulation Authority.

Social Media

• Solicitors using social media must follow SRA Principles and relevant standards in the Code of Conduct.
• If a client relationship is continued via social media, the solicitor must continue to comply with the standards in the Code of Conduct on service and competence and confidentiality and disclosure.
• The Law Society notes the benefits of social media, but also highlights the risks that include breaching client confidentiality.

Arrangements with Third Parties

• Solicitors may enter into agreements with third parties to introduce clients or refer clients to them.
• Agreements must comply with the SRA Principles and Code of Conduct.
• Client relationships should be built on trust, therefore arrangements with third parties shouldn't jeopardise that trust.
• Solicitors cannot abuse their position by taking unfair advantage of clients.
• Clients must be informed of any financial or other interest the solicitor has in referrals.
• Clients introduced to a solicitor by a third party must not have acquired in a way that would breach the SRA's regulatory arrangements.
• Clients must be informed of any financial or other introducter interest.
• Referral payments are prohibited.
• The amount made to a third party by a solicitor, either on the solicitor's gross or net fees, constitutes revenue sharing.
• Clients must be informed of any fee-sharing arrangement and have it in writing.

"Referral Fees"

• Despite the ban on referral fees lifted in 2004, legislation still prohibits them in certain circumstances.
• The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) specifically prohibits payment or receipt of referral fees in damages claims.
• LASPO also prohibits payment for other claims for damages arising from the same circumstances.
• Under Paragraph 5.2, the SRA may consider payments to be a "referral fee" if they were already considered payments to be that.

Separate Businesses

• A separate business is owned by or connected with a body authorised by the SRA.
• The public should not be confused or misled by a solicitor or firm incorporating non-regulated services, because protection might be different from SRA-regulated services.
• Solicitors must not represent any separate business as being SRA regulated.
• Separate business services historically included alternative dispute resolution, financial services, and estate agencies.
• The SRA Authorisation of Firms Rules now permit firms to offer a wider range of services
• A solicitor can refer, recommend, or introduce a client to the separate business and divide a client's matter between their regulated business and the separate business with informed consent.