LLP Conversion for Law Firms (eBook)

Executive summary............................................................................................................. V
About the author................................................................................................................IX
Acknowledgements ............................................................................................................XI
Disclaimer........................................................................................................................XIII
Table of legislation............................................................................................................XV
Chapter 1: Introduction...................................................................................................... 1
The definition of an LLP conversion ........................................................................................ 1
The trend towards LLP conversion........................................................................................... 1
Chapter 2: To convert or not to convert? ............................................................................ 3
Reasons for conversion.......................................................................................................... 3
Chapter 3: Preparing for conversion................................................................................... 7
Potential issues .................................................................................................................... 8
Chapter 4: Forming the LLP.............................................................................................. 11
Chapter 5: Converting under the default regime .............................................................. 13
The default provisions and their potential dangers................................................................. 13
Chapter 6: Drafting the LLP agreement ............................................................................ 19
The name........................................................................................................................... 19
The registered office of the LLP............................................................................................. 20
The LLP’s business............................................................................................................... 20
Commencement, duration and place of business .................................................................. 21
Accounting and funding ...................................................................................................... 21
Funding of an LLP ............................................................................................................... 21
Members............................................................................................................................ 22
Designated members .......................................................................................................... 22
Withdrawal of capital .......................................................................................................... 23
Contents
IV
Profits and losses ................................................................................................................ 23
Voting and decision making................................................................................................. 23
Employee members............................................................................................................. 25
Provisions for retirement ...................................................................................................... 26
Provision for expulsion......................................................................................................... 27
Non-competition clauses .................................................................................................... 29
Other matters to consider.................................................................................................... 29
Insolvency and winding up................................................................................................... 29
Chapter 7: Transferring the business – In practice............................................................. 31
Transferring client matters.................................................................................................... 31
Salaried partners – The criteria to be a member in the LLP..................................................... 33
Chapter 8: Accounting and taxation ................................................................................. 35
Appointing auditors............................................................................................................. 35
Taxation ............................................................................................................................. 35
The costs of a conversion .................................................................................................... 37
Chapter 9: Managing the conversion project ................................................................... 39
Create a list of the requirements for conversion..................................................................... 39
Managing the conversion in-house or externally? .................................................................. 41
Ensuring minimum disruption when transferring client matters................................................. 42
The potential problems arising after a conversion.................................................................. 44
Chapter 10: LLPs and ABSs .............................................................................................. 49
Case study 1: Kingsley Napley – A conversion in practice ................................................. 53
Reasons for conversion........................................................................................................ 53
A step-by-step process......................................................................................................... 54
Case study 2: Retirement under the default provisions and accounting under the SARs ..... 57
Appendix: An illustrative example of an LLP agreement .................................................... 61
Index ............................................................................................................................... 87