So far, clear as mud?

Part of the confusion comes from the difference between traditional partnerships, limited companies and LLPs.  In a traditional partnership, people are either Partners or not.  Apart, of course, from Salaried Partners - who are called Partners and have the liability of Partners, but who don't share in the profits!

In limited companies there are directors who run the business and shareholders who own the business.  They are distinct, although in many private businesses they are one and the same people.

The LLP does not have this distinction between ownership and management.  In terms of an LLP, someone is either a Member or is not a Member.  Members can agree, if they wish, to appoint a management committee or board to run the LLP on a day to day basis, but that is not a requirement, although makes sense when there are more than half a dozen or so Members.

So if someone presents you with a card that says "Partner", you know that they may or may not be a Partner in a traditional partnership or that they may or may not be a Member of an LLP.

Within LLPs, and especially within LLP Agreements, Members are often descried as:

• Members
• Designated Members
• Equity Members
• Salaried Members
• Fixed Share Members
• Full Members
• Associate Members
• Founder Members

As explained above, you are either a Member of an LLP or not.  If you are a Member, you will be registered at Companies House as a Member, and Companies House makes no distinction between types of Member, except for requiring at least two Designated Members.  All the other designations, and I am sure there are others, are defined by the Members themselves in their LLP Agreement.  There must be a least two Members - it is a type of partnership after all.  In a future article I may cover how the schizophrenic can form an LLP with themselves.

Companies House requires at least two of the Members to be Designated Members.  All Members can be Designated Members and where there are 3 or 4 Members this makes sense.  Where there are 100 Members it does not and therefore larger LLPs appoint a small number of Designated Members.  The role of the Designated Member is to ensure that the correct forms are filed with Companies House, including Annual Accounts and Annual Returns.  The Designated Members also have to sign forms appointing and removing Members.  Any Member can be a Designated Member and this is distinct from the other classes of Member listed.

Part three tomorrow

Here at Ralli Partnership Law, we are creating a lot of LLP agreements and we are often asked about all the different types of Members that can exist within an LLP. I thought I would try to set out, as clearly as possible, the different classes of Member that can exist within an LLP.

I’ll start by defining Member. A Limited Liability Partnership, or LLP, is (unlike a traditional partnership) a separate legal entity, which is registered at Companies House. A limited company has directors and shareholders, but an LLP has Members. Traditional partnerships have Partners.

This is where the confusion can begin! Members of an LLP are often called Partners. This is because the public are used to senior professionals being Partners in partnerships and many, within and outside the professions, regard the LLP as just a different type of partnership, which – in some ways – it is. We also suspect that many Senior Partners do not want to be called Senior Members!

So, Members can be called Partners. But not all those called “Partner” are Members! Partner, within an LLP, is just a title and there can be “Non-Member Partners”. These are senior professionals, who are not Members of the LLP but are given the status of Partner.

More to follow in the next update…

After stopping off in Nottingham, Sheffield, Liverpool, Leeds and London, a joint LLP seminar will be returning to advise Manchester business owners of the opportunities and pitfalls of LLPs.

The number of Limited Liability Partnerships (LLPs) in the UK has reached an all-time high and business owners are invited to attend the interactive seminar on Wednesday 11th May at the Digital World Centre, Salford Quays.

The financial strains of the recession have put a lot of pressure on business partnerships and LLPs are a way of protecting all involved parties’ assets. This has resulted in the number of LLPs in the UK increasing by almost 50% in the past four years, according to figures released from Companies House.

Mark Briegal, head of partnership law at national law firm Ralli and one of the speakers at the event, said:

“The LLP seminar will provide business owners in Manchester with practical advice on all the things they need to consider before forming an LLP.

“The seminar will help businesses decide if an LLP is the right decision for their firm, explain the process of forming this type of partnership, as well as looking into the pitfalls of LLPs.

Many accountants and solicitors attended our roadshows as they want to understand how the new Alternative Business Structures (ABS) will affect law firms and create opportunities for non-lawyers to get involved.”

Partnership law experts, Mark Briegal and Adrian Anderson from Ralli, along with leading accountant and LLP tax specialist Howard Hackney, will be hosting the seminar.

To reserve your place please visit www.llproadshowmanchester.eventbrite.com or for further information please contact Gillian Nuttall: gillian.nuttall@ralli.co.uk

Article written by Mark Briegal, head of Ralli Partnership Law.

Business owners could land themselves in hot water by putting employees on garden leave.

Garden leave is routinely used by companies as a way of keeping staff who are leaving a job - through choice or otherwise - away from work during their notice period.

This paid absence is used to ensure staff are not aware of commercially sensitive information which could be shared with a potential new employer.

But practices could face action for sending employees on garden leave if their employment contracts do not include guidance on this.

Mark Briegal, head of Ralli Partnership Law, said this breach of contract could have disastrous results.

He added: "It is commonplace in businesses for departing staff to be put on garden leave but often employers act in haste, without checking out the employment law issues they could be facing.

"Garden leave provisions must be written into partnership or LLP agreements to ensure businesses are protected from future actions.

"Putting a partner or member on garden leave without precautions in place is unlawful exclusion and can result in anything from a damages claim to a winding-up order."

Briegal said extreme conclusions can be avoided if employers check their contracts from the outset.

He added: "Garden leave is only an option if the employment contract makes reference to it. We have already worked on cases where a departing member has contested garden leave because it was not referred to in his contract.

"Employers need to ensure they have relevant and accurately drafted clauses to cover all eventualities.

"In times of economic uncertainty, making sure your partnership agreements are watertight can save a lot of legal and financial heartache in the long term."

Article by Alex Spence, Legal Correspondent, Times Online.

City law firms are preparing to raise millions of pounds from external investors as the British legal market braces for its own version of Big Bang.

At least 20 firms are planning to raise outside funding under rules that will allow non-lawyers to own a stake in legal practices for the first time, accountants advising the firms told The Times.

Three of these firms are planning to raise a war chest for acquisitions of more than £20 million, either through an initial public offering or from private equity investors.

The new rules, which will come into force next year, are expected to transform the legal sector, as deregulation did financial services in the 1980s.

Jeremy Black, a partner at Deloitte, the Big Four accountant, said: “It’s going to change the way firms look at the provision of legal services. Nobody will be untouched by these changes.”

Under the Legal Services Act, firms will be able to adopt a range of business models in place of their traditional partnership structures. In addition to taking outside capital, they will be allowed to go into business with other professionals and to admit non-lawyers as partners.

Firms at all levels of the market are examining their options, but external funding is likely to be embraced most enthusiastically by small and mid-tier firms. The prospect of flotation is particularly attractive to those that carry out a lot of straightforward work, such as personal injury cases, that can be standardised through investment in technology and processes.

Some City firms are looking closely at an IPO. George Bull, a partner at Baker Tilly, the accountant, said that some were aiming to raise funds to acquire other legal practices or to poach staff from competitors.

Others are planning to raise money from private equity or from family funds rather than through a listing. Research by Smith & Williamson, the accounting firm, suggests that as many as 60 UK law firms will seek some form of external funding.

Giles Murphy, head of professional practices at Smith & Williamson, said that many firms were thinly capitalised, as their profits typically are withdrawn each year by partners. Some are attracted to the idea of third-party funding as an alternative to bank financing.

Many partners remain sceptical. They argue that external funding will dilute their partnership culture and force them to give up too much control of their businesses.

Mark Briegal, Partner and Head of Ralli Partnership Law comments:

"The first stage of this has allowed law firms to have partners owning up to 25% of the business who are not lawyers.  This has not been widely taken up, although a few senior legal executives and practice managers have now been made partners, which makes sense.

The next stage, to which this article refers, will be more interesting.  The big firms may seek investment to fund growth and takeovers.  Mid sized firms may find it cheaper than loan capital and possibly an interesting influx of non-legal business skills.  The small firms may find it useful for survival.  The same issues apply with any decision to raise capital - loan or equity?  The partners in successful firms may prefer to borrow to fund expansion if they can then keep a greater share of the equity for themselves.  Floatation is a different matter is the existing partners believe they can make a killing on their shares. 

We’ll watch this space with interest."

Michael Ingram, Telegraph.,co.uk, 8th February 2010

Another day, another of the seemingly incessant attacks on "lazy, overpaid, inaccessible GPs". There they sit, runs the mantra, enjoying their 9-5 days and handsome recompense while lives are put at risk every night and weekend through second-rate or dangerous out-of-hours service. It wasn't like this in the old days…

Of course it wasn't. What could match the arrival of the avuncular doctor who, seemingly at your beck and call, would visit at all hours of the day and night? But in those days patients also died rapidly and prematurely of diabetes, heart disease or cancers. There were fewer elderly patients and very little monitoring or treating of long-standing conditions. Hospitals kept patients in for weeks until they were fully returned to health; there was no concept of day surgery or early discharge. Our consultations were short and the welter of paperwork, emails, telephone calls and meetings was absent.

These days though, the GP's lot has changed. As we take the strain for the hospitals, the complexity and weight of our daily workload has changed irrevocably – yet we remain avuncular.

Before the much-maligned re-negotiation of the GP contract in 2004, I was doing all my own duties day and night and was just about coping. But only just. There was no day off after a night on duty. There was no shift system in place. I was exhausted. Yes, I had the satisfaction of helping those in distress but they were outnumbered by patients who would wake me up in the early hours to tell me that they could not sleep.

My colleagues were withering and morale in general practice was at rock bottom. New graduates would contemplate 24‑hour duty and walk away. It was a desperate situation.

Then we were relieved of out-of-hours care and it changed general practice for the better. Though many GPs still do work some shifts, it meant we were better able to cope with the core 10½-hour daily practice responsibility.

But even though we work on increasingly complex cases – and contrary to popular belief it is not just sore throats and backache – GPs are still criticised for shirking their social responsibility. As we strive to cover the gaps appearing in the NHS, it really is demoralising to feel that we are the scapegoat for anything that the NHS fails to deliver. The conveniently forgotten fact here is that responsibility for out-of-hours care no longer lies with GPs; it was handed in 2004 to the Primary Care Trusts (PCTs). Yet when the PCTs fail to cut the mustard, we still get the blame.

The situation couldn't be clearer: if PCTs choose to cut cash and cut corners, then they will get a badly run, badly delivered out-of-hours service. If they fail to employ high quality doctors, then they will get bad care. If they fail to vet the companies that they contract to, then they can hardly expect to escape the blame for any unhappy consequences. Out-of-hours services need good management, good resources and high calibre staff. That is why the profession is getting involved. Here in Hertfordshire, and in many other areas, it is local GPs themselves who work out of hours, as the PCT has contracted with the local GP co-operative to provide cover. I can rest assured that my colleagues, working a co-ordinated shift system, are delivering a high quality of care. In other areas, often those where spending is lower, other providers have been used and there have been some terrible accidents.

If I, my partners and colleagues can deliver a high standard of in-hours general practice care throughout the country, why is it that some PCTs cannot deliver the same quality out of hours? Ask them. And stop pointing the finger at those who are keeping the NHS lights on.

Dr Michael Ingram is a full-time GP in Hertfordshire

Mark Briegal, Partner at www.rallipartnershiplaw.co.uk comments on the article:

“This is an interesting article and one which will ring true for many of our GP clients.  Some of the comments it has elicited from readers are slightly scary and may make GPs wonder why they bother.  GPs can feel squeezed between the demands of their patents, the PCT contract, the acute hospitals and an aggressive media.  GPs are of course also running a business, with all that entails, on top of the demanding medical role.”

Alex Spence of the Times Online reports that one of America's biggest law firms is defying the turmoil in the commercial legal market with plans to build a London office of more than 200 lawyers within three years.

Greenberg Traurig, the tenth biggest law firm in the United States, with 1,800 lawyers and revenue of $1.2 billion (£754 million), has hired Paul Maher, a highly regarded dealmaker who was formerly vice-chairman of Mayer Brown, another big American firm, to build a City office.

Mr Maher, 50, born into a working-class family in North London, rose to become one of London's top mergers and acquisitions lawyers and a senior executive at Mayer Brown, where he earnt more than £1 million a year. He left the firm in April after he was passed over for the role of chairman.

He had planned to set up his own firm in London, holding talks with private equity investors about funding his start-up costs, but he decided to join Greenberg Traurig instead after he was persuaded that its senior partners' global ambitions fitted with his own.

Since July, Mr Maher has hired 30 lawyers, some from Mayer Brown and some from White & Case. He expects to have 50 by the end of the year and said that the London unit would need to recruit 200 lawyers within three years to reach "critical mass". That would make it one of the five biggest offices for an American law firm in London.

Lawyers at rival firms said that the move was a huge gamble at a time when others were cutting back in London and profits were plummeting.

Mr Maher told The Times that he had been given a broad remit to expand and planned to turn the traditional City law firm model "on its head".

In a rare move, Greenberg's American partners allowed Mr Maher to put his name above the door, calling its London office Greenberg Traurig Maher (GTM).

Its lawyers will be paid depending on performance rather than seniority, with a smaller ratio of junior feeearners to partners — some City firms employ as many as seven associates for every senior lawyer — and increased use of flexible working.

"We're taking every aspect of a law firm and turning it on its head," he said. "Do we even need offices in the City? Could we have everyone working from home, or should we put them all in Luton? I don't just want photocopiers with views of the Thames."

Mr Maher also hinted that GTM would become one of the first City law firms to float when new rules allowing external investment in law firms come into force in 2012. "A lot of stakeholders will need to be convinced," he said, but he added that it was inevitable that law firms would seek to raise outside capital when regulations allowed: "The rules of nature don't do a right turn when they get to legal services."

He said that the traditional law firm business model had been rendered obsolete by the downturn and the "golden age" of City firms was over.

Mark Briegal, Partner at Ralli comments: "It's interesting to see a US firm planning to take advantage of the new rules.  In any business good players can succeed by adopting a new model or by being better than the competition, even in a recession.

There will be good lawyers looking for jobs or looking to further their careers and joining an aggressive new firm with a different slant on the traditional model will be attractive. Flexible working and home working will appeal to staff and lower cost offices will appeal to investors.  Clients need to be convinced that they will get as good or better service for the same or less cost.

Here at Ralli, we have taken work from London firms as clients realise that we don't need to be geographically close (although we can and do visit them, as Manchester is only 2 hours from London) and they can get a better service for a lower cost.  Time will see how GTM gets on."

Gareth Iacobucci reports that GPs have been advised to check the small print on their contractual insurance policies, after PMS practices involved in a PCT dispute learned they would not be covered if their case was referred to the NHS Litigation Authority.

Practices in Havering, Essex, were confident they would be covered if their dispute over PMS claw-backs went beyond local appeal, as their policy safeguarded against contractual disputes concerning 'the purchase, hire, sale or provision of goods or services.'

However, they were informed by insurance firm Wesleyan, which took over the policies of hundreds of practices in 2002 when it acquired the BMA's own insurance broker BMA services, that their case fell outside these parameters.

The firm has now been accused of selling inappropriate cover to GPs, and failing to clearly state that practices would not be covered if their contractual disputes progressed as far as the NHSLA.

One practice manager in Havering, who wished not to be named, said any contractual policy that didn't cover GPs beyond local disputes was not suitable.

'The contract doesn't say that it won't help you if you have to go to the NHSLA. If they're selling legal insurance for a doctors' surgery, and they know that that case has to be heard at the NHSLA, they should insure you for legal cover.

They added: 'It seems very poor. They have sold us cover which is inappropriate. I bet there are lots of surgeries who think they are covered for legal expenses, and are under a misapprehension. They need to check the terms of their policy.'

Andrew D'Arcy, Wesleyan director of general insurance said the terms of the policy were very clear, but that disputes with PCTs were different to other forms of contractual dispute.

'The policy is designed to protect the rights of the practice facing specific legal problems in areas such as employment disputes, property matters, contract disputes, criminal prosecutions, recovering debts, partnership disputes and tax investigations,' he said.

'The agreement that a practice has entered into with its PCT is very different to contracts it might have with other parties.

'It is governed by specific legislation which clearly and specifically denies normal contractual rights to the practice and requires any dispute to be resolved through an internal NHS Dispute Resolution Service.'

Mark Briegal, Partner at Manchester law firm Ralli, and head of its specialist partnership law team, www.rallipartnershiplaw.co.uk, said "it is important for all businesses to check the terms of their insurances carefully.  It is possible to sue insurance companies if they fail to provide cover when they should and we at Ralli have a track record of doing this.

However, if it is clear that a specific area of cover is excluded it will be difficult.  A group of practices may wish to club together to fund a special insurance counsel's opinion on the terms of this insurance policy.  If the policy was bought through a broker the broker may be liable for mis-selling

Manchester Solicitors Ralli has set up a new service advising on partnership law which it says is in response to a 50 per cent rise in the number of business partnerships registered within the last four years.

The division will be headed by Mark Briegal and will advise on all aspects of partnership law, including traditional partnerships, joint ventures and Limited Liability Partnerships (LLPs) – some 39,000 of the latter have been set up since the structure was introduced in April 2001.

""Business people can unwittingly find themselves in unregulated partnerships without an agreement to set out their contract. This can leave them vulnerable and open to dispute if they don't lay out the ground rules and an exit strategy from the outset," said Briegal. "We are advising more and more clients on partnership disputes and dissolutions, particularly in the current climate".

If you are in a partnership or planning to form a partnership or joint venture or have a dispute, please contact Mark Briegal or call 0161 832 6131.

Manchester based solicitors Ralli has launched a new website to highlight its specialist legal services in the area of partnership law.

Ralli Partnership Law, which can be found at www.rallipartnershiplaw.co.uk, aims to provide an invaluable resource for those looking for more partnership law information, whilst setting out what bespoke services Ralli Partnership Law can offer to clients.

Ralli Partnership Law is made up of a team of expert solicitors, based in Manchester and is part of Manchester law firm Ralli, which comprises experts in a range of legal fields.

The website is focused towards those people who are in partnerships or who are planning to form a partnership or joint venture or those who may be in partnership dispute. The website explains how Ralli Partnership Law's specialist team of expert partnership lawyers can help, whatever the issue.

Ralli Partnership Law covers all aspects of partnership law from traditional partnerships, Limited Liability Partnerships (LLPs) and Limited Partnerships, whilst the Corporate Department at Ralli can help with Limited Companies.

Ralli Partnership Law is the latest Ralli website to be built by Text Internet Marketing and represents an evolution online of the Ralli branding, incorporating the implementation of a hub and spoke SEO strategy.

Mark Briegal from Ralli Partnership Law commented, "We've got such a good relationship with Text, we know how good their content management system is and we know they can deliver. Text was the obvious choice for Ralli Partnership Law."