The Limited Liability Partnership is an interesting beast. Some may feel that it is neither one thing nor the other and that it contains many of the worst features of both partnership and incorporation.

It is in fact a corporate body and LLPs of course have to be registered with the Registrar of Companies under the 2000 Act. It does not have shares or shareholders or directors but members and there are no memorandum or articles, simply usually a members' agreement, in practice that same as a partnership agreement. Like a company, it is a legal entity in its own right. It can seek to limit its liability to clients but this is a major subject that I cannot go into here and in any case needs good legal interpretation and advice. Rules in The guide to the Professional Conduct of Solicitors lay down details.

Many elements remain as for conventional partnership but partners do achieve a limiting of their liability in case of a failure or a catastrophe outside the firm's indemnity cover. However, in smaller firms and even in medium-sized ones, it is highly likely that bankers and any other significant lender will demand personal guarantees from partners so this advantage is limited to some extent.

The principle disadvantages are that accounts will have to be published (unless turnover is below £1 million and the balance sheet value is under £1.4 million); many partners shy away from this structure on this ground alone.

The writer must stress that he is not qualified in this area. It goes without saying that any firm considering such a change must obtain the right legal and accountancy advice as there are many factors to take into account. Speaking personally, I have to admit that I fail to see much advantage for smaller firms and am of the opinion that we will soon see far more firms chosing incorporation, skipping over this half-way step altogether. If any reader with knowledge in this area would like to submit an article I will be delighted to add it here.

There is more on this on the Law Society's website.