Mayer Brown becomes UK's largest legal LLP and asks: why not limit liability?

NEUTRAL COUNTRY: firm plans to have partnerships as members of separate LLP

City firm Mayer Brown Rowe & Maw has become the largest legal practice to convert into a UK limited liability partnership (LLP).

The move - which has taken ten months to complete - is likely to be a precursor to the US arm of the practice taking on LLP status when its home state of Illinois allows LLPs and, in the long term, possibly an all-embracing LLP being set up in a neutral country.

The firm has been active in advising on LLPs: it acted for big four accountants Ernst & Young in becoming the first UK LLP, and was also heavily involved in introducing an LLP law in Jersey which was seen as putting pressure on the UK government to introduce its own legislation.

When Rowe & Maw merged with US firm Mayer Brown in February 2002 to create one of the largest ten firms in the world, the UK arm set itself a deadline of achieving LLP status in the UK by November 2002.

Senior partner Stuart James said plans to become an LLP were accelerated by the merger because it made the partnership consider where it ultimately wanted to be and also because of the potential exposure to US class actions.

'Who in their right mind wouldn't want to take advantage of a structure to limit that possibility, even if that possibility is small?' he said.

He added that the near-corporate structure of LLPs was 'a better way' of organising the firm.

A team of finance partner Stephen Walsh, corporate partners Andrew Copley and Stephen Bottomley, and partnership law specialist Richard Linsell were given the job of producing all the documentation and leading the firm through a complex process requiring detailed analysis of UK and US tax and liability issues.

Mr James was bullish about the financial disclosure the firm will have to make as an LLP, such as its accounts and the highest amount paid out to partners.

'The important bits are known anyway,' he said, referring to the countless surveys of the top firms.

He said the only figure not disclosed to the market which will be as a result of being an LLP is Mayer Brown Rowe & Maw's capital base.

For liability and tax reasons, the US and UK partnerships of Mayer Brown are separate.

Its Brussels partners are within the UK LLP, but the French and German partners are not as they are in the US partnership.

Mr James said the ultimate aim 'is to wrap the LLP package around the whole lot' by having the partnerships as members of a separate LLP in a neutral country.

According to Law Society figures, 48 law firms have already converted to LLPs.

Neil Rose