The Limited Liability Partnerships Bill is the new flexible friend of professional practices.

This has been a decision on the part of the Department of Trade and Industry (DTI) to 'help to maintain Great Britain's position as a leading centre of business'.

The DTI has also stated clearly that it has sought to provide no more or less protection for third parties when dealing with an LLP, than when dealing with a normal limited company.

The Bill is intended to encourage major accountancy practices not to establish limited liability partners under the new legislation in Jersey.The key to this legislation is the way in which it tries to balance the desire to protect the personal assets of a LLP member in relation to claims for which they are not personally responsible, against providing adequate safeguards for third parties, particu larly clients, dealing with the LLP.

The structure of the draft LLP legislation is the embodiment of flexibility.

The 17-clause Bill will be padded out by the Limited Liability Partnerships Regulations 1999.

Delivering the substance of the LLP rules through secondary legislation means that many of the rules can be changed and updated to take account of how the LLP structure works in practice without new primary legislation.

The plan is to approve the initial LLP regulations at the same time as the Limited Liabilities Partnerships Bill is enacted.Various interest groups, including the LLP working party of the multi-disciplinary Association of Partnership Practitioners, are scrutinising the details of the draft Bill and regulations.

The general view is that, in principle, the structure is legally and commercially acceptable.

The key elements of the draft legislation appear to achieve a fair balance between the interests of the members of the LLP and its creditors.In return for the requirement that the LLP file financial and other information on the public record, individual liability is limited to the assets of the LLP itself.

Unlimited personal liability should only arise following a breach by an individual partner of duties he owes on his own account to clients.

The DTI has dropped the proposals that the LLP members should provide some form of guarantee or bond.

This was abandoned on the basis that it would have provided creditors with more protection than offered by limited companies, which can set up with a share capital of £1.Clients dealing with the LLP are protected by a wide range of other safeguards.

In addition to being required to file audited accounts, LLP members can be subject to penalties for wrongful and fraudulent trading, can be investigated to the same extent as company directors and can be disqualified as members on a similar basis as company directors.The original proposals for clawback of members' earnings have been substantially modified.

The liquidator of an LLP would be able to apply to the court to recover any withdrawals of property made by a member within two years prior to winding up at a time when that member knew that the firm was insolvent or would be made insolvent by the withdrawal.

That application will fail if there was at the relevant time a reasonable prospect that the firm would avoid going into insolvent liquidation.

This is a significant concession on the part of the DTI - earlier proposals would have exposed LLP members to greater risk.Initial criticism of the draft legislation surrounds the extent to which the DTI has based the LLP draft on the Companies Act 1985.

Many suggest this fails to take account of the differences between companies and partnerships.

The LLP members will be the owners of the business as well as the managers and therefore the shareholder protection provided under company legislation is not required.There are other criticisms about the LLP structure only being open to regulated professions and the extent to which it might be useful as a joint venture investment vehicle.

A 'softly, softly' approach when responding to the LLP consultation paper will encourage the DTI and the government to progress the legislation and to take comments on board.