Newsletter 71

Monday 20 January 2025

Your weekly SQE Prep Quiz has arrived

Dear Subscriber,

I hope you had a great weekend! Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.

Weekly SQE1 FLK1 livestreams! Get your SQE questions answered live! Click here and tap the notification button in anticipation of our next session on 22 January.

SQE1 Mocks: Test your knowledge in exam conditions for the price of a pizza! I am collaborating with Law Drills to offer mini-mocks. Go to https://www.lawdrills.com/ , click Start for Free, select SQE1 FLK1 and go to exam packs for the mini-mocks. Also, use discount code “IOANNIS” to get 15% off any of the Pro Plans of AI tutor Law Drills.

Question: James, a solicitor at a mid-sized law firm, is representing a long-standing client, Olivia, in a property dispute. Olivia confides in James that she plans to dispose of certain key financial documents before they can be requested by the opposing party. She believes these documents might weaken her case. James is aware that the opposing party is likely to seek disclosure of these documents during proceedings. Olivia insists that the firm should proceed with the case as if the documents never existed. James is now in a dilemma regarding his professional obligations and seeks guidance on how to handle the situation.

Under the Solicitors Regulation Authority (SRA) Code of Conduct, what should James do in response to Olivia’s intention to destroy evidence?

  1. Advise Olivia that destroying the documents would be unlawful and refuse to continue representing her if she insists on doing so.
  2. Proceed with the case while remaining silent about Olivia’s actions, as he owes a duty of confidentiality to his client.
  3. Inform the court immediately about Olivia’s intention to destroy evidence, as solicitors have an overriding duty to the court.
  4. Ignore the situation, as it is Olivia’s personal decision and not his responsibility as her legal representative.
  5. Advise Olivia that if she wishes to destroy the documents, she should do so without involving him to protect solicitor-client privilege.

Resource: An overview of solicitor ethics is available right now for channel members on this video.

Free Study Planner: You can download our SQE1 Study Planner for the July 2025 exam by clicking here.

Support me and this newsletter: Become a member of ‘iGlinavos Scholars’ on YouTube (£2.99/month, click here for info) and get priority access to new videos. Also, you get access to a members’-only FB group where we can communicate directly.

Answer and feedback to last week’s question: Sophie and Daniel are childhood friends who want to start a business selling handmade sustainable clothing. Sophie has significant capital to invest, while Daniel has experience in fashion design and marketing. They are debating whether to form a partnership, a private limited company (Ltd), or a sole proprietorship. They are concerned about potential liability for business debts, taxation, and how much control they each will have over decision-making. Sophie wants to limit her financial exposure, while Daniel wants flexibility in running the business and avoiding excessive administrative burdens.

Which of the following business structures is most suitable for Sophie and Daniel’s needs, and why?

  1. A partnership, as it offers flexibility in decision-making and profit-sharing, but both Sophie and Daniel would be personally liable for business debts.
  2. A private limited company, as it limits Sophie and Daniel’s personal liability, provides flexibility for investment, and allows clear division of control.
  3. A sole proprietorship, as it is easy to set up and gives Daniel full control over the business, but Sophie can act as an informal investor.
  4. A partnership, as it allows Sophie to invest as a silent partner without any personal liability for business debts.
  5. A private limited company, as it avoids any taxation on the company’s profits, allowing Sophie and Daniel to keep all earnings personally.

Correct Answer: 2. A private limited company, as it limits Sophie and Daniel’s personal liability, provides flexibility for investment, and allows clear division of control. Feedback: A private limited company (Ltd) is the most suitable business structure for Sophie and Daniel because it: Limits personal liability: Shareholders (like Sophie and Daniel) are only liable for the company’s debts up to the value of their shares, protecting personal assets. Investment flexibility: Sophie can invest capital in exchange for shares, allowing her to contribute financially without being personally liable for business debts. Clear governance: A company structure allows for formal agreements on decision-making and control, such as appointing Daniel as the managing director to handle day-to-day operations.

Option 1 is incorrect because while a partnership offers flexibility, it does not provide personal liability protection. Both partners would be personally liable for the business’s debts, which conflicts with Sophie’s goal of limiting her financial exposure. Option 3 is incorrect because a sole proprietorship would mean that Daniel has full control but would bear all the risks of business debts personally. Additionally, Sophie’s role as an informal investor would lack formal protection or rights, which could lead to disputes. Option 4 is incorrect because partnerships do not allow for limited liability unless it is a limited partnership (LP) or a limited liability partnership (LLP), and even then, certain restrictions apply. Option 5 is incorrect because private limited companies are subject to corporation tax on their profits. Sophie and Daniel would only receive the remaining profits after tax as dividends or salaries, contrary to the statement in this option. Thus, a private limited company is the best option, offering liability protection, flexibility in investment, and clear governance, all of which align with Sophie and Daniel’s objectives.

Thank you for subscribing and let me know how you are getting on in your preparation through our Facebook Group. Feel free to forward this email to anyone you think will benefit.

If you wish to unsubscribe: You can stop receiving the newsletter at any time by emailing us at newsletter@glintiss.co.uk with ‘unsubscribe’ as the subject. We will promptly remove your email address from our mailing list. Thank you for being with us.

You will hear from me again soon.

All the best

Dr Ioannis Glinavos

Leave a Reply

Your email address will not be published. Required fields are marked *

Cookie Consent with Real Cookie Banner