Payment in equity/shares and investing in clients

Very occasionally a client offers to pay in shares and not cash. We cannot accept payment in shares. This is for a number of reasons including:

• Keystone, as a listed entity, cannot acquire other shares.
• An equity sum cannot be divided into the relevant fee notes.
• Equity can't easily be valued or turned into cash.
• Receipt of shares creates a conflict shadow.

If you are genuinely keen to get client's shares, then the best way forward is to subscribe for shares in the usual way, at full market price and agree with the client that they will use those monies to pay the Firm's bill. It will then be processed in the usual way and you will get the relevant percentage of your subscription monies back. If you do this, though, you should note and follow the guidance on Own Interest Conflicts and, if you are to get some control over the client (e.g. become a director), then you must read the guidance on Becoming a non-executive director.

If you are going to invest in your client, then you need to consider the regulatory aspects. An automatic assumption of undue influence will arise in respect of any transaction between a solicitor and a client, unless you can show that the assumption should not apply. You should therefore never ask for equity; it should be the client's idea. You should never have anything to do with setting the value, which must be done independently, and you must not have any involvement in advising on, or arranging, the shares issued to you. Before making an investment, you should contact the Director of Operations and Compliance to discuss any impact on your independence.