Freshfields Bruckhaus Deringer, Macfarlanes and Hammonds have become the latest law firms to convert to limited liability partnership (LLP) status.
All three firms converted with effect from 1 May, leaving just a handful of top City players to convert - with Slaughter and May and Simmons & Simmons now the only top 10 City firms not operating as LLPs.
Freshfields’ LLP includes most of the firm’s offices. Notable exceptions include its offices in Hong Kong and Japan, which are unable to convert for regulatory reasons. The firm’s Spanish arm is expected to join the LLP later this year, while its US practice will continue to operate through a separate US LLP already in place.
Freshfields had been considering converting to an LLP for some time but is thought to have been held up by uncertainty about how some foreign offices of UK LLPs would be treated by local tax authorities.
The conversion, which was backed via a partner vote last month, protects both full equity partners and fixed-share partners, though voting rights and internal management will remain the same under the new structure.
Hammonds’ LLP will include the firm’s offices in the UK as well as its offices in Belgium, Spain and Germany. The conversion will open up the firm’s accounts to public scrutiny after a turbulent period involving a number of partner exits and an ongoing dispute over profits with former partners.
Hammonds managing partner Peter Crossley (pictured) commented: “While our decision to convert to an LLP will have little or no effect on our clients, it will enable us to create the structure and transparency of a corporate entity which will better serve our clients and business in the future.”
Macfarlanes’ conversion also involved creating a formal partnership agreement - something the firm has never previously had. Commenting on the process, Macfarlanes senior partner Charles Martin said: “We think the switch is an appropriate and business-like way of operating.”
Other top 50 UK law firms to have recently converted to LLP status include Pinsent Masons, which converted in March, and City duo Nabarro and Ashurst, which made the switch in January and at the end of last year respectively.
Last year, the French tax authorities confirmed that local partners in UK LLPs would not be subject to double taxation after lobbying from firms including Linklaters, Freshfields, Ashurst and CMS Bureau Francis Lefebvre.
