PDF Practice Notes on Partnership Law (Practice Notes)

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Partners control the Shareholders have little business but the control over the majority investor is not business but a entitled, without further majority shareholder agreement, to any has considerably more greater degree of control power than the others. No infor mation is Information concerning publicly available, with the business is publicly the exception of the available. Each partner has joint and several liability and this liability is unlimited. Third parties may therefore issue proceedings against just one partner, who is obliged to meet all the liabilities of the partnership see This is similar to a partnership, but whilst there must be a least one general partner with unlimited liability, the others may be limited partners and limit their liability to the extent of their capital contribution see 1.

In addition, in the long term, continuity can more easily be maintained with a company. The comparative advantages and disadvantages of companies and partnerships are summarised in 2. When advising clients, always bear in mind the advantages and disadvantages of a partnership over other forms of business medium, and clearly explain the options to the clients. If the client requires additional advice which the adviser does not feel qualified to give, for example, on taxation considerations, they should explain that to the client and, if they are able, recommend the appropriate person to give that advice.

However, it is advisable both to have an agreement and to put it in writing for two reasons. First, it promotes certainty by allowing the partners to set out their respective rights and liabilities, anticipate problems and agree a mechanism for resolving disputes. Secondly, an agreement whether in writing or not is the only way in which the provisions of the Act can be disapplied.

For example, in Hitchman v Crouch Butler Savage Associates SJ , a requirement in the agreement that all expulsion notices be signed by a particular partner was held by the court not to apply when that partner was himself expelled. Terms may also be implied by the court to give the partnership agreement business efficacy Miles v Clarke [] 1 All ER see 3.

The following clauses should be included or at least considered in any agreement. An example of a partnership agreement is included in Appendix 4. It is set out in the form of a deed simply because this is common practice for partnership agreements. There is, however, no legal requirement that the agreement take the form of a deed, and an ordinary agreement will suffice. The agreement itself may provide a procedure for amendment or, if it does not, s 19 of the Act provides that the agreement may be varied by consent of all partners.

This consent may be express or implied from a course of dealings. The partnership lasted 11 years during which time the agreement was ignored and money allocated differently. The court held that the agreement had been validly altered. Therefore, if a partnership agreement has an express provision stating that any amendment must be in writing, this would effectively disapply s 19 of the Act and the agreement could not be altered by a course of dealing.

In Croft v Day 7 Beav 84; 49 ER , partners by the names of Day and Martin set up a partnership to manufacture blacking, and adopted the Day and Martin name for the fraudulent purpose of representing to the public that they were the then well known blacking manufacturer of that name. The court granted an injunction to prevent the use of the Day and Martin name by the partnership.

This means that there is a check that the business really is, for example, international or involves insurance. Professional bodies, such as The Law Society, may also impose restrictions on the names used by their members. If there are more than 20 partners, it may instead be stated on letters and documents that a list of partners and an address for service is displayed at the principal place of business. This means that contracts made by the partnership while it is in breach of the Business Names Act are unenforceable if the other party can prove that he was unable to pursue a claim against the partnership because of the breach, or that he has suffered loss as a result of the breach.

In addition, if the name is similar to that of a competitor so as to deceive or cause confusion, its use may expose the partners to the risk of liability under the tort of passing off. In the absence of agreement by the partners, mere use of property by the partnership is generally insufficient for it to be regarded as partnership property. However, an example of a case where mere use was held to be enough was Waterer v Waterer —73 15 LR Eq , where land used in a nursery business was held to be partnership property because of the nature of the business the land could not be separated from the trees and shrubs growing in it which were stock in trade.

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In Miles v Clarke [] 1 All ER , which concerned a photography business, the court held that only property which was necessary to give business efficacy to the relationship constituted partnership property. The stocks of film used in the course of the business were therefore partnership property, but the negatives and prints brought in to the business, and the lease of the premises, were not.

They continued to belong to the partners who brought them in. If property is partnership property, whether by virtue of s 20 of the Act or a partnership agreement, certain consequences follow. The most important are set out in 3. See the Insolvent Partnerships Order , discussed in Chapter 9. Thus, the distinction between partnership property and property of a partner is of great importance to the creditors if the partnership or a partner is insolvent. The other partners can redeem the share by paying off the creditor and they can then claim the cost of this back from the partner if the partner has sufficient assets.

In order to protect the partnership, it may be advisable to provide for the expulsion from the partnership of a partner against whom such judgment has been obtained see further 7. This, of course, is subject to contrary agreement. Where the property in question is land, the partners hold the land on trust for themselves with a maximum of four as trustees s 34 of the Law of Property Act The valuation of an asset may have tax consequences see Chapter 11 and will certainly be relevant if the partnership business is sold or a partner disposes of his share in the partnership see 8.

It is therefore advisable to include in the partnership agreement either a method for calculating goodwill or a statement that it is to have a nominal or nil value see Deacons v Bridge [] 2 All ER Such an approach may also have tax consequences see Chapter This means that goodwill is valued as it has been in the partnership accounts. If a general partner becomes a limited partner or a limited partner assigns their share, this must be advertised in the London , Edinburgh or Belfast Gazette as appropriate see below and see further Chapter 16 for contact details for the Gazette and the Registrar of Companies.

Until this is done, these transactions have no effect. Principal place Register at Official notices of business in Companies to appear in House in England or Wales Cardiff London Gazette Scotland Edinburgh Edinburgh Gazette Northern Ireland Belfast Belfast Gazette The Registrar will advise against the use of any name which is the same as, or too like, a name on the register which includes limited companies and other legal bodies, as well as limited partnerships. The Business Names Act also applies if the name of a limited partnership does not consist of the names of all the partners.

The name must then comply with the rules set out in 3. The details registered are available for public inspection at the relevant Companies House. A checklist of questions to ask the client s could be based on the list of possible clauses for a partnership agreement see 3.

Although, as noted in 3. It also ensures that new partners are aware of the agreement applying when they join the firm. If the written agreement is out of date and a new partner is not informed of amendments prior to joining, he cannot consent to them and is not bound by them. This means that a partner must act in the interests of the partnership and not for himself.

He must therefore act honestly and treat his co partners with the utmost fairness and good faith. This duty should be made clear to all those considering setting up a partnership and borne in mind by them throughout its duration. An understanding of the duty of good faith in the context of partnerships is therefore vital to an understanding of this important aspect of company law. While the duty of good faith cannot be excluded by agreement, it is possible to exclude by agreement particular aspects of it, including the duties referred to in the Act.

This is a positive duty to disclose information, rather than simply a negative duty not to conceal it. In Law v Law [] 1 Ch , one partner bought out the other partner and the partner who had been bought out subsequently discovered that certain assets had not been disclosed.

However, at this point the partner who had been bought out accepted the original settlement. The court held that although partners were under a duty to disclose information, the partner who had been bought out was not entitled to compensation for the difference in value of his share of the partnership, because he had validly elected to reach a settlement without full disclosure. As mentioned in 1. It may be advisable to alter the provisions on decision making so as to counter the possibility of an equality of votes, and to provide for some degree of delegation.

If a majority is required, the agreement should specify whether this means a majority by number or on some other basis, for example, by capital contribution. It is also possible to provide for weighted voting so that greater weight is accorded to the longest serving partners, or those whose capital contribution is greatest. Details of how often partner meetings will be held, how they will be called, and the quorum, should be specified in the partnership agreement. Provision for a casting vote and for proxy voting should also be considered.

The amount of time to be devoted to the business is not dealt with by the Act and therefore needs to be specified in a partnership agreement. In Joyce v Morissey and Others The Times , 16 November, which concerned a dispute between the former partners of the pop group The Smiths, the Court of Appeal ruled that the presumption of equality was not displaced by the fact that two of the four partners controlled the management and had a greater commitment to the business.

The mere receipt by the other partners of accounts showing a different division of profits was insufficient to show contrary agreement. Leave to appeal to the House of Lords in this case has been refused. It is, of course, possible to agree a more sophisticated arrangement than a simple profit share. If capital has not been contributed equally, it is advisable to record how much is contributed by each partner in order to disapply the presumption in s 24 1.

The defendant partner, who had made a greater contribution, continued the business alone on the dissolution of the partnership and sold the assets two years later at a profit. This includes the right to use an agent, such as an accountant, to look at the accounts. If a partner, for example, enters into a contract which is within his authority, the partnership will be legally bound to that contract and will have to pay for goods or services supplied under it, or supply goods or services itself if that is what the contract says.

Whether a partner has been authorised by the other partners to enter into an obligation on behalf of the partnership is a question of fact, but, even if the partner has not been so authorised, his acts may still bind the partnership under s 5 of the Act. In Mercantile Credit v Garrod [] 3 All ER , a partnership agreement for a business which let garages and repaired cars expressly excluded the buying and selling of cars.

The court held that the partnership was liable. In Niemann v Niemann 43 Ch D , a partner accepted, in payment of a debt by a third party to the partnership, shares in a company. This is likely to be the case because his name will either be part of the name of the partnership or will appear on the letter heading in compliance with the Business Names Act see 3.

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Secondly, it is in the usual way of business for partners in trading partnerships see 1. By way of exception, s 13 of the Act provides that if the property is trust property and a partner who is a trustee misapplies it by using it in the partnership business, the partnership is not liable unless the other partners are aware of the breach of trust. However, he may become liable for such debts if he takes part in a novation or an indemnity see 5.

This will result automatically in the dissolution of the partnership. Alternatively, there may be provision for retirement in the partnership agreement, in which case this will govern the procedure for, and the consequences of, retirement. Subject to contrary agreement, a partner will be liable for all debts and liabilities incurred while he was a partner and, therefore, it is the date a contract was made or a tort committed which is decisive. If it took place before the partner retired, he will still be liable, even where the resulting claim is made after his retirement.

In Bagel v Miller [] 2 KB , the estate of a deceased partner was held not liable for goods delivered to the partnership after his death, since the obligation to pay did not arise until delivery. The only stated exception to s 17 is if there is contrary agreement by way of novation under s 17 3.

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This sub-section provides that a retiring partner may be discharged from liabilities incurred while he was still a partner if there is an agreement to this effect between the retiring partner, the continuing partners including any new partners and the relevant creditor. The agreement need not be express. Similarly, by not objecting to accounts showing this debt, the new partners had impliedly agreed to accept liability for it.

There was, therefore, an implied novation of the debt. The problems with novation as a method of eliminating liability are that creditors cannot be forced to agree to it and, to release a partner from all liabilities, it is necessary to have a novation in respect of every contract and every claim. Thus, it is of no assistance in respect of tortious claims which are brought only after the partner has retired, but where the cause of action arose while he was a partner. An alternative method of eliminating liability is to get an indemnity see, also, 1.

This is an agreement whereby the remaining partners and any new ones undertake to meet the liability of the retiring partner, should any such liability arise in future. It is a form of insurance, since, if the retired partner has to repay a partnership debt, he can recover the amount in full from the other partners.


The disadvantage of an indemnity is that the retired partner is still liable to the creditor, and if he cannot trace the partners who gave him an indemnity or they have no money, the indemnity is worthless. A partner who pays more than his share of a partnership debt is also entitled to recover a contribution from the other partners pursuant to s 24 2 of the Act see 4. Section 24 2 provides that the partnership must indemnify partners in respect of any payments made by them in the ordinary and proper conduct of partnership business and anything necessarily done for the preservation of the partnership business or property.

A repudiatory breach of the partnership agreement will not affect the liability of the partners under s The other partner claimed that this amounted to a repudiatory breach of the partnership agreement, which he accepted. The considerations here are similar to those set out in 1. In certain partnerships, it may be appropriate to provide that the partner may not continue to work or participate in management during his notice period but may not start any new employment.

It gives some protection to the partnership against attempts by the retiring partner to poach clients or employees. However, such clauses, like all restraint clauses, are subject to certain legal constraints see 5. Such a clause is subject to certain legal constraints see 5. Restraint clauses The continuing partners cannot simply prevent a former partner from competing with the partnership.

As with restrictive covenants in contracts of employment and agreements to sell a business, the existence of a proprietary interest which requires protection must be established, such as confidential information or customer connections, and it must be proved that the restraint imposed is reasonable in its scope. Nevertheless, it is still true to say, for example, that the greater the geographical scope of the restraint clause, the shorter would be the acceptable duration and vice versa.

In Deacons v Bridge see 3. In Trego v Hunt see 3. In Darby v Meehan and Another The Times, November 25, the partnership agreement provided that a retiring partner was entitled to a share of goodwill and could elect to retain the business of certain clients as part payment of that share, but did not provide for any non-solicitation covenants. The court implied a two year non-solicitation clause on the part of the continuing partners, in relation to the clients retained by the departing partner. A clause which is too wide may be saved, in part, by severing the invalid elements, but only if they can be severed from the rest of the clause without altering the nature of the agreement and while leaving a clause which makes grammatical sense.

If a restraint clause is to be included in the partnership agreement, specialist advice on the subject should be sought and the latest case law checked. What amounts to notice, in this context, varies for different creditors. A notice in the London , Edinburgh or Belfast Gazette according to the country of the principal place of business: see 3. This is so regardless of whether they read it. Remaining partners It is for the retiring partner to make sure that proper notices are given, so that he is not liable under s 14 see 5.

However, remaining partners should ensure that they comply with the provisions of the Business Names Act in order to avoid the commission of a civil wrong or criminal offence see 3. However, where the genuine partners hold out a non-partner as a partner or knowingly allow the non-partner to hold himself out, they will also be liable under s 14 because they have represented themselves as partners of the non- partner, or allowed themselves to be so represented.

However, there are three key differences. First, in order to establish liability under s 14, the third party must act in reliance on the belief that the alleged partner is a partner whereas, for s 36 to apply, the third party only needs to believe that the retired partner is still a partner and need not consider it important.

This was sent under cover of a letter on headed paper which held out an employed solicitor as a partner. The court held that liability under s 14 of the Act only arose where there had been a holding out, reliance on that holding out and the consequent giving of credit. Section 14, therefore, did not apply. The partners were unaware of the failure to renew and, thus, of the dissolution and reconstitution.

The former partner was consequently held out as a partner because neither he nor his former partners realised that he was not a partner. A third difference is that liability will not arise under s 14 if the alleged partner can prove that he did not know or did not consent to being held out as a partner, whereas a retired partner will avoid liability under s 36 by giving the correct notice to creditors.

In fact, Christmas did use such note paper to confirm a new contract. The court held that Ingram was not liable. He had clearly shown that he did not consent by agreeing that Christmas should not use the old note paper. Since there was no consent, s 14 could not apply. If a non-partner is held out by the other partners, he will have a defence if he can show that he did not know or did not consent to the holding out. However, if he knows that his name appears as a partner on the letter heading, then he will be unable to show lack of knowledge of the holding out which is evidentially difficult in any case and should, therefore, do something positive to show his lack of consent, for example, by complaining to his ex-partners in writing and sending the letter by recorded delivery.

Similarly, you should advise partners to ensure that they avoid holding out non-partners as partners, or allowing non-partners to hold themselves out as partners, since this could lead to the partnership being liable for the actions of the non-partner. However, there are a number of ways in which partners can avoid or, at least, mitigate the effects of unlimited liability and these should be considered when advising any client. In order for a capping or exclusion clause in a contract to be valid, it must be incorporated into the contract and any ambiguity in the clause will be construed against the partnership.

Non-contractual disclaimers are only valid if the third party has notice of them. In addition, they may be commercially unacceptable to certain clients and a partnership which seeks to use them should consider whether their advantages outweigh their disadvantages. Sections 2 and 11 of UCTA require clauses excluding negligence in contracts and disclaimers of negligence liability to be reasonable in order to validly exclude liability for economic loss. In assessing whether a clause is reasonable under s 11 of UCTA, the court is to have regard to a number of factors, including the resources which the defendant could expect to have to meet potential liabilities and the extent to which insurance is available.

The Unfair Terms in Consumer Contracts Regulations only apply to contracts with consumers and, then, only to terms which have not been individually negotiated. There are additional restrictions on the limiting of liability by certain professional partnerships. This option is open to all trading partnerships and, increasingly, to professional partnerships.

Certain formalities are required in order to incorporate a company see 2. It will also be necessary to transfer existing insurance policies into the name of the company and novations will be required in order to transfer over contracts. Corporate status has a number of other advantages and disadvantages see Chapter 2. The topic of limited liability partnerships will be considered at A dispute may be taken to court, but a further alternative is to provide for some form of alternative dispute resolution ADR , such as arbitration, mediation or conciliation.

Such procedures can be used to reach agreement on matters which arise during the currency of an agreement or as a means of allowing for a less destructive parting of the ways. A dispute may only be submitted to arbitration or any form of ADR if all parties agree. Rather than trying to reach agreement when a dispute arises, it is sensible to provide for some form of ADR in the partnership agreement, since, if a dispute cannot be settled internally, it is unlikely that the parties will be able to agree on any ADR procedure at that time.

If such a clause exists, then the Arbitration Act provides that the court must grant a stay of any court proceedings if an application for such a stay and a referral to arbitration is made except in the limited circumstances set out in s 8 4 of that Act. The potential advantages of arbitration are that it can be quicker than going to court and avoids adverse publicity. The partnership agreement should specify how an arbitrator is to be appointed, what powers he will have and any right of appeal and can, for example, adopt model arbitration rules, such as those used in the construction industry.

Thus, even without a clause allowing for mediation, it will become relevant if proceedings are issued. A meditation clause cannot be used to force a resolution, since participation in mediation is voluntary. However, the attractions of mediation mean that the parties may be willing to try it and a clause in the agreement could reinforce this. Mediation is a process by which disputing parties engage the assistance of a neutral third party to act as a facilitating intermediary a mediator.

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The mediator has no authority to make any binding decisions, but uses various procedures and skills to help the parties to resolve their dispute by negotiated agreement. Both are networks of independent mediators who can provide a range of ADR services. If there is a genuine will to solve the problem, then mediation can sometimes work where direct negotiation has failed. Even if it seems that the time for talking has passed, the prospect of a long and expensive court case and the permanent loss of a business relationship may increase the chances of mediation succeeding.

The parties have nothing to lose other than the time and cost involved in the hearing, which is usually scheduled to last for a day or part of one day and any party may abandon the procedure at any time. As a result, mediation can defuse confrontational situations and lead to a settlement. In Re Garwoods Trusts [] 1 Ch , the court stressed that an assignee had no right to challenge bona fide acts of management and it may, therefore, be that the position would be different if the management were not being carried on in good faith.

Section 31 2 of the Act provides that, on dissolution see Chapter 8 , an assignee has the right to an account see The court held that the expulsion was unlawful, since the actual ground relied on was not covered by the expulsion clause in the partnership agreement. In Blisset v Daniel 10 Hare ; 68 ER , the court held that the expulsion of a partner without cause or explanation was ineffective because it was done in bad faith. In Barnes v Youngs [] 1 Ch , a partner was expelled without warning and without being given the chance to explain.

It was held that the expulsion could not be effective when carried out in such a way. However, in Green v Howell [] 1 Ch , the court upheld the expulsion of a partner who had not been give a chance to explain. It ruled that Barnes v Youngs was not an authority for the proposition that the partner must always be given due warning prior to expulsion, but only that, on the facts of that case, the expelling partners lacked good faith.

In Barnes , the cause of the expulsion the partner was living with a woman to whom he was not married had existed at the outset of the partnership and the other partners had always been aware of this. There was, thus, no lack of good faith in the expulsion. It therefore appears that it is possible to expel a partner summarily where the facts are such that the expelled partner can be in no doubt that he has done something which would render him liable to expulsion. However, the procedure for expulsion should be specified in the partnership agreement and, where possible, the partner should be given due warning and a proper hearing prior to any expulsion.

Such clauses should include some provision for ADR, the grounds and procedure for expulsion and an option for continuing partners to purchase the share of an outgoing partner. If advice is only sought after the dispute has arisen, any agreement should be carefully checked and followed in respect of provisions governing disputes. Where there are no such provisions, it may be possible to assist them in reaching an agreement.

If not, it is still worth suggesting that the dispute be submitted to arbitration or mediation, but, ultimately, court action may be necessary see Chapter If the business is genuinely to come to an end or to be sold, the assets will be collected, the debts paid and any surplus distributed to partners. Alternatively, it may be that one or more of the partners are to continue the business. In this case, the continuing partners will buy out those who are leaving, and effectively continue the same business as a sole trader or partnership.

Section 37 of the Act provides that a partner can compel the others to publicise the dissolution. This is particularly important where one or more partners are to carry on the business, since the partners who leave are at risk of incurring liability under s 36 of the Act see 5.

This may be varied by contrary agreement and is not applicable to limited partners see 1. This may not be varied by agreement. It may be that the business is unlawful or that it was formed illegally. It was held that the partnership dissolved at the date the certificate lapsed. Since the other partners continued to practice, a new partnership was constituted by conduct and excluded the former partner who could not legally practice. However, the partnership will not dissolve just because the objects of the firm could be carried on illegally. In Dungate v Lee [] 1 All ER , a partner in a firm of bookmakers had not obtained the permit necessary to carry on bookmaking.

However, the court held that the purpose of the partnership was not illegal and that, as a permit was only required by those partners actually engaged in bookmaking, the partners were not necessarily breaking the law. Section 33 provides that, if this happens, the other partners may dissolve the partnership. For example, where no notice period has been agreed, a partnership at will may simply be dissolved by any of the partners on giving notice to the other partners.

However, judicial dissolution may be required if one or more partners but not all, since the partners acting unanimously could simply alter the agreement wish to dissolve a partnership for a fixed purpose or term, or a partnership at will with an agreed notice period, before the purpose is achieved or the term or notice period has expired. Section 35 of the Act provides that the grounds on which the court may dissolve the partnership are as follows.

The element of wilfulness requires that there be a serious breach inflicting damage on the firm. Any partner may petition on this ground. In circumstances where the dissolution of a partnership has become desirable, the partners may wind up the partnership informally themselves. This will be the appropriate procedure where the partnership is solvent. Any partners actively involved in the winding up may deduct an allowance Manley v Sartori [] All ER The function of a receiver is to get in the assets of the partnership and pay the partnership debts, but not to determine the rights of the partners inter se or to run the business.

The function of a manager is to carry on the business of the partnership under the direction of the court. In practice, where a manager and receiver are appointed, they are likely to be the same person. The court may appoint a receiver if it determines that to do so would be just and equitable and it will take into account the nature of the business and the probable effects of the appointment of a receiver s 37 of the Supreme Court Act An application will usually be granted where the partnership has already been dissolved Pini v Roncoroni [] 1 Ch , but in other instances it will be necessary to show facts which could lead to a judicial dissolution, such as exclusion from management Floydd v Cheney [] 2 WLR or misconduct of a partner and jeopardy to partnership assets Smith v Jeyes 4 Beav ; 49 ER A member of the partnership may be appointed as the receiver if this is appropriate in all the circumstances.

The appointment commences from the making of the order, and a copy of it must be served on the receiver and all parties. The receiver has authority to deal only with the assets of the partnership and not with those of the individual partners Boehm v Goodall [] 1 Ch Section 44 of the Act governs the distribution of the assets, subject to contrary agreement. If, therefore, the partnership assets are insufficient to pay debts to creditors or to partners, the partners must make good this deficiency in their profit sharing ratios.

However, if partners are required to contribute to make good capital losses and one partner cannot afford to contribute, his share need not be made good by the others Garner v Murray [] 1 Ch These rules only apply if the partnership is solvent. The position on insolvency is considered in Chapter 9. There are a number of methods of valuing the assets see 3. Ultimately, as with other transactions, the correct price is determined by what the buyer is prepared to pay and what the seller is prepared to accept. If a partnership is being sold, a Sale and Purchase Agreement will need to be drafted, containing the terms on which the business is to be sold, exactly what is being sold and how the purchase price is to be apportioned as between each of the assets being sold.

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The latter is important for tax reasons, in particular, stamp duty see Where the purchaser acquires assets and assumes responsibility for some but not all of the creditors, this may be seen as a preferential treatment of creditors under s of the Insolvency Act see 9. If a client seeks advice at a later stage on the dissolution of a partnership, the initial stage of advice should be to consult the partnership agreement if there is one. These may include, for example, an attempt to resolve the dispute by mediation see 7.

A number of procedures are available to insolvent partnerships, including two designed to assist in the survival of the business voluntary arrangements and administration orders and a number of others designed to assist in the termination of the business. It should also be noted that the DTI is currently reviewing insolvency law with particular reference to rescue procedures and bankruptcy.

Such arrangements are governed by Art 4 and Sched 1 of the Order. The Order does not specify whether the partners have to act unanimously, by a simple majority, or otherwise, in proposing the voluntary arrangement. This section draws a distinction between day to day business decisions, which may be taken by a majority, and decisions which affect the fundamental nature of the partnership, where the implied rule is that of unanimity and it seems that the proposal of a voluntary arrangement is more likely to fall into the latter category.

In a partnership, contributories and partners are likely to be the same people. One disadvantage is that a proposal for a partnership voluntary arrangement may be overtaken by the presentation of a bankruptcy petition or other proceedings against the partnership. It is possible to ward off predatory creditors with an administration order see 9. This could result in such creditors being paid off ahead of partnership creditors who are bound by the voluntary arrangement.

However, if all partners, as well as the partnership, enter into voluntary arrangements, this disadvantage will disappear. The petition must be supported by an affidavit. A statement of the partnership affairs must be submitted to the administrator within three months of the making of the order or such longer period as the court may allow s 22 of the IA In the case of general partnerships, it is unclear whether the requirement to notify the Registrar is a legislative oversight, but this is likely to be the case, since the Registrar has no other dealings with general partnerships.

If the proposals are approved at a meeting of creditors, the administrator must manage the partnership in accordance with them. He may subsequently apply to the court for the order to be discharged. Alternatively, it might improve the position on winding up. However, an administration order is disadvantageous in that it can prove expensive and lengthy, and certain prior transactions may be set aside see 9.

Section of the IA provides that any transaction at an undervalue which is made to put assets beyond the reach of a partnership creditor, or to otherwise prejudice such a creditor, may be set aside by the court on the application of the administrator. There is no time limit on the transactions which may be set aside under this section.


These provisions apply equally in respect of a corporate partner which is put into administration see 9. Just as with voluntary arrangements, the best advice is for all partners to use individual or company voluntary arrangements or company administration orders if at all possible. For example, U. Though mergers are more common among better economies, slowing down a bit during recessions, big firms sometimes use mergers as a strategy to boost revenue during a recession.

Nevertheless, data from Altman Weil indicates that only four firms merged in the first half of , as compared to eight in the same period in , and this was taken by them as indicating a dip in morale regarding the legal economy and the amount of demand. Law firms can vary widely in size. The smallest law firms are lawyers practicing alone, who form the vast majority of lawyers in nearly all countries. Smaller firms tend to focus on particular specialties of the law e. Large law firms usually have separate litigation and transactional departments.

The transactional department advises clients and handles transactional legal work, such as drafting contracts, handling necessary legal applications and filings, and evaluating and ensuring compliance with relevant law; while the litigation department represents clients in court and handles necessary matters such as discovery and motions filed with the court throughout the process of litigation.

Lawyers in small cities and towns may still have old-fashioned general practices, but most urban lawyers tend to be highly specialized due to the overwhelming complexity of the law today. This lower cost structure allows virtual law firms to bill clients on a contingency basis rather than by billable hours paid in advance by retainer.

Illustrative Practice Notes

Related innovations include alternative legal services provider ALSP , legal outsourcing and what is sometimes called "NewLaw". The largest law firms have more than 1, lawyers. The largest firms like to call themselves "Big-Law" firms because they have sections specializing on each category of legal work, which in the U. These firms rarely do plaintiffs' personal injury work. However the largest law firms are not very large compared to other major businesses or even other professional services firms. The largest law firms in the world are headquartered primarily in the United Kingdom and the United States.

However, large firms of more than 1, lawyers are also found in Australia Minter Ellison 1, attorneys , China Dacheng 2, attorneys and Spain Garrigues, 2, attorneys. The American system of licensing attorneys on a state-by-state basis, the tradition of having a headquarters in a single U. Thus, whilst the most profitable law firms in the world remain in New York, four of the six largest firms in the world are based in London in the United Kingdom. Due to their size, the U. A research paper noted that firms from other countries merely pick up their leftovers: "[M]uch of the competition is relatively orderly whereby predominantly Australian, New Zealand, and Canadian firms compete for business not required by English or American law firms.

As a result of the U. The Denver Post reported that major law firms have cut more than 10, jobs nationwide in Law firm salary structures typically depend on firm size. Small-firm salaries vary widely within countries and from one country to the next, and are not often publicly available. Because most countries do not have unified legal professions, there are often significant disparities in income among the various legal professions within a particular country.

Finally, the availability of salary data also depends upon the existence of journalists and sociologists able to collect and analyze such data. Many other high-end New York-based and large national law firms soon followed. The traditional salary model for law firm associates is lockstep compensation , in which associate salaries go up by a fixed amount each year from the associate's law school graduation.

However, many firms have switched to a level-based compensation system, in which associates are divided into three or sometimes four levels based on skills mastered. Some prominent law firms, like Goodwin Procter and Paul Hastings , give generous signing bonuses e. Another way law firm associates increase their earnings or improve their employment conditions is through a lateral move to another law firm. British firms typically practise lockstep compensation.

Salary levels are lower in areas outside London. Australia has regional variation in lawyer salaries, with the highest salary levels in Sydney , followed by Melbourne , Perth , Brisbane , then Adelaide. Typically in Australian firms lawyers are in a lock-step system for the first two years of practice, following which pay increases are dependent on performance assessed, in large measure, by satisfaction of billable hour targets.

There is more information available for entry level soups [ definition needed ].

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Tier 1 law firms provide the best pay package, of about INR 15,00, a year. Most law firms are located in office buildings of various sizes, ranging from modest one-story buildings to some of the tallest skyscrapers in the world though only in , Paul Hastings was the first firm to put its name on a skyscraper. In late , it was widely publicized that John C.

Dearie 's personal injury plaintiffs' firm in the state of New York has been experimenting with bus -sized "mobile law offices. As legal practice is adversarial, law firm rankings are widely relied on by prospective associates , lateral hires and legal clients. Work place rankings are directed toward lawyers or law students, and cover such topics as quality of life, hours, family friendliness and salaries. In an October press conference reported in The Wall Street Journal and The New York Times , the law student group Building a Better Legal Profession released its first annual ranking of top law firms by average billable hours, pro bono participation, and demographic diversity.

The group has sent the information to top law schools around the country, encouraging students to take this demographic data into account when choosing where to work after graduation. A number of television shows, movies and books have revolved around relationships occurring in fictional law firms, highlighting both public fascination with and misperception of the lives of lawyers in high-powered settings.

One popular American legal drama television series is called Suits. There is one popular American dramedy, also known as, comedy-drama called Boston Legal which was created by David E. One famous legal movie is called The Firm , which was adapted from a book written by John Grisham. From Wikipedia, the free encyclopedia. Main articles: Legal drama and Law firms in fiction. ABA Journal. Retrieved October 4, The American Lawyer. Retrieved 1 August Retrieved Above the Law. Hazard, Jr. Anderson and Marilyn J. Headrick, The Legal Profession: Is it for you?

Cincinnati: Thomson Executive Press, , Solicitors Journal. Sigurdson Post. Artificial Lawyer.

Practice Notes

Retrieved 5 June Lawrence M. Gray, "The global restructuring of legal services work? A study of the internationalisation of Australian law firms," 14 Int'l J. Legal Prof. Archived from the original on September 18,