Protection of personal assets for non negligent partners against those of negligent partners when it comes to negligence litigation brought by a client, is the main benefit of turning your legal firm into an LLP ....
Anderson Strathern's reasoning on this as reported in the Herald newspaper :
"In Scotland's increasingly competitive legal market, it is important that we keep the best interests of our clients and staff at the forefront of our decision-making. This is at the heart of the firm's conversion to limited liability partnership.
"There will be no change to the way in which we do business. Clients will continue to receive the excellent service and advice that they currently expect from Anderson Strathern."
Clients will of course be pleased to hear it ... unless of course they have to sue the firm for negligence ... but of course, the Master Insurance Policy, managed by Marsh UK and under the watchful eyes of Douglas Mill & Alistair Sim will be able to handle that one surely not ...
The Herald reports :
Anderson Strathern joins list of limited liability partnerships
IAN FRASER September 03 2007
Edinburgh law firm Anderson Strathern has converted to a limited liability partnership and has restyled itself as Anderson Strathern LLP.
The firm, created when two established Edinburgh firms - J&F Anderson and Strathern & Blair - merged in 1992, is now Scotland's 10th-largest law firm, according to rankings from Scottish Business Insider.
In the year to August 2006, it posted a turnover of £15.5m, and with a total of 40 partners and 220 staff, its client list includes corporates, public sector bodies, banks, property developers, landowners and educational institutions.
As an limited liability partnership, Anderson Strathern will be required to publish full annual accounts - including details of turnover, profits and partners' earnings - and to lodge these with Companies House. In exchange for this financial transparency, the firm benefits from protection in the event of liability claims against it. The personal assets of non-negligent partners will be protected in the event of litigation.
Chairman Robert Carr said: "Limited liability partnerships are now generally considered to be the most suitable trading vehicle for large, modern professional services practices. This move is a natural step for Anderson Strathern and supports our growth.
"In Scotland's increasingly competitive legal market, it is important that we keep the best interests of our clients and staff at the forefront of our decision-making. This is at the heart of the firm's conversion to limited liability partnership.
"There will be no change to the way in which we do business. Clients will continue to receive the excellent service and advice that they currently expect from Anderson Strathern."
Simon Brown, a partner, said the firm, which opened a Glasgow office in October 2005, has modernised since moving from sprawling Georgian accommodation in Edinburgh's Castle Street to a mirrored glass building in the Exchange district in May 2004. The limited liability partnership conversion is a further development of that process.
There are few large commercial law firms left in Scotland that have not converted to limited liability partnership status. Exceptions include Glasgow-based McClure Naismith, which is considering such a move.
However, neither Glasgow-based Brechin Tindal Oatts nor Edinburgh-headquartered Turcan Connell are understood to favour such a move.
Turcan Connell is understood to have taken a decision not to convert to limited liability partnership status, partly because it suspects such a move would send the wrong signal to clients.
Instead, the Edinburgh-based firm is exploring alternative business structures that will enable non-lawyers to have ownership stakes in the firm with the Law Society of Scotland.
The first Scottish firm to convert to an limited liability partnership was Edinburgh-based Brodies in 2004, swiftly followed by Dundas & Wilson later that year. Maclay Murray & Spens converted in July 2006, with McGrigors and Shepherd & Wedderburn converting a few months later.
Limited liability partnership legislation was rushed in by the government in 2001 following pressure from large accountancy firms. They had been rocked by a succession of big lawsuits that followed cases such as the Maxwell pensions scandal and the collapse of BCCI and Equitable Life. The beancounters were concerned they would fail to recruit staff if non-negligent partners risked unlimited liability for errors committed by their colleagues.
Prem Sikka, professor of accountancy at Essex University, said two members of the Big Four accountancy firms were responsible for forcing the UK government to introduce limited liability partnerships seven years ago.
He said that in 1995 the UK arms of Ernst & Young and Price Waterhouse invested £1m in the drafting of an limited liability partnership bill, "which would give firms considerable protection from lawsuits with no formal regulation or public accountability."
Sikka said PwC and Ernst asked the government of Jersey to enact their bill, which it eventually did in 1998, and issued a threat to the UK government that if it failed to follow suit, they would transfer their operations to Jersey.
The UK government capitulated and introduced the Limited Liability Partnership Act 2000. The firms agreed to publish audited financial statements in return for liability concessions and also retained partnership tax perks. In the end, no firm migrated to Jersey.
Sikka said: "The general rule for limited liability partnerships is that the liability claims are met by the assets of the firm and any applicable liability insurance, followed by the assets of the partner responsible for the action/inaction creating the liability. Thus, the assets of the other partners are protected, even though they share in the profits generated by all partners."
Andersen Strathern officially became an limited liability partnership on Saturday, September 1.
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