Offshore centre set to allow limited liability partnerships; US model could win out
The Bahamas is to consider allowing law firms to register as limited liability partnerships (LLPs). The spur for lawyers, accountants and other professionals in the offshore jurisdiction has been the growth in the number of transactions they are handling - now running into several hundreds of millions of pounds. The complexity of such deals increases the risk of lawyers being sued. Insurance cover is also considered to be insufficient protection as it is significantly less than the value of US and UK firms' cover. Charles Crowe, a partner at Bahamas firm Lennox Paton, said most local firms are insured for $10m-$20m (£6.5m-£12.9m), about one-tenth of the cover of medium-sized UK firms. "I know of no major claims against our professionals. But it is early days. The Bahamas has only just started attracting the high-value work," Crowe said. He added that there are alternatives to LLPs, such as limited equity structures, but he feels this is a way of "skinning costs" rather than putting in place an adequate form of protection for law-yers and other professionals. LLP structures already exist based on the US model in the Bahamas, but they can be used only by investment vehicles. It would be easier to set up an LLP based on the UK rather than the US system because the Bahamas has a similar set of company laws. However, UK LLPs operate in a style akin to a company and are thus regarded as more cumbersome than the US LLP model, which has the advantage of being very tax transparent - useful for an offshore jurisdiction seeking to improve its image. Another alternative for the Bahamas, previously used by English partnerships before the dawn of LLPs in the UK, is to set up holding companies through which employers retain some protection. However, the government is keen on pursuing the LLP option and is due to start canvassing the opinions of foreign partnerships with LLP structures.