LPC Exam Bundle (Revision Notes) used for Business Law and Practice Module (BPP University).
High distinction achieved in module and distinction in LPC overall.
Ideal for use in open note LPC exams or to memorise for closed note.
SGS 1 – SETTING UP IN BUSINESS
LEARNING OBJECTIVES:
1. Appreciate the process by which law firms engage new clients
2. Analyse the legal and commercial framework in which businesses operate
3. Appreciate the different legal forms that businesses may adopt and explain the main
advantages and disadvantages
4. Identify some key constitutional differences between public and private companies
through the analysis and interpretation of statutory provisions
1.ENGAGING A NEW CLIENT AS A LAW FIRM + BUSINESS PLANS:
Practical matters before you take on a new client:
- Conflict of interest check 6(a) SRA Code of Conduct:
o You do not act if there is an own conflict of interest or a significant risk of one.
o Can only act if the clients has a substantially common interest in relation to the
matter or the clients are competing for the same objective AND:
▪ All clients have given informed consent
▪ Put in place safeguards to protect your clients’ confidential info
▪ You are satisfied it is reasonable to act for all the clients
o Disclosure: You keep the affairs of current and former clients confidential unless
disclosure is required or permitted by law or the client consents.
- Client Identification 8 SRA Code of Conduct:
o You identify who you are acting for in relation to any matter.
o Check for risk such as money laundering (PASSPORT)
- Complaints Handling 8 SRA Code of Conduct:
o Ensure clients are informed in writing about their right to complain about your legal
services or charges, how complaint can be made and to whom.
- Competency:
o Are you and the firm competent to carry out the work.
o Code of Conduct SRA
- CLIENT CARE LETTER (ENGAGEMENT LETTER):
o Explain what is going to happen
o How much it is going to cost
o What client needs to do
o Contact details
o Letter shows a clear purpose and is concise
o RETAINER
o Timescales
1
, 2
2.Do they have a BUSINESS PLAN?
A plan which allows lenders to decide how much money they are willing to lend (measure the risk).
1. Appendices
2. History and Background
3. Mission statement/objectives
4. Products or services
5. Market info (SWOT, PESTLE)
6. Resources employed
7. Management/Operation requirements
8. Financial info
9. Summary action plan
2.THE DIFFERENT LEGAL FORMS THAT BUSINESSES MAY ADOPT –
ADVANTAGES AND DISADVANTAGES:
SOLE TRADER LIMITED COMPANY PARTNERSHIP LIMITED LIABILITY
PARTNERSHIP
No specific Companies Act 2006 Partnership Act Limited Liability
GOVERNING legislation 1890 Partnerships Act
STATUTE relating to sole 2000.
traders.
Limited Liability
Subject to Partnerships
relevant Regulations 2001(as
commercial, tax amended) (‘2001
legislation, Regs’): contain
accounting default provisions on
rules and capital and profit
common law. share between
members
Limited Liability
Partnerships
(Application of
Companies Act 2006)
Regulations 2009
(‘2009 Regs’): apply
provisions of the
CA06 (as modified)
to LLPs, e.g.
requirement to have
2
, 3
a register of charges
and file an annual
confirmation
statement.
LIABILITY OF Unlimited Limited liability – members only As the partnership Liability of the
INVESTORS personal liable to pay any amount unpaid does not have a members of LLP is
liability. on their shares – S 3 (2) CA separate legal limited to the
identity liability amount they have
If creditors have asserted their moves to the agreed to pay under
rights in full against the company, partners. the terms of the
CANNOT then pursue SH. Partnership
Partners have Agreement.
unlimited personal
liability on either a
joint, or a joint and
several basis.
LEGAL STATUS Business has no Separate legal entity Not a separate legal Body corporate –
OF THE legal identity of entity. separate legal entity.
BUSINESS its own.
MEDIUM Sole trader The partners are the For tax purposes;
enter into partnership. Each individuals liable on
contracts in partner is their share of income
personal individually or gains.
capacity – responsible.
unlimited
personal
liability.
NUMBER OF 1 1 – S 7 (1) CA 2006 Need to be at least 2 Need to be at least 2
PERSONS persons (can be a persons (can be a
NEEDED TO company) company).
SET UP
Note: If a business is
carried on for over 6
months after the LLP
is down to one
member, that
member becomes
jointly and severally
liable, with the LLP,
for debts incurred
after the 6 month
grace period i.e. the
benefit of limited
liability is lost.
EXPENSES Little or no Incorporation documents Little or no costs, no Incorporation
BEFORE OR costs, no generically include: incorporation document required.
DUE TO START incorporation memorandum and AOA requirements – BUT
UP requirements. (constitution), registration fee HIGHLY Registration fee.
and printing of company RECOMMENDED TO
stationery. HAVE A
3
, 4
PARTNERSHIP LLP does not require
FAST AND EASY TO AGREEMENT the equivalent of a
INCORPORATE. DRAWN UP BY memorandum or
LAWYERS. articles of
association. The LLP
regulations (see 1
above) provide some
default provisions
but it is highly
recommended to
have a limited
liability partnership
agreement drawn up
by lawyers.
Printing of LLP
stationery - the LLP’s
name must appear
on all the same
documents as
required of a
company (e.g.
letterhead, invoices
and cheques).
PUBLICITY AND Privacy – do In the normal course of trading Privacy – do not Similar disclosures to
DISCLOSURE not have to disclosure to Registrar of: have to register at companies and
register at • Registered office – s.86 CA Companies House; includes:
Companies 2006 do not have to • Registered office
House. • Accounts – s.441 CA 2006 disclose profits or – s.2(2)(c) and
Do not have to • Information on directors (and the constitution. (d) LLPA and
disclose profits. secretary if the company has 2009 Regs
one) and members. As a • Details of
result of the SBEEA 2015, members –
companies can now for a fee s.2(2)(e) LLPA.
keep registers of members, As a result of the
directors and secretaries at Small Business
Companies House as an Enterprise and
alternative to keeping internal Employment Act
registers. 2015 (‘SBEEA
• Information on the share 2015’) LLPs can
capital of a company. As a for a fee keep
result of the SBEEA 2015 the registers of
Statement of Capital can be members,
updated as part of the directors,
Confirmation Statement secretaries and
(explained in point 7 below) charges at
to show the aggregate Companies
amount unpaid on the total House.
number of shares instead of • Details of
the previous requirement to ‘designated
show the amount paid up and
4
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