Question of ethics archive

Important: The guidance below was written and issued before the introduction of the SRA Handbook on 6 October 2011, and may refer to regulatory material that is no longer in effect. Although it may still be relevant, this guidance has not been rewritten in light of the wide-ranging regulatory changes implemented on 6 October 2011. Accordingly, it has been archived.

July 2009

Account's report: terms of letter of engagement

Q. I have been advised that I have to provide a new letter of engagement to my accountants before they can prepare my accountant's report. Is this correct and what are the changes?

Yes. The Solicitors' Accounts Rules 1998 were amended on 31 March 2009 and the terms which must now be included in your reporting accountant's terms of engagement are set out in the amended rule 38(1).

The amended terms reflect the new section 34(9) of the Solicitors Act 1974, which was inserted by the Legal Services Act 2007 and imposes mandatory whistle-blowing obligations on reporting accountants in certain circumstances. The effect of these changes is that before your accountant undertakes any new work, or further work, in relation to your accountant's report, you must provide him or her with a new letter of engagement incorporating the terms set out in the amended rule.

Waiver of requirement for three years of post-qualification experience before setting up in practice

Q. I wish to set up in practice but have not held a practising certificate for the required 36 months. I have applied for a waiver of the requirement but have heard that even if I am successful I may not get indemnity insurance, is this the case?

It is always advisable to clarify the situation with regard to indemnity insurance cover before making application for a waiver of rule 5 of the Code, as you may find at the end of the process that you cannot obtain cover. Whether you will qualify for cover depends on the insurance providers you have approached and their requirements.

Requirement to inform SRA of being charged with indictable offence

Q. I have recently been charged with an offence. Am I right in thinking that I do not have to inform the SRA unless I am convicted?

Regulation 14.1 of the SRA Practising Regulations 2009, which came into effect on the 1 July 2009, imposes an obligation on you if you are a solicitor, a registered European lawyer or a registered foreign lawyer, to notify the SRA of certain events within 14 days. These include where you are charged with, or convicted of, an indictable offence.

The events triggering the notification requirement under regulations 14.1 and 14.2 are quite varied and it is therefore advisable to read the regulation to ensure you are aware of when the obligation arises.

Conflict of interest in divorce proceedings: acting for client and for person with whom their estranged spouse cohabits

Q. We act for Mr Jones in connection with his divorce and, quite separately, for Mr Taylor in connection with his divorce. The firm has just discovered that Mrs Jones is cohabiting with Mr Taylor (Mr Taylor played no part in the breakdown of Mr and Mrs Jones's marriage). Is there a conflict? 

Yes. Although initially the two matters were unrelated, they have become related as a result of Mrs Jones moving in with Mr Taylor, because any financial settlement reached in either matter will clearly have an impact on the other. Your ability to act in the best interests of both is compromised and you need to consider whether you can continue to act for one client or whether both will need to instruct new firms (see rule 3.03).