Sponsored by: mfg Solicitors
Legal
Survey claims LLP model is starting to show its age
The limited liability partnership (LLP) model is beginning to look outdated in the West Midlands legal sector, according to a new survey. The claim is made in Smith &
Williamson’s 25th annual Law Firm Survey, with a massive 71 per cent of respondents saying that an LLP structure was not ideal for their business, with 21 per cent of firms said they had already moved away from it. Meanwhile a further 18 per cent
said that being an LLP was proving to be a constraint on growing their business. The survey shows that where legal firms once sought safety in the LLP structure, its restrictions were now taking a toll on businesses, in particular the decision-making process, which can be cumbersome when attempting to carry out a consensus across a large partnership. But despite the high numbers
dissatisfied with the LLP structure, 58 per cent of survey respondents said they would maintain in for the next three to five years. Stephen Drew, professional
services managing partner at Smith & Williamson in Birmingham, said: “For almost two decades, limited liability partnerships have been the standard operating structure for
Stephen Drew: LLP structure may have had its day
‘The LLP model doesn’t make embracing new business lines easy’
professional practices. The structure seemed to have some notable advantages: it minimised the liability of individual partners, while, from a tax perspective, partners could remain self- employed. “At the time of conversion from
the traditional partnership structure, few firms considered alternatives in any depth.
“However, the legal world has changed. Alternative business structure (ABS) reforms have allowed new competition, such as the large accountancy firms. Many law firms have started to consider adding consultancy services and other diversification on to their legal practices. The LLP model doesn’t make embracing new business lines easy. If a law firm wants to make an add-on acquisition or make large investments in staff or IT, it needs additional capital. “Yet in an LLP, all profits are
allocated to partners in the business in the year that they’re earned and taxed on that basis. The structure doesn’t facilitate the retention of working capital. “There is also the problem of
staff retention. The LLP structure doesn’t allow for any participation in the ownership of the business prior to achieving partnership level. “A limited company, in contrast,
would allow for share options and may enable firms to reward talent better. Some law firms have gone down this route. There is no right or wrong answer, but if working capital, staff retention, or the division of the business are a concern, then it is worth considering a change.”
Families facing feuds over wills
Millions of families across the UK could face huge arguments because most people have not made a will, Thursfields Solicitors has warned. The comments from the leading Midlands law firm
come after a new survey found that 68 per cent of UK adults are what is known as ‘intestate’ – equivalent to nearly 28 million people. Meanwhile, the survey found that 70 per
cent think their families will easily split their assets after they are gone. But Katherine Ellis (pictured), a
senior associate solicitor in the dispute resolution team at Thursfields’ Kidderminster office, explained that no will means estates are left to the mercy of the intestacy rules – which may be contrary to the deceased’s actual wishes. Ms Ellis said: “This research shows how
people are under the misapprehension that their family will easily agree decisions regarding their estate, but we’re increasingly seeing this is far from reality. “Contentious issues range from who should take
responsibility for overseeing the administration of the estate, to funeral arrangements and whether the deceased would have wished to be buried or cremated. “In other cases, friends and certain family members who, in absence of a will, the law does not
recognise as beneficiaries receive no benefit from the estate. “Instances can also arise where distant relatives
whom the deceased had little or no contact have an automatic legal entitlement to benefit from an estate, but a non-blood relative who was far closer to the deceased, such as a cohabitee, does not. “There are potential legal avenues available to explore in such cases, but it is a complex area of law with stringent timescales. Anyone who finds themselves in such situations should seek specialist legal advice as a priority.” The survey, published by Remember a Charity, also found widespread
confusion about how complicated it is to sort out a Will, and who inherits if you die
without one. It said a third of people assume their partner and
children will automatically inherit, and a similar number believe they only need a Will if they are very wealthy. Ms Ellis added: “It’s important that people
appreciate the need to make a will, irrespective of the value of their estate, as they will surely want all their wishes respected. “But if anyone ever doubts that what a deceased
clearly wanted is not happening, Thursfields has expertise in cases like these and can help.”
By Samuel Pedley, mfg
High Court’s automatic email sign-off ruling is a warning
The High Court has ordered that a compromise contract be completed after ruling that a solicitor’s email sign-off was proof of signature and acceptance. In Neocleous & Anor v Rees,
the judge said the sender’s automatically generated name on the email showed a ‘clear intention’ to associate himself with the email - adding that ‘many thanks’ showed an intention to connect the name with the email’s contents. This case surrounded a land
dispute and the emails were between lawyer Daniel Wise and the defendant’s solicitor, David Tear. Following a call, Tear
emailed Wise confirming terms, signing off with ‘many thanks’ alongside his name, position and the firm’s name. Wise confirmed his agreement but the defendant later asked for a re-listing, stating that terms were not finalised. The claimants contended
that the emails amounted to a binding contract, with the defendant stating there was no contract because the emails were unsigned. Tear submitted he did not add his name and instead it was added automatically. In response, the claimants
argued that the typed name of the sender, rendered the document ‘signed’. Ruling for the claimants in
what is a wide-reaching case, the judge said an ordinary person would consider that when a sender stores their name in the ‘signature’ on emails they would do so intending to sign.
For further information readers can email
samuel.pedley@
mfgsolicitors.com
December 2019/January 2020 CHAMBERLINK 75
Sector Focus
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