Government proposals for limited liability legislation do not go nearly far enough to satisfy most law firms, according to the experts.
Ronnie Fox, senior partner of Fox Williams, described the proposals as “ridiculous”.
Some of the Big Six accountancy practices have already expressed their intention to register as limited liability partnerships (LLPs) in Jersey, but big City law firms would prefer to limit liability in the UK and were expecting the Government to allow LLPs provided the firms disclosed their accounts.
But the consultation paper, published by the DTI last week, goes much further than this simple trade off. It proposes that liquidators can claw back excessive partnership drawings for the previous two years. Furthermore, in what The Lawyer has discovered is a last minute addition to the proposals since they were first drafted in December, partners who had been members of a liquidated firm in the five years before its collapse would be liable to a fixed sum personally guaranteed by them.
Fox said: “That's not what I call limited liability. To expect clients to consider whether or not they will instruct a firm on the basis of who has been a partner in the last five years and what those partners' drawings have been is ridiculous.”
Law firms have until 16 May, after the general election, to respond. The Labour Party has not yet made clear whether it will back LLP legislation.