Top City law firms are likely to follow accountants in registering in Jersey under its new limited liability law, according to a lawyer who helped draft it.
Mike Lombardi, partner at Jersey firm Ogier & Le Masurier, which helped one of the big six accountancy firms and the Jersey Parliament draft the law, said he thought solicitors would initially “wait and see”. But he added: “Once some of the big accounting firms have registered, then many of the law firms will follow. We've had a number of inquiries from some of the top City firms.”
The law passed its third reading in the Jersey Parliament last week and now goes to the Privy Council for Royal Assent. One Jersey deputy said he understood an early day motion opposing the law would be raised in the House of Commons. But Jersey's law-making process has never before been stopped by the House of Commons.
Price Waterhouse and Coopers & Lybrand have both helped the Jersey Parliament draft the law and are thought likely to register in Jersey as LLPs. Enst & Young has already announced it will put a formal proposal to its partners.
Lombardi said: “The accountancy firms have invested a lot of money in promoting this law. It would be lost if they don't make use of it.”
The requirement of a £5m deposit would not be as big a deterrent to law firms as people thought, he said, because it did not have to be cash: a banker's letter of credit or a bond would do. “The firm would have to pay something like 1 per cent interest a year and the bank can take assets as security.”
Richard Tapsfield, partner at Linklaters & Paines, who is looking at the issue of limited liability for the firm, said: “We are in wait-and-see mode. Law firms, cautious and conservative by nature, are likely to wait for the accountants to move and see what happens with them.”
The DTI may itself introduce limited liability legislation this autumn.