Firms to take on LLP status
The two remaining Big Four firms that have not converted to limited liability partnerships are poised to take on the additional business protection in the near future.
Link: The Debate: LLPs
Deloitte & Touche, which until recently had been less enthusiastic than the other firms about LLPs, has confirmed it is investigating a change in status, having now incorporated Andersen into its own business.
A spokesperson for the firm said: ‘We have started the process to look at adopting LLP status.’
At the same time, PricewaterhouseCoopers is understood to be considering a similar strategy now that it has completed the sale of its consultancy arm to IBM.
As part of the process, both firms would be required to reveal financial information about their businesses.
Ernst & Young became a limited liability partnership as soon as the law had passed on to the statute books in 2001, while KPMG, which had already sought to protect itself by incorporating its audit business in 1996, followed suit earlier this year.
LLP status would give the firms a degree of protection from catastrophic lawsuits, which could wipe out the firm and bankrupt all partners if they remained as a partnership.
Under the new legislation, only the partners directly involved in a negligence claim would face the possibility of personal bankruptcy.
The legislation has removed the concept of ‘joint and several’ liability which held responsible all partners of a firm even if they hadn’t been directly involved with any negligent work.
All the big firms had adopted similar protection in the US.