Confidentiality and Client Money
Confidentiality is broader than legal professional privilege: it covers all information learned in the professional relationship, whether or not litigation is contemplated. Privilege is narrower and protects certain communications from disclosure. Exceptions to confidentiality include client consent, statutory disclosure (e.g., money laundering reporting), and prevention of serious crime. Candidates must understand the duty continues after the retainer ends and after the client's death.
Client money handling is a separate, highly regulated area. Know the concepts: client account versus office account, the duty to keep client money separate, the prohibition on using client money for the firm's own purposes, the requirement to account promptly, and the rules on interest. Understand three-way reconciliation (client ledger, client bank account, and cash book) and the timing rules for paying received money into the client account.
Traps: assuming privilege and confidentiality are interchangeable; believing a lawyer may disclose to defend a complaint without limit (disclosure must be proportionate); commingling client and office money; and treating a receipt as office money when it is client money. Questions may test whether interest is payable, when money must be paid into the client account, and what to do with unidentified receipts.
Worked example: a firm receives settlement funds for a client. The money is client money; it must be paid into the client account promptly, recorded on the client ledger, and only transferred to office account when fees are properly billed and the client has been given the required notice. Rule of thumb: when in doubt, it is client money and it stays in the client account.