Full disclosure

Lawyers are incidental beneficiaries of the protections afforded by limited liability partnership (LLP) status.

The legislation introducing the model, now seven years old, stands testament to the formidable lobbying clout of the blue-chip accountancy giants, which had been rocked by a succession of so-called 'deep-pocket' lawsuits in the wake of high-profile corporate collapses such as Maxwell and BCCI.


The quid pro quo for LLP status was disclosure, in the shape of a full set of accounts. This deterred many lawyers (and accountants) from making the switch, at least initially, in some cases because partners were nervous that their clients might take exception when they learned how much the LLP 'members' actually earned.



Eventually, however, that transparency requirement delivered, for the first time, a degree of reliable financial insight into two of the nation's biggest industries (if they can be so called).

Now we learn that the government will not force overseas LLPs operating in England and Wales to meet the same disclosure requirement. This is both unfair and potentially anti-competitive. To turn the tables, do we imagine that the Securities and Exchange Commission would ever offer foreign corporates a more lax reporting regime than domestic US companies? No chance, and rightly so.