The Jersey Limited Liability Partnership: A New Legal Vehicle for Professional Practice

Published date01 July 1997
Date01 July 1997
DOIhttp://doi.org/10.1111/1468-2230.00097
LEGISLATION
The Jersey Limited Liability Partnership: A New Legal
Vehicle for Professional Practice
Philip Morris* and Joanna Stevenson*
The Limited Liability Partnerships (Jersey) Law 1997
1
is, at least in terms of the
jurisdictions of the British Isles, a unique legislative experiment which, despite
being legislation enacted by a small offshore jurisdiction, could well have a
profound impact on the future legal framework of major United Kingdom
professional practices, particularly those operating in the accountancy and legal
services sectors. In a nutshell, the legislation creates an innovative legal vehicle —
the Jersey Limited Liability Partnership (LLP) — which combines the traditional
partnership structure with the twin fundamental principles of separate legal
personality and limited liability characteristically found in company law codes.
Perhaps more importantly from a professional practices perspective, the Jersey
structure contains no restrictions on the participation of partners in a firm’s
management and thus does not reproduce the fundamental flaw of existing United
Kingdom limited partnership legislation, the Limited Partnerships Act 1907, which
confers limited personal liability (to the extent of their capital contributions) on
limited partners but prohibits them from participating in partnership management.
This prohibition has always made the United Kingdom limited partnership an
unattractive choice of legal vehicle for professional practices.
While the LLP concept has, until Jersey’s bold and highly controversial initiat-
ive, been an unknown concept in British commercial law, it is well entrenched in
America where some 40 State legislatures have enacted LLP legislation in recent
years.
2
Moreover, it seems probable that Jersey’s move will act as a catalyst for a
similar rapid proliferation of LLP legislation in both small and large jurisdictions
of the British Isles: evidently, Jersey’s ‘micro’ offshore jurisdiction counterparts
(and competitors), Guernsey
3
and the Isle of Man,
4
are seriously contemplating the
The Modern Law Review Limited 1997 (MLR 60:4, July). Published by Blackwell Publishers,
108 Cowley Road, Oxford OX4 1JF and 350 Main Street, Malden, MA 02148, USA.538
*Department of Accountancy and Finance, University of Stirling.
Funding for this research was provided by the Carnegie Trust for the Universities of Scotland. We are
grateful to Richard Syvret, Director of the States of Jersey Financial Services Department, for agreeing to a
personal interview as part of our research. Needless to say, all views expressed in this commentary, unless
otherwise indicated, are to be attributed to the authors alone.
1 States Greffe, States of Jersey (1997: L.3/97, 503). The legislation received the assent of the Privy
Council (acting on behalf of the Crown) on 19 November 1996 and will come into force during
Autumn 1997.
2 For full accounts of this rapid proliferation, see further L.E. Ribstein, ‘Possible Futures for
Unincorporated Firms’ (1996) 14 University of Cincinnati Law Review 319; and R.W. Hamilton,
‘Registered Limited Liability Partnerships: Present at the Birth (Nearly)’ (1995) 66 University of
Colorado Law Review 1065.
3Accountancy Age, 31 October 1996.
4Accountancy Age, 21 November 1996; and J. Burn, ‘Isle of Man to offer ‘‘cut price’’ LLPs,’
Accountancy Age, 29 August 1996. The Isle of Man has in fact recently enacted legislation, the
Limited Liability Companies Act 1996 (Tynwald, Isle of Man), which could be utilised by
partnerships. The Manx LLC will have separate legal personality, the liability of its members will be
restricted to their capital contribution and it will be possible to manage the LLC in a similar manner to
a partnership: see The Lawyer, 4 June 1996; and Accountancy Age, 18 July 1996.

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