Last month marked 25 years since the Limited Liability Partnerships Act 2000 received Royal Assent, ushering in a new era for professional services firms in the UK. While lawyers don’t typically celebrate the birthdays of legislation, CM Murray Partner and partnership specialist Corinne Staves bucked that trend and marked the LLP’s Big Birthday with this article for Law.com.
In the article, Corinne explores how the legal services profession has developed over the past 25 years, and the extent to which that evolution can be attributed to the LLP vehicle.
A Game-Changer for Risk and Growth
Before LLPs, law firms operated as general partnerships, where partners had joint and several liability for the firm’s debts, therefore risking personal assets. The introduction of limited liability changed that dramatically. LLP members are now only liable up to the amount they invest, with a few exceptions. This shift has been credited with turbo-charging the growth of UK-headquartered law firms, both nationally and internationally.
The UK Government’s Modern Industrial Strategy Paper (June 2025) obviously expects this growth to continue, aiming to double investment in the professional and business services sector to £65 billion by 2035.
Flexibility Fuels Innovation
One of the LLP’s greatest strengths is its flexibility—particularly in governance and profit-sharing. Over the past 25 years, most law firms have shifted from lockstep-based profit sharing to hybrid models that seek to reward both loyalty and individual performance. This adaptability has helped firms align incentives with strategic goals and respond to evolving market demands.
Governance structures have also evolved. Many firms now delegate decision-making to central boards or management committees, allowing partners to focus on client service and performance. This has arguably enhanced client service, profitability, and competitiveness.
Mobility, Mergers, and Market Dynamics
LLPs have probably also contributed to increased partner mobility and the thriving lateral partner hires market. With reduced personal risk, partners no longer need deep trust in their partners’ competence, making lateral moves more common. This has created a dynamic talent market. Likewise, the ability to manage liability risks offers scope for firms to consider M&A as a tool for growth which, this year, is often fuelled by PE investment.
Culture and the Future
Beyond legal structure, LLPs have helped shape firm culture. Many law firms pride themselves on their “partnership” ethos, where partners are both owners and managers. While not unique to LLPs, this structure reinforces a sense of shared purpose and accountability.
Looking ahead, the flexibility of LLPs will be crucial as the legal sector continues to evolve. With growing investment from private equity and a focus on AI-driven solutions, firms will need adaptable governance and compensation systems to stay competitive.
Not a Panacea, But a Proven Model
Of course, LLPs aren’t the only successful model—some firms thrive as companies or general partnerships. But after 25 years, it’s clear that LLPs have played a pivotal role in shaping the modern legal landscape.
Happy Birthday, LLPs. Here’s to the next 25 years.
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We are pleased to share a special discount for the newly published book, Partner Retirement in Law Firms, Second Edition (Authors: Corinne Staves, Caroline Field, Ivor Adair, Andrew Baker, Nicky Owen, Micheline Hogan, Veronica Mann, Roderick Chamberlain. Consulting Editor: Ronnie Fox).
Corinne Staves is the author of the chapter on ‘Partner retirement: a firm’s perspective’ where you will learn that her key advice is ‘Be prepared. Be right. Be nice’.
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