LLP member disputes resolved in private.
Independent mediators and advisory counsel for LLP member exits, drawings disputes, attempted expulsions and dissolution. Fixed fee, confidential, and built to produce signed terms in a day.
Limited liability partnerships are used by professional practices precisely because they combine partnership flexibility with limited liability, but that flexibility is also what makes member disputes difficult. The LLP agreement is a private contract, it is often drafted at incorporation and never updated, and it frequently fails to deal with the situation that has actually arisen. When a member falls out with the designated members, or a fixed share member is told their share is being cut, the first question is always what the agreement actually says and whether the default regulations fill the gap.
Litigation is a poor fit for these disputes. Members owe each other duties of good faith in a relationship that is closer to a marriage than a commercial contract, and a public claim damages the practice, unsettles staff and alarms clients and insurers at the same time. A confidential mediated day protects the trading business while producing the same commercial result.
Clerk&Counsel places practitioners on LLP member disputes as advisory counsel for one member, or as a neutral mediator where all members want the matter finished. The roles are never combined on the same dispute, and conflict checks are run before a fee is quoted.
LLP member disputes we mediate.
- Member exits and retirement terms, including notice, gardening leave and capital repayment.
- Profit share, points allocation and drawings disputes between equity and fixed share members.
- Attempted expulsion where the agreement contains no express power to expel.
- Deadlock between designated members and disputes over management authority.
- Restrictive covenants, client follow and team moves to a competing practice.
- Capital accounts, tax reserves and disputed member loan balances.
- Breach of the duty of good faith and exclusion from information and management.
- Dissolution and winding up of an LLP, including solvent wind down and asset allocation.
The agreement, the default regulations and good faith.
An LLP is a body corporate under the Limited Liability Partnerships Act 2000, but the relationship between the members is contractual. Where the agreement is silent, the Limited Liability Partnerships Regulations 2001 supply default terms that are usually unwelcome to whoever is trying to force a change, because they give every member equal profit share and equal management rights and give no one a power of expulsion.
Members do not automatically owe each other the full fiduciary duties that partners owe under the Partnership Act 1890, but most LLP agreements impose express duties of good faith and full disclosure, and the courts will imply obligations where the agreement clearly assumes them. Disputes about diversion of clients, secret profits and competing activity turn on those clauses.
Where a member has been excluded from management or had their share reduced, the possible routes are a contractual claim under the agreement, a claim under section 994 of the Companies Act 2006 if it has not been excluded, or a just and equitable winding up petition. Each has a very different cost and risk profile, and a short written advice identifying which applies will usually change how both sides value the case.
How an LLP mediation is run.
The mediator reads short position statements and a core bundle, usually the LLP agreement, the last three years of accounts, the member's capital and current account statements and the key correspondence. Private calls with each side before the day identify the real commercial drivers, which in professional practices are usually run off insurance, client transfer and the timing of tax payments.
On the day the members sit in separate rooms and the mediator moves between them. Nothing said is admissible later. The mediator tests each side's view of what a court would order, narrows the gap, and begins drafting as the positions converge.
Signed heads of terms at the end normally cover the exit date, the capital and current account settlement and how it is funded, treatment of work in progress and unbilled time, professional indemnity run off cover, restrictive covenants and any agreed relaxation, Companies House filings and the announcement to clients and staff.
Instructing a mediator or advisory counsel.
The process is short and the fee is fixed before anything is committed:
- Send a short outline of the LLP, the membership and the issue. Documents can follow.
- We run conflict checks and shortlist a mediator or advisory counsel with the right sector experience.
- A written fixed fee is issued, normally shared between the members for a mediation day.
- Position statements and a core bundle go to the mediator and the day is listed, usually within two to four weeks.
Specialist areas within this practice.
- Partnership dispute mediation
Traditional partnership and business partner exits.
- Business partner dispute mediation
Two and three partner businesses, profit share and dissolution.
- Shareholder dispute mediation
Company deadlock, unfair prejudice and share buyouts.
- Partnership disputes
Counsel for partnership and LLP litigation.
- Commercial mediation
The wider commercial mediation service.
LLP member dispute to resolve?
Send a short outline of the LLP, the membership and what has gone wrong. A clerk will come back with mediator or advisory counsel options and a fixed fee.
Common questions.
Can an LLP member be expelled?
Only if the LLP agreement contains an express power to expel. Section 5 of the Limited Liability Partnerships Act 2000 and the default regulations give no majority power of expulsion, so an attempted removal without an express clause is usually invalid and can itself found a claim.
What happens if the LLP has no written agreement?
The default provisions in the Limited Liability Partnerships Regulations 2001 apply. Profits are shared equally, every member may take part in management, no member is entitled to remuneration, and there is no power of expulsion. Those defaults rarely match what the members thought they had agreed.
Can a member bring an unfair prejudice claim?
Section 994 of the Companies Act 2006 is applied to LLPs, but most LLP agreements exclude it. Whether the exclusion is effective is one of the first questions advisory counsel will look at, because it changes the leverage on both sides.
How long does a mediation take to arrange?
Usually two to four weeks from instruction. A single day is enough for most member disputes, with a longer day where there are several members and a valuation issue.
What does it cost?
A written fixed fee for the mediation day, agreed before instruction and normally shared between the parties. Advisory work is quoted as a fixed fee for a written opinion or an agreed hourly rate.
Are you a barristers' chambers?
No. Clerk&Counsel is a clerking agency and a trading style of Found First Digital Ltd. We place independent barristers regulated by the Bar Standards Board and non-barrister mediators, and the instruction runs directly between you and the practitioner.