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Allen & Overy (A&O) partners - don't panic. If the discovery that you're all personally liable for £85,000 towards filling the gaping hole in your firm's pension fund comes as news to you, take comfort in the fact the whole liability is not payable today.
A&O's chunky £26.2m should disappear within 10 years. Plus, more good news; the deficit as a proportion of A&O's total net assets is relatively low compared with some of those that have emerged in industry. BT's deficit, for example, is some 61 per cent of net assets, while A&O's, at £26.2m to £251m, is around 10 per cent.
That doesn't alter the fact that it is the partners' responsibility to fund the deficit and fix that hole, but at least they know the size of the problem they're dealing with.
Changes in the accounting rules for LLPs forced A&O to make its liabilities public and all of its partners should be aware of its scale. Can the same be said of every other equity partner in the City and further afield? The size of the pensions liabilities at firms that have not yet converted to LLP remains unclear. Calls to those bastions of the non-LLP world - Clifford Chance, Linklaters and Freshfields - produced a mixed bag of results.
Freshfields admitted it too had a deficit, and although it wasn't minded to divulge the actual amount, it claimed it was "substantially lower" than A&O's. But it confirmed that, like A&O, it is currently funding the deficit at a rate that will reduce it to zero over 10 years.
Clifford Chance and Linklaters shrunk from comment at press time. Shame.
Now, it's just an idea, but could it be that pensions liabilities are one reason for firms not converting to LLP? That the fact they would have to be crystallised in the accounts and, as in the case of A&O, are likely to run into millions, might just be slightly off putting? Most firms have a defined-benefits schemes in some form, although equally many will now be closed to new members. But the liabilities will remain, as will the dulling effect on profits. Maybe something you want to keep to yourself? By the way, at A&O the pensions deficit cut around £10,000 per partner from its 2005 PEP. Not a huge amount, but at the moment the partner-shedding A&O needs all the help it can get.