I write to comment on the letter from David Lang on the subject of partnerships as executors, the transfer of the former practice to a limited liability partnership (LLP), and the question of compulsory 'qualifying' indemnity insurance as required by the Solicitors' Indemnity Insurance Rules (see [2004] Gazette, 22 April, 15).

This issue was discussed at a recent meeting of the Law Society's indemnity insurance committee.

We did not think that the solution of a 'dormant partnership' as suggested in Mr Lang's letter would work.

Partnership (according to the Partnership Act) consists of the relationship subsisting between persons carrying on business together with a view of profit.

If a business is not carried on, there is no partnership.

Similarly, if there is no view of profit, there is no partnership, even if a business is carried on.

So, it is likely that an organisation that existed simply to appoint another organisation to act for it, without view of profit for itself, would not be a partnership.

If that is right, then the partnership would have ceased when it discontinued its practice in favour of the LLP.

It would follow that the appointment of the partnership as executor would fail, because there would be no partnership to appoint.

The implications for indemnity insurance are two-fold.

First, if the partnership has ceased, then no doubt the LLP would be the 'successor practice' within the meaning of the minimum terms and conditions annexed to the indemnity insurance rules.

The former partnership would not be carrying on a practice, and would not need to effect insurance.

Future claims would be covered by the qualifying indemnity insurance effected by the LLP as successor practice.

Secondly, if the partnership has not ceased, but has so arranged its affairs that with a view of profit it carries on the business of appointing the LLP to act for the executors, then it and its partners are carrying on a practice and are required by the rules to effect indemnity insurance.

The practice carried on by the partnership would be separate from that carried on by the LLP, as Mr Lang rightly identifies.

The LLP would not be a successor practice.

The rules require that each separate firm carrying on a practice shall have its own policy of qualifying insurance.

Thus, it would not be possible to cover the partnership under the 'umbrella' of the LLP.

The reason for this is that the principals and employees of the partnership need not be (and in all probability would not be) identical with those of the LLP, so a policy covering one entity would not indemnify all the persons requiring protection in the other.

It would, of course, be sensible for solicitors organising their business in this way to effect the two required policies with the same insurers.

Probably the combined premium payable by the somnolent (but not dormant) partnership and the LLP would not be much larger than the premium paid by the original partnership.

Peter Farthing, chairman, Law Society indemnity insurance committee