Setting up in business as a partnership or a limited liability partnership (LLP) is an exciting and potentially rewarding venture. It is also risky. Circumstances can change, promises can be broken and disputes can arise.
A legally binding agreement will minimise this risk.
With our help, you can create a partnership agreement or LLP members' agreement to set out precisely how any possible issues are to be resolved.
Areas of expertise:
- How can existing partners leave the business?
- How will new partners be introduced?
- How will profits will be distributed?
- What are the individual roles and responsibilities?
Dealing with these issues in a legal document, along with many more specific to your sector and company, will give your business a firm legal base on which to build.
Make your plans official
Your partnership or LLP members' agreement will be at the heart of your business. Without it, you will only be subject to the default rulings as set out by the Partnership Act 1890 or LLP Act 2000.
Both of these Acts provide only a cursory operating framework, and will be inadequate for many situations that may arise. A legally binding partnership or LLP agreement will allow your business to function according to terms agreed at the outset by all parties.
Draft your agreement with expert legal help
With our extensive legal expertise in the area of partnership agreements and LLP agreements, we can draft a bespoke document that will bolster the future progress of your business and offer certainty to all the individuals involved.
Furthermore, if you are considering changing the structure of your business, say, from a partnership to an LLP, we can help to ensure the transformation takes place without a hitch.
Converting businesses to LLPs
Limited liability partnerships (LLPs) provide a business framework that complements a flexible business partnership while limiting each member's liability. Converting a traditional partnership to an LLP involves spending some time and money, but the rewards are worth it for many businesses.
If you think LLP status could benefit you and your business, it is essential to seek legal guidance to ensure the best possible outcome.
Change for the better
Converting a traditional partnership to an LLP involves creating a new LLP and then moving the assets over from the previous arrangement. This process can be completed at any time within 12 months after the LLP's formation.
The creation of this new partnership structure results in a number of legal issues, for example:
- An LLP members' agreement must be drafted to specify details of how your LLP will be run. This will supersede many of the default provisions laid out by the Limited Liability Regulations 2001.
- The tax implications of the business transfer need to be considered. With insightful legal guidance, you can ensure your tax situation is as advantageous as possible.
- When transferring assets from the old to the new arrangement, great care must be taken to avoid any breach of contract. Solicitors transferring their conditional fee agreements, for example, must ensure they are still valid after being transferred.
Your partners for LLP conversion
Our highly experienced partnership law team know all the benefits and pitfalls of the LLP conversion process. With our assistance, you can make the transfer smooth and cost-effective, allowing you to reap the full rewards of being an LLP.
LLP members' agreements
It is not essential for members of an LLP to have a members' agreement, but without one, you will be obliged to abide by the default provisions as set out in the Limited Liability Partnerships Regulations 2001.
This default constitution contains directives such as:
- All members have an equal right to manage the business
- Members cannot be removed from the LLP
- New members can only be introduced with the unanimous consent of existing members
- Profits are shared equally between all members
A bespoke LLP members' agreement allows you to specify precisely what rules apply in all these circumstances and more. To ensure the contract is legally binding and covers all the issues members wish to address, specialist legal guidance is essential.
Write your own rulebook
Your LLP members' agreement is created by all the members in order to resolve any issues that may arise in the future. Think of it as an insurance policy. In the event of any difficulties or disputes between members, the solution can be swiftly reached by consulting the members' agreement.
Hopefully, it will never be needed. But if it is, it could save you a great deal of time, money and stress.
Build a legal foundation for your LLP
We have a huge amount of experience drafting LLP members' agreements. We'll work with you and all other members to ensure that there are no loopholes or unwelcome surprises in the future.
As well as creating new members' agreements, you can also make use of our expertise to check over an existing members' agreement. With our help, your LLP will be underpinned by an unshakable understanding that is mutually approved and enforceable.
Partnership agreements
Most business partnerships are built around a partnership agreement (sometimes called a deed of partnership). Although it's not strictly necessary to have one, without a partnership agreement, the partnership will automatically be subject to the default provisions as laid out in the Partnership Act 1890.
This default agreement may not fully address all the circumstances your business may encounter, and it's unlikely to satisfy all involved parties. Your own bespoke partnership agreement will allow you to establish a watertight constitution that is mutually acceptable and legally binding.
Advice from a legal specialist in partnership agreements is vital for ensuring the effectiveness of the document.
Protect your partnership
A partnership agreement gives your business the confidence to plan for the future. If you don't have one, you could be vulnerable to instability brought about by, for instance, one partner putting the partnership at risk of dissolution.
A partnership agreement specifies what action to take under a wide range of circumstances. It helps to regulate the conduct of all partners, sets out the rules governing distribution of profits, outlines the process for introducing new partners, plans what happens in the event of a partner leaving and much more.
Like an insurance policy, your partnership agreement is always there if you need it. Hopefully you won't need it, but it could save you a lot of time, money and stress if you do.
Agree a framework for your business
Our partnership law team has a huge amount of experience drafting partnership agreements for businesses across a wide range of sectors, including accountants, solicitors, hauliers, property developers, farmers, GPs and dentists.
In each case, we work closely with the partners to create a bespoke agreement that reflects your business needs and gives you the certainty you need for your partnership to succeed.
Key Contact
Stuart Scott-Goldstone
Partner | Head of Corporate & Commercial
Stuart is the Head of the firm's Corporate & Commercial team and has experience in all aspects of corporate and commercial law. His specialist areas are corporate finance transactions and corporate reorganisations and restructuring.
