SQE Glossary
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ABS (Alternative Business Structure)
An ABS is a law firm that has non-lawyers in managerial or ownership roles, allowing multidisciplinary practices that combine legal services with other professional services, such as financial or accounting advice. Introduced under the Legal Services Act 2007, ABSs aim to increase competition and innovation within the legal services market, making it more accessible and client-focused.
ALM (Anti-Money Laundering)
AML refers to the laws, regulations, and procedures that financial and legal institutions must follow to detect and prevent money laundering activities. Law firms are required to implement AML measures, including conducting client due diligence, reporting suspicious activities, and training employees to comply with relevant AML regulations. This is essential to prevent the use of legal services for concealing illicit funds.
Client Account
A client account is a dedicated bank account that law firms use to hold client funds separate from the firm’s operational accounts. This ensures client money is protected and not used for the firm’s own expenses, as required by the SRA Accounts Rules. Client accounts are integral to maintaining trust and ethical handling of client funds.
Client Money
Client money includes all funds received by a law firm on behalf of a client, such as fees paid in advance, disbursements, or funds held for property transactions. The SRA Accounts Rules mandate that client money be held securely and separately from the firm’s own funds to prevent misappropriation and ensure transparency.
Conflict of Interest
A conflict of interest occurs when a law firm’s duties to one client conflict with its duties to another client or its own interests, potentially compromising impartiality. Identifying and managing conflicts is crucial to maintaining ethical standards and client trust, as conflicts can affect the firm’s ability to provide unbiased and effective representation.
COFA (Compliance Officer for Finance and Administration)
The COFA is a designated officer responsible for ensuring that a law firm complies with financial regulations, especially those related to handling client money under the SRA Accounts Rules. The COFA monitors financial transactions, addresses financial risks, and reports any significant breaches to the SRA to maintain accountability.
COLP (Compliance Officer for Legal Practice)
The COLP is a designated officer within a law firm responsible for overseeing regulatory compliance, ensuring that the firm adheres to SRA standards. The COLP must identify and report regulatory breaches and work to maintain the firm’s adherence to ethical, professional, and legal standards in its practice.
FCA (Financial Conduct Authority)
The FCA is a UK regulatory body responsible for overseeing financial markets and firms, including those offering certain financial services within legal practices. The FCA’s mandate is to ensure consumer protection, promote fair competition, and maintain financial market integrity in the UK.
FLK (Functioning Legal Knowledge)
FLK refers to the core legal knowledge and understanding required for SQE1, covering key areas like contract, tort, criminal, and property law. FLK assesses candidates' ability to apply legal principles in practical scenarios, focusing on the functioning knowledge essential for everyday legal practice as a solicitor.
FLK1 (Functioning Legal Knowledge 1)
FLK1 is the first section of the SQE1 assessment, covering key areas of Functioning Legal Knowledge related to core practice areas like business law and practice, dispute resolution, contract, tort, legal system, and constitutional law. FLK1 requires candidates to demonstrate foundational knowledge and application of these subjects through a multiple-choice format, testing their readiness for practical legal practice.
FLK2 (Functioning Legal Knowledge 2)
FLK2 is the second section of the SQE1 assessment, focusing on other essential areas of Functioning Legal Knowledge, including criminal law and practice, property practice, wills and administration of estates, and trust law. FLK2 assesses candidates’ understanding and practical application of these topics, ensuring comprehensive readiness across the SQE1 syllabus.
FSMA (Financial Services and Markets Act 2000)
The FSMA governs the regulation of financial markets and services in the UK, giving regulatory powers to the FCA and PRA. FSMA sets standards for financial activities, impacting some law firms that provide financial advice or services, ensuring compliance with regulations designed to protect consumers and maintain market stability.
HOFA (Head of Finance and Administration)
The HOFA is typically responsible for managing a law firm’s financial and administrative operations. In smaller firms, the HOFA’s duties may overlap with those of the COFA, focusing on financial compliance, budgeting, and overall financial health to ensure regulatory adherence and business stability.
HOLP (Head of Legal Practice)
The HOLP is responsible for overseeing the quality and compliance of a firm’s legal services, ensuring adherence to professional standards. This role often involves working closely with the COLP to monitor legal practice operations, uphold ethical standards, and meet the regulatory requirements set by the SRA.
NCA (National Crime Agency)
The National Crime Agency (NCA) is a UK law enforcement body focused on tackling serious and organised crime, including financial crime and money laundering. Law firms report suspicious financial activities related to money laundering to the NCA, often through their MLRO, to support national crime prevention efforts.
PRA (Prudential Regulation Authority)
The PRA, part of the Bank of England, oversees the financial stability of institutions like banks and insurers. While the PRA does not regulate law firms directly, its regulations impact financial services within firms that may engage in certain regulated activities, especially those related to financial advice.
LSA (Legal Services Act 2007)
The LSA introduced major reforms in the legal services sector, including the regulation of alternative business structures (ABS) and the establishment of the Legal Services Board. The LSA emphasises consumer protection, promoting competition, and improving access to justice within the legal industry.
MLCO (Money Laundering Compliance Officer)
The MLCO oversees compliance with anti-money laundering (AML) regulations within a law firm, implementing policies, managing risk assessments, and ensuring staff training. This officer plays a crucial role in detecting and preventing money laundering activities, meeting the firm’s legal obligations to combat financial crime.
MLRO (Money Laundering Reporting Officer)
The MLRO is the designated person within a firm who receives and assesses internal reports of suspicious financial activities. If necessary, the MLRO escalates these reports to the NCA, serving as the firm’s liaison for anti-money laundering compliance and reporting obligations.
MTC (Minimum Terms and Conditions)
The Minimum Terms and Conditions (MTC) are mandatory requirements for professional indemnity insurance policies held by law firms. These terms ensure clients have sufficient protection if claims are brought against the firm for errors, negligence, or misconduct, as specified by the SRA.
REL (Registered European Lawyer)
An REL is a lawyer from a European Economic Area (EEA) country registered to practice in England and Wales. RELs must comply with SRA regulations and are permitted to perform certain legal activities in England and Wales, with pathways available for eventual qualification as solicitors.
RFL (Registered Foreign Lawyer)
An RFL is a lawyer from a jurisdiction outside the EEA who is registered to practice in England and Wales. RFLs are subject to SRA regulations and may provide limited legal services in specific areas, though they may need additional qualifications to expand their practice scope.
SQE (Solicitors Qualifying Examination)
The SQE is a standardised assessment introduced as a new route to qualifying as a solicitor in England and Wales. It comprises SQE1, which tests legal knowledge (FLK), and SQE2, which assesses practical skills like client interviews and advocacy, ensuring consistent standards across the legal profession.
SQE1 (Solicitors Qualifying Examinations Stage 1)
SQE1 is the first part of the Solicitors Qualifying Examination (SQE), focusing on testing Functioning Legal Knowledge (FLK) across a broad range of practice areas such as contract, tort, criminal law, and property. SQE1 is assessed through multiple-choice questions where candidates must select the single best answer. This exam ensures that aspiring solicitors possess the foundational legal knowledge necessary to practice law effectively.
SQE2 (Solicitors Qualifying Examinations Stage 2)
SQE2 is the second part of the SQE, focusing on practical legal skills needed for solicitors to serve clients competently. SQE2 assesses skills such as client interviewing, advocacy, legal writing, and drafting through a series of simulations and written exercises. Passing SQE2 demonstrates that candidates can apply their legal knowledge in practical, real-world scenarios and meet the professional standards required of solicitors.
SRA (Solicitors Regulation Authority)
The SRA is the regulatory body for solicitors in England and Wales, responsible for setting professional standards, enforcing ethical codes, and overseeing compliance within the legal profession. Its primary aim is to protect public interest by ensuring high standards in legal services.
SRA Accounts Rules
The SRA Accounts Rules govern the management of client money within law firms, mandating that it be held securely in a separate client account and kept distinct from the firm’s funds. These rules aim to protect clients and uphold trust by ensuring ethical financial practices.
SRA Code of Conduct for Firms
This Code of Conduct outlines the regulatory obligations of law firms, covering client care, risk management, and compliance requirements. It sets the ethical and professional standards that firms must follow to maintain trust and transparency in their legal services.
SRA Code of Conduct for Solicitors, RELs, and RFLs
This code sets out the standards of conduct expected of solicitors, Registered European Lawyers (RELs), and Registered Foreign Lawyers (RFLs), including integrity, professionalism, and client-focused service. It provides specific guidelines for handling conflicts, confidentiality, and ethical obligations.
SRA Financial Services (Conduct of Business) Rules
These rules define how law firms should manage financial services offered within legal practice, emphasising transparency, client protection, and ethical standards in financial dealings. Firms must adhere to these rules to ensure compliance with FSMA requirements and client safeguards.
SRA Financial Services (Scope) Rules
The Scope Rules outline the types of financial services that law firms can provide within the bounds of FSMA, ensuring firms operate within authorised limits. This rule restricts the financial services offered by law firms to those compliant with financial regulations and consumer protection laws.
SRA Indemnity Insurance Rules
The SRA Indemnity Insurance Rules require law firms to hold professional indemnity insurance that meets the Minimum Terms and Conditions (MTC). This insurance is essential for protecting clients in cases of negligence, errors, or breaches of duty by the firm in the provision of legal services.
SRA Principles
The SRA Principles are fundamental ethical standards that all solicitors and law firms must follow, including acting with integrity, upholding the rule of law, and maintaining client confidentiality. These principles underpin the SRA’s regulatory framework, guiding legal professionals in ethical decision-making.
SRA Transparency Rules
The Transparency Rules require law firms to provide clear, accessible information on their services, fees, and regulatory protections. This rule aims to help clients make informed choices and enhance openness within the legal profession by promoting a client-centred approach.
An ABS is a law firm that has non-lawyers in managerial or ownership roles, allowing multidisciplinary practices that combine legal services with other professional services, such as financial or accounting advice. Introduced under the Legal Services Act 2007, ABSs aim to increase competition and innovation within the legal services market, making it more accessible and client-focused.
ALM (Anti-Money Laundering)
AML refers to the laws, regulations, and procedures that financial and legal institutions must follow to detect and prevent money laundering activities. Law firms are required to implement AML measures, including conducting client due diligence, reporting suspicious activities, and training employees to comply with relevant AML regulations. This is essential to prevent the use of legal services for concealing illicit funds.
Client Account
A client account is a dedicated bank account that law firms use to hold client funds separate from the firm’s operational accounts. This ensures client money is protected and not used for the firm’s own expenses, as required by the SRA Accounts Rules. Client accounts are integral to maintaining trust and ethical handling of client funds.
Client Money
Client money includes all funds received by a law firm on behalf of a client, such as fees paid in advance, disbursements, or funds held for property transactions. The SRA Accounts Rules mandate that client money be held securely and separately from the firm’s own funds to prevent misappropriation and ensure transparency.
Conflict of Interest
A conflict of interest occurs when a law firm’s duties to one client conflict with its duties to another client or its own interests, potentially compromising impartiality. Identifying and managing conflicts is crucial to maintaining ethical standards and client trust, as conflicts can affect the firm’s ability to provide unbiased and effective representation.
COFA (Compliance Officer for Finance and Administration)
The COFA is a designated officer responsible for ensuring that a law firm complies with financial regulations, especially those related to handling client money under the SRA Accounts Rules. The COFA monitors financial transactions, addresses financial risks, and reports any significant breaches to the SRA to maintain accountability.
COLP (Compliance Officer for Legal Practice)
The COLP is a designated officer within a law firm responsible for overseeing regulatory compliance, ensuring that the firm adheres to SRA standards. The COLP must identify and report regulatory breaches and work to maintain the firm’s adherence to ethical, professional, and legal standards in its practice.
FCA (Financial Conduct Authority)
The FCA is a UK regulatory body responsible for overseeing financial markets and firms, including those offering certain financial services within legal practices. The FCA’s mandate is to ensure consumer protection, promote fair competition, and maintain financial market integrity in the UK.
FLK (Functioning Legal Knowledge)
FLK refers to the core legal knowledge and understanding required for SQE1, covering key areas like contract, tort, criminal, and property law. FLK assesses candidates' ability to apply legal principles in practical scenarios, focusing on the functioning knowledge essential for everyday legal practice as a solicitor.
FLK1 (Functioning Legal Knowledge 1)
FLK1 is the first section of the SQE1 assessment, covering key areas of Functioning Legal Knowledge related to core practice areas like business law and practice, dispute resolution, contract, tort, legal system, and constitutional law. FLK1 requires candidates to demonstrate foundational knowledge and application of these subjects through a multiple-choice format, testing their readiness for practical legal practice.
FLK2 (Functioning Legal Knowledge 2)
FLK2 is the second section of the SQE1 assessment, focusing on other essential areas of Functioning Legal Knowledge, including criminal law and practice, property practice, wills and administration of estates, and trust law. FLK2 assesses candidates’ understanding and practical application of these topics, ensuring comprehensive readiness across the SQE1 syllabus.
FSMA (Financial Services and Markets Act 2000)
The FSMA governs the regulation of financial markets and services in the UK, giving regulatory powers to the FCA and PRA. FSMA sets standards for financial activities, impacting some law firms that provide financial advice or services, ensuring compliance with regulations designed to protect consumers and maintain market stability.
HOFA (Head of Finance and Administration)
The HOFA is typically responsible for managing a law firm’s financial and administrative operations. In smaller firms, the HOFA’s duties may overlap with those of the COFA, focusing on financial compliance, budgeting, and overall financial health to ensure regulatory adherence and business stability.
HOLP (Head of Legal Practice)
The HOLP is responsible for overseeing the quality and compliance of a firm’s legal services, ensuring adherence to professional standards. This role often involves working closely with the COLP to monitor legal practice operations, uphold ethical standards, and meet the regulatory requirements set by the SRA.
NCA (National Crime Agency)
The National Crime Agency (NCA) is a UK law enforcement body focused on tackling serious and organised crime, including financial crime and money laundering. Law firms report suspicious financial activities related to money laundering to the NCA, often through their MLRO, to support national crime prevention efforts.
PRA (Prudential Regulation Authority)
The PRA, part of the Bank of England, oversees the financial stability of institutions like banks and insurers. While the PRA does not regulate law firms directly, its regulations impact financial services within firms that may engage in certain regulated activities, especially those related to financial advice.
LSA (Legal Services Act 2007)
The LSA introduced major reforms in the legal services sector, including the regulation of alternative business structures (ABS) and the establishment of the Legal Services Board. The LSA emphasises consumer protection, promoting competition, and improving access to justice within the legal industry.
MLCO (Money Laundering Compliance Officer)
The MLCO oversees compliance with anti-money laundering (AML) regulations within a law firm, implementing policies, managing risk assessments, and ensuring staff training. This officer plays a crucial role in detecting and preventing money laundering activities, meeting the firm’s legal obligations to combat financial crime.
MLRO (Money Laundering Reporting Officer)
The MLRO is the designated person within a firm who receives and assesses internal reports of suspicious financial activities. If necessary, the MLRO escalates these reports to the NCA, serving as the firm’s liaison for anti-money laundering compliance and reporting obligations.
MTC (Minimum Terms and Conditions)
The Minimum Terms and Conditions (MTC) are mandatory requirements for professional indemnity insurance policies held by law firms. These terms ensure clients have sufficient protection if claims are brought against the firm for errors, negligence, or misconduct, as specified by the SRA.
REL (Registered European Lawyer)
An REL is a lawyer from a European Economic Area (EEA) country registered to practice in England and Wales. RELs must comply with SRA regulations and are permitted to perform certain legal activities in England and Wales, with pathways available for eventual qualification as solicitors.
RFL (Registered Foreign Lawyer)
An RFL is a lawyer from a jurisdiction outside the EEA who is registered to practice in England and Wales. RFLs are subject to SRA regulations and may provide limited legal services in specific areas, though they may need additional qualifications to expand their practice scope.
SQE (Solicitors Qualifying Examination)
The SQE is a standardised assessment introduced as a new route to qualifying as a solicitor in England and Wales. It comprises SQE1, which tests legal knowledge (FLK), and SQE2, which assesses practical skills like client interviews and advocacy, ensuring consistent standards across the legal profession.
SQE1 (Solicitors Qualifying Examinations Stage 1)
SQE1 is the first part of the Solicitors Qualifying Examination (SQE), focusing on testing Functioning Legal Knowledge (FLK) across a broad range of practice areas such as contract, tort, criminal law, and property. SQE1 is assessed through multiple-choice questions where candidates must select the single best answer. This exam ensures that aspiring solicitors possess the foundational legal knowledge necessary to practice law effectively.
SQE2 (Solicitors Qualifying Examinations Stage 2)
SQE2 is the second part of the SQE, focusing on practical legal skills needed for solicitors to serve clients competently. SQE2 assesses skills such as client interviewing, advocacy, legal writing, and drafting through a series of simulations and written exercises. Passing SQE2 demonstrates that candidates can apply their legal knowledge in practical, real-world scenarios and meet the professional standards required of solicitors.
SRA (Solicitors Regulation Authority)
The SRA is the regulatory body for solicitors in England and Wales, responsible for setting professional standards, enforcing ethical codes, and overseeing compliance within the legal profession. Its primary aim is to protect public interest by ensuring high standards in legal services.
SRA Accounts Rules
The SRA Accounts Rules govern the management of client money within law firms, mandating that it be held securely in a separate client account and kept distinct from the firm’s funds. These rules aim to protect clients and uphold trust by ensuring ethical financial practices.
SRA Code of Conduct for Firms
This Code of Conduct outlines the regulatory obligations of law firms, covering client care, risk management, and compliance requirements. It sets the ethical and professional standards that firms must follow to maintain trust and transparency in their legal services.
SRA Code of Conduct for Solicitors, RELs, and RFLs
This code sets out the standards of conduct expected of solicitors, Registered European Lawyers (RELs), and Registered Foreign Lawyers (RFLs), including integrity, professionalism, and client-focused service. It provides specific guidelines for handling conflicts, confidentiality, and ethical obligations.
SRA Financial Services (Conduct of Business) Rules
These rules define how law firms should manage financial services offered within legal practice, emphasising transparency, client protection, and ethical standards in financial dealings. Firms must adhere to these rules to ensure compliance with FSMA requirements and client safeguards.
SRA Financial Services (Scope) Rules
The Scope Rules outline the types of financial services that law firms can provide within the bounds of FSMA, ensuring firms operate within authorised limits. This rule restricts the financial services offered by law firms to those compliant with financial regulations and consumer protection laws.
SRA Indemnity Insurance Rules
The SRA Indemnity Insurance Rules require law firms to hold professional indemnity insurance that meets the Minimum Terms and Conditions (MTC). This insurance is essential for protecting clients in cases of negligence, errors, or breaches of duty by the firm in the provision of legal services.
SRA Principles
The SRA Principles are fundamental ethical standards that all solicitors and law firms must follow, including acting with integrity, upholding the rule of law, and maintaining client confidentiality. These principles underpin the SRA’s regulatory framework, guiding legal professionals in ethical decision-making.
SRA Transparency Rules
The Transparency Rules require law firms to provide clear, accessible information on their services, fees, and regulatory protections. This rule aims to help clients make informed choices and enhance openness within the legal profession by promoting a client-centred approach.
