City lawyers fear the Government is planning to ditch the long-awaited Limited Liability Partnership (LLP) Bill this week, prompting fears of a further partner exodus to “protected” US firms.
The Cabinet Committee is expected to decide this week which bills will make it into the crowded Parliamentary legislative programme.
Sources say the LLP Bill could be ditched in favour of more eye-catching legislation on e-commerce. Lawyers are lobbying furiously to keep the LLP Bill on track.
City lawyers fear the delay to the Bill – it was promised by the previous Conservative government – is encouraging lawyers to either hold back from partnership or jump ship to US firms, where partners can limit their liability. They are accusing Labour of reneging on its election promises.
Rowe & Maw partner Richard Linsell says: “US firms are regularly poaching partners, and nearly all the US firms in the City are LLPs.
“For a lawyer considering partnership, a firm with LLP poses one less bit of risk, and we want the UK and the US to operate on a level playing field.”
Linsell says the Bill is likely to be delayed until November 2000 at the earliest if the Government pulls the plug on it now. He adds: “The Government endorsed its commitment to this Bill in its first month of office, and the Department of Trade and Industry (DTI) Select Committee slated the e-commerce Bill 10 days ago. However, e-commerce is a buzzword.”
Allen & Overy partner in charge of private clients, Richard Turnor, says: “The LLP legislation is ready but the DTI has been told it is not allowed both bills. There will be a lot of disappointed people in the City if this doesn't go through.”
According to the DTI Select Committee, which considered the Bill in December, 60,000 professional firms in the UK want LLP status.
Elite City group – the Association of Partnership Practitioners, whose members are lawyers, accountants and bankers – urged its members last week to write to the DTI asking that the LLP Bill be given priority.
In a letter to Commons Leader Margaret Beckett MP, accountancy firm Smith & Williamson, whose client list includes a large number of lawyers, claims “the considerable financial exposure” accompanying equity partnership “has resulted in occasions where [partnership] has been rejected with resultant negative business consequences for the firm”.