The bulk of law firms are unlikely to be tempted by the limited liability partnership (LLP) structure, research revealed last week - as Herbert Smith bucked the trend by voting to convert.

The City firm cited the 'increasingly litigious business environment' as the reason for its decision to adopt LLP status in April.


However, a survey of 475 law firms of all sizes commissioned by insurer Zurich Professional revealed that just 4% have so far converted to LLPs, with only another 7% committed to doing so.


Herbert Smith: LLP in April

More than one-third of firms said they had ruled out converting to an LLP altogether, with solicitors of more than 15 years' post-qualification experience particularly unwilling to consider the idea. Some 36% of solicitors interviewed were not even aware that the LLP structure existed.

Of those familiar with the structure, more than half cited limitation of personal liability as the chief advantage, while only 7% said they thought the structure would save them money.


One-fifth of firms cited financial transparency as the greatest drawback to LLP status, with solicitors reluctant to disclose information on the pay packets of senior lawyers. Solicitors also expressed concern that clients and suppliers could be put off if the firm's financial performance was seen to worsen.


Tony Williams, founder of management consultancy Jomati and former managing partner of Clifford Chance, said: 'A lot of firms at the higher end of the market are converting to LLPs, with a decent proportion of the top 20 already having done it. In the magic circle, only Slaughter and May has ruled it out, and below them Wragge & Co, Eversheds and DLA [as it was] have all converted. But as Allen & Overy has discovered, it becomes more complex the more international you are, with tax and regulatory issues.


'However, a number of firms may decide that if most of their work is well within their insurance cover, it is not worth converting to an LLP and having their accounts published.'


Andrew Nickels, risk manager at Zurich Professional, said: 'It appears that older, more established firms that probably have tried-and-tested risk management processes in place are perhaps less concerned about large claims than their younger counterparts... While the chief advantage of LLP status is the benefit of limited liability, firms also need to be aware that it will not protect a member from his individual liability in tort.'