Partnerships for the 21st Century? - Limited Liability Partnerships and Partnership Law Reform in the United Kingdom

Abstract

The introduction of the limited liability partnership (LLP) into UK law has taken place against the backdrop of two fundamental law reform projects - one on company law which is currently being considered by the Government and one on partnerships and limited partnerships which is being conducted by the Law Commissions of England and Wales and Scotland - but oddly without reference to or by either. This article considers the unusual gestation process and resulting legal regulation and structure of the LLP against this background of law reform. It also considers whether the LLP will be used and/or is useable - in particular as a vehicle for obtaining immunity for members of the professions from direct or vicarious liability for negligent misstatements; whether the internal structure will be suitable for small businesses; and whether an appropriate creditor/member balance has been achieved. The article then considers some aspects of partnership law reform generally, welcoming the proposals for legal personality, continuity of association and simplification of the definition of a partnership. It suggests revisions to the proposals on contemplated partnerships, the effects of a repudiatory breach on a partnership agreement and the interaction of potentially conflicting fiduciary duties if legal personality is introduced. Finally it suggests a new approach to the law on the liability of innocent partners for the accessory liability of one partner incurred in connection with the firm's activities.