Salaried partners are likely to cause problems when converting to LLPs, says Simon Young
After nearly a decade of experience of the process of converting traditional partnerships to limited liability partnerships (LLPs), it has become apparent that there is one significant group of people who are likely to cause more problems than any other.
This is not because they wish to be awkward, or because the firm’s management are approaching things wrongly, but because the very nature of their position causes difficulties. They are salaried partners.
The concept of holding out
The root of the problem, which all concerned are often reluctant to admit, is that the concept of salaried partners is a lie! A lie sanctioned by regulations, recognised implicitly by statute, and endorsed by widespread usage over centuries, but nonetheless a lie.
Those people involved are held out to the world as something they are not, and the very point of this being done is to create a belief in third parties which the firm and the individuals know is not true, namely that they are actually partners. It is difficult to
