3 July 2014
Manju Manglani, Editor (@ManjuManglani)
‘LLPs still offer the best of all worlds’, said Richard Turnor
A multi-disciplinary partnership (MDP) alliance has been launched between three law firms and one accountancy firm.
The UK-based Professional Practices Alliance, which intends to target professional services firms, is founded by law firms Maurice Turnor Gardner, CM Murray and Hierons and chartered accountancy firm Buzzacott, all of which have a limited liability partnership (LLP) structure.
At their launch event, the firms debated whether the LLP model is still fit for purpose in the UK as a result of the recent changes in the tax treatment of salaried members and the Supreme Court ruling in Clyde & Co LLP and another v Bates van Winklehofthat partners should be treated as workers for certain employment rights.
“LLPs still offer the best of all worlds,” said Richard Turnor, name partner at Maurice Turnor Gardner, who chaired the lively debate.
“Members benefit from limited liability and can have a role in management. LLPs can also adopt sophisticated corporate governance arrangements like global corporates.”
In assessing the alternatives to LLP structures, alliance members suggested that, although limited companies now appear to offer greater certainty, they may not suit a firm that operates, however inefficiently, as a democracy.
Succession challenges should not be underestimated, they noted.
“Corporate and partnership structures have advantages and disadvantages; LLPs will remain attractive,” said Richard Hierons, founder of law firm Hierons.
“Boutique firms may offer a ‘partnership’ model, but most larger professional firms need a ‘management’ model. The transition from partnership to corporate management will continue for some years. It will be challenging for many firms and may be more important to future success than choosing the right vehicle.”
Speaking about the changes affecting LLPs, Cliff Cooper of Buzzacott commented: “We feel the flexibility of LLPs can’t easily be matched by other structures or incorporation, particularly for larger firms, but it would be helpful if legislature could provide a bit more stability for LLP structures, particularly when it comes to tax rates.”