When the Economic Crime and Corporate Transparency Act 2023 was passed, it was emphasised that the Act would introduce powers and processes to target organised criminals and others seeking to abuse the UK’s economy.

As part of this reform, and to assist with disrupting economic crime, several changes to the processes on Companies House were unveiled which apply, or will apply to LLPs, limited partnerships and companies. In previous bulletins we have considered the introduction of the reforms and the changes introduced in March 2024.

It has been indicated that the next changes affecting LLPs (and companies) will start to take effect from “spring” 2025.

Identity Verification

From 25 March 2025, Companies House should be in a position to allow LLP members, company directors and persons with significant control (PSCs) to voluntarily verify their identity.

Identity verification is expected to closely resemble the process with which many are familiar with for anti-money laundering purposes, including providing proof of ID (such as a passport) and proof of address (such as a recent utility bill).

This voluntary process will be replaced by compulsory identity verification as part of the LLP or company formation process and on the appointment of new LLP members or directors – envisaged to be in autumn 2025.

Autumn 2025 will also be the start of the 1 year transition period for existing LLP members and company directors to verify their identities. This will be incorporated into the process of filing annual confirmation statements for LLPs and companies.

This process is expected result in all individuals on the Companies House register having verified their identity by the end of 2026. It is understood that this will impact more than 7 million existing LLP members, directors and PSCs.

Verification of ID – what should firms do?

For professional services firms, this new requirement is likely to be an administrative headache, rather than problematic. Firms should start to plan early for how they will address this exercise. The date for submitting the annual confirmation statement is not necessarily aligned with the LLP or company’s year-end date, and for some firms this might be as early as October or November 2025 (depending also on what Companies Houses mean by ‘autumn’).

Once detailed information about how to verify ID is available, which should be as the voluntary process is rolled-out from March, firms can plan how they will comply.

This might include a centralised effort to gather and submit documentation from partners, perhaps linked to the annual tax return discussion meetings that many firms arrange for their partners in winter/January (for those firms for which it is not too late).

International firms are likely to want to have systems to support non-UK based LLP members. It seems probable that the Companies House system will involve an element of automation and therefore non-standard documentation, such as non UK passports or proof in other languages, might not be accepted as readily as their UK equivalents.

Firms will also need to remember that the 2026 new partner appointments, often taking effect from 1 April or 1 May, will require the verification of those individuals’ ID in order to register the new partners at Companies House.

Authorised Corporate Services Providers (ACSPs)

Eventually, only ACSPs will be permitted to form new companies and LLPs, or file documents on their behalf, because they need to be permitted to verify the ID of the new entity’s members/directors. This means that businesses which wish to assist clients with incorporating new LLPs or companies, such as law and accountancy firms, will need to be ACSPs to offer that service to clients.

Companies House expects to launch this process from spring 2025 (as at early March 2025, this was still not live). By spring 2026, only firms which are ACSPs will be permitted to file documents on behalf of LLPs or companies, including to incorporate entities.

A director or LLP member will need to register their firm as an ACSP. That person can add users to the firm’s account.

One key function for ACSPs will be to verify the ID of people wishing to incorporate new entities.
The ongoing requirements for ACSPs include the following:

  • ACSPs must be always be registered with an AML supervisory body (for law firms, the SRA).
  • Changes to the ACSP’s information must be notified to Companies House within 14 days.
  • If requested by Companies House, an ACSP must provide information about:
    • its filings with Companies House
    • identity checks it has undertaken to verify someone’s identity for Companies House
    • compliance with their legal responsibilities
  • Each ACSP must keep records of any identity checks for 7 years, if they have verified someone’s identity for Companies House.

Firms will need to update their systems and processes to ensure compliance, including risk registers. They will want to ensure teams are adequately trained so that the individual’s ID is verified to a sufficient standard.

There will also need to be safeguards to ensure that information provided to the firm for verification purposes is consistent with the information gathered for the firm’s own AML checks. Firms may also need to revisit their information retention policies to ensure that information will be retained for the required 7 years. Firms will also need to consider these responsibilities and information on key events, such as mergers.

The ACSP’s officers e.g. LLP members or company directors, are all responsible for ensuring compliance with the legal requirements, and face fines or criminal prosecution for failures.

Firms should begin considering now whether or not they want or need to be ACSPs.

Firms which do not wish to become ACSPs, or are not eligible because they are not subject to AML supervision, will need to find alternative was to meet client needs in relation to Companies House filings. For example, the firm may establish a relationship with a corporate services provider. Issues such as client confidentiality and data protection, liability for risk and costs will need to be addressed, and terms of business with clients updated accordingly.

Limited partnerships

Companies House reports that it will require limited partnerships to submit more information by the end of 2026.

Accounts reforms

Timelines have not yet been provided for the following reforms:

  • all companies/LLPs to file profit and loss accounts
  • no option for small and micro companies/LLPs to file abridged accounts
  • software-only filing for all accounts
  • limit the number of times that a company/LLP can shorten its accounting reference period

If you would like to discuss any of these changes and how they may affect your firm, please contact Partner Corinne Staves, who specialises in non-contentious partnership law.

We couldn’t let the (approximate) 25th anniversary of the Limited Liability Partnership go past without bringing you a webinar sharing our expert insights into the interesting and challenging features of LLPs we’ve seen over the last 25 years and what we see approaching on the horizon for LLPs. 

This panel discussion will touch on the key benefits of using LLPs in professional services, the trends we’ve seen – be that a move away or back to LLPs, key tax changes and issues, trends in LLP disputes as well as what the next 25 (or at least 5) years may hold for LLPs. 

Ours speakers will discuss:

  • Key uses of LLPs in professional services – then and now
  • The increase in larger LLPs and what impact that has had on firms and partners
  • Flying the nest – how are those who turned their back on the structure faring – pros and cons of LLP v corporate 
  • A brief tale of the tax challenges for LLPs and members
  • Trends in partner remuneration
  • The duty of good faith: an evolution in LLPs.
  • Will we ever get a body of case law? The challenges and trends of LLP litigation

Speakers:

  • Jeremy Callman, Barrister, Ten Old Square – Leading expert in partnerships and LLPs and renowned authority on the issues relating to discretionary decisions making in this context, having advised and litigated on numerous cases in this field
  • Corinne Staves, Partner, CM Murray LLP – Leading non-contentious partnership law expert, specialising in advising on all aspects of partnerships, LLPs and professional practices law and practice for both firms and individual partners
  • Dr Robert Millard, Cambridge Strategy Group – Law firm consultant and specialist in strategy, mergers and business model transformation
  • Sarah Chilton, Senior Partner, CM Murray LLP – Leading Partnership law specialist and co-head of CM Murray LLP’s partnership practice (Chair)

Date: Friday 7 March 2025
Time: 9.00am-10.00am GMT

Registration:
Register to attend here.

Should you have any questions that you would like to be put to the speakers, please email Sarah Chilton.

In this podcast focusing on global legal expansion, CM Murray LLP Partners Corinne Staves and Zulon Begum are joined by special guest Robert C. Bata, Founder and Principal of Warwick Place Legal, for a detailed discussion on trends from 2024, insights from the Warwick Place Global Expansion Index and predictions for the year ahead. In particular, Corinne, Zulon and Robert discuss:

  • Geographical trends in international expansion:
    • Increased interest in the US market, driven by recent mergers
    • UK firms strengthening their positions in Europe with more office openings compared to US firms
    • The focus of US firms on the Asia market, in particular Singapore
    • Growth in Latin America, highlighted by the Perez Llorca merger in Mexico
    • Continued interest in the Middle East, despite geopolitical challenges
       
  • The drivers for expansion:
    • Global economy and weaknesses in European economies, leading to increased M&A opportunities
    • A strong interest in sectors such as leveraged finance, healthcare, life sciences and litigation
    • The role of AI in shaping legal practices and their competitive advantage
       
  • Challenges facing firms considering international expansion:
    • Being clear on the reasons for expansion and the specific jurisdictions to target
    • Navigating the tax implications and regulatory compliance, in particular regarding profit-sharing and liability
    • Cultural alignment when merging different firm cultures and the associated impact on remuneration models and operational practices
       
  • Predictions for 2025:
    • Continued emphasis on UK firms seeking US market entry, with potential for significant mergers
    • Growth in disputes-focused practices and the impact of KPMG entering the legal services market
    • Potential developments in India regarding legal services liberalisation

If you have any questions arising from this recording, or would like to discuss international expansion in more detail, please contact Partners Corinne Staves and Zulon Begum of CM Murray LLP or Robert C. Bata of Warwick Place Legal.

We are delighted to share with you the recording of our recent webinar, ‘How Do You Attract and Retain ‘High Flyer’ Partners?’, in which partnership specialists discuss navigating the recruitment process for high flyers and important issues facing such decision making within professional practice firms. 

In this recording, Chair Corinne Staves (Partner, CM Murray LLP), Dr Robert Millard (Cambridge Strategy Group), David Shufflebotham (PepUp Consulting), and Zulon Begum (Partner, CM Murray LLP), are joined by guest speaker Siobhán Lewington, Partner at transatlantic legal recruiting firm, Macrae. The panel explore the key challenges involved in attracting and retaining ‘high flyer’ partners, who are often at the very heart of the engine room of many firms. Their discussion addresses key questions and topics, including:

  • What do we mean by high flyers; what might firms be looking for?
     
  • The extent to which firm culture, partner performance and succession planning are key strategic considerations
     
  • How can firms elevate the high flyers already identified within their ranks?
     
  • Should firms guarantee offer compensation packages or are they too flawed with difficulties?
     
  • How can firms manage any tensions between high flyers and other partners?
     
  • The ways in which integration plays into promoting the long-term success of high flyers within a firm

You can also listen to the recording on Spotify or Apple Podcasts.

If you would like to discuss any of the above issues in further detail, please contact Partners Corinne Staves and Zulon Begum, who specialise in partnership law issues for firms and partners.

In this first of a two-part video series focusing on law firm partner remuneration and profit sharing systems, Clare Murray (Managing Partner, CM Murray LLP), David Shufflebotham (Founder, Pep Up Consulting), and Corinne Staves (Partner, CM Murray LLP) discuss the following:

  • What are the principal challenges and notable differences in partner remuneration systems between large international firms and small to medium-sized practices?
     
  • Can such challenges be resolved with short-term fixes, or do they usually require a major overhaul of the remuneration system? How do you determine the best approach to take?
     
  • To what extent do effective partner remuneration systems require alignment with the firm’s overarching strategic objectives, as well as a robust framework for evaluating partner performance and contributions, beyond the typical financial metrics?
     
  • How do firms balance the need to remain competitive on partner compensation in order to retain top talent, while ensuring their remuneration policies reflect the firm’s culture, values, and desired behaviours?
     
  • Why is changing partner remuneration systems particularly arduous for firms transitioning from an “eat what you kill” model, versus those coming from a lockstep system? What factors contribute to this disparity?
     
  • What leadership qualities are essential to successfully obtaining buy-in from the partner group of the merits and necessity of implementing a new remuneration system?

In part two of this series, Corinne, David and Clare will delve into the strategy and implementation of developing a new remuneration system. 

If you would like to discuss your partner remuneration system in more detail, or if you have any questions arising from this video, please contact Corinne Staves (Partner, CM Murray LLP), David Shufflebotham (Founder, Pep Up Consulting), or Clare Murray (Managing Partner, CM Murray LLP).

Join us for the next Professional Practices Alliance (PPA) webinar, ‘How Do You Attract and Retain ‘High Flyer’ Partners?‘ on Wednesday 11 September at 9.00am BST. See below for full details and register your place here.

This discussion will explore the challenges involved in attracting (whether by recruitment or internal promotion) and retaining the ‘high flyer’ partners that can be at the very heart of the engine room of many firms. We will consider:

  • What do we mean by high flyers?
     
  • Do the headlines give a real indication of what is happening in firms? If so, what can we learn?
     
  • The extent to which issues are structural, rather than cyclical; and related to over- or under- rewarding partners
     
  • How can you keep high flyers happy? How do you keep them long term? How to get the balance right
     
  • How do you deal with partners who think they are high flyers, but aren’t all that? How can firms mitigate the influence of dissatisfied partners?
     
  • How can firm protect against polarisation?
     
  • Strategy and culture where some fly far higher than others
     

Join us on Wednesday 11 September for an interactive discussion which will answer these questions and leave you feeling more confident in your decision-making process, and how you can use it to drive your strategic vision and mitigate risk.

Our panel brings together expertise in remuneration structures and their implementation and application, managing partner performance – both over and under performance, fair and lawful decision making and discrimination law. They will share their experience and insights on these issues, which affect all professional services businesses on a regular basis.

Chair: 

Guest Speaker:

  • Siobhán Lewington, Partner at transatlantic legal recruiting firm, Macrae – Advises law firms on growth, recruiting partners and teams, office launches, mergers, strategic projects, career management strategy for law firm partners 

PPA Speakers:

Date: Wednesday 11 September 2024
Time: 9.00am-10.00am BST

Registration:
Register to attend here.

Should you have any questions that you would like to be put to the speakers, please email Corinne Staves.

We are delighted to share with you the recording of our recent webinar, ‘Managing Partner Performance in Professional Services Firms, Evaluating Contribution and Using Partner Processes to Drive Your Firm’s Strategy’, in which partnership and regulatory law specialists discuss how to manage successfully partner promotion and remuneration processes within professional services firms.

Jeremy Callman, Barrister at Ten Old Square, David Shufflebotham of Pep Up Consulting and Sarah Chilton and Andrew Pavlovic, Partners at CM Murray LLP, explore the important and practical considerations professional service firms ought to consider when making decisions about partner promotions and remuneration. Their discussion addresses key questions and topics including:

  • What do the regulators, such as the SRA, expect regarding workplace culture and partner performance? How does this impact firm strategy and decision-making?
     
  • What factors should an organisation consider when developing its partner promotion and remuneration strategy and processes?
     
  • What does an effective partner performance evaluation process look like? 
     
  • What governance powers and documentation are required to implement these evaluation and remuneration processes?

If you would like to discuss any of the above issues in further detail, please contact Partners Sarah Chilton and Andrew Pavlovic, who specialise in partnership, professional discipline and regulatory law issues for firms and partners.

We are delighted to share with you the recording of our recent webinar, ‘Cash, Remuneration and Economic Uncertainty’, in which partnership and regulatory law specialists discuss navigating economic uncertainty and how this can be successfully achieved within professional firms. 

Robert Millard of Cambridge Strategy Group, David Shufflebotham of Pep Up Consulting and Corinne Staves and Andrew Pavlovic, Partners at CM Murray LLP, explore the important and practical considerations professional practice firms ought to consider in these times of economic uncertainty. Their discussion addresses key questions and topics including:

  • What key commercial changes are affecting firm strategy and their decision making?
  • What sources of capital firms should be looking to in the new high interest rate landscape; are the traditional methods still viable? 
  • How can firms better structure their own governance to appear more attractive to private equity and bank funding?
  • Strategic options available to mid-market firms to maintain financial resilience; 
  • Key considerations of financial health from an SRA perspective; at what point do the SRA get involved with a firm in financial distress? How do the SRA view different forms of funding?
  • What does the financially resilient law firm of the future look like? 

The SRA has recently issued a warning notice on law firm mergers, sales and acquisitions, seemingly in response to the fallout from the collapses of Axiom Ince and SSB.
 
In this Ten-Minute Talk, Partners Corinne Staves, Zulon Begum and Andrew Pavlovic discuss the content and implications of this SRA Warning Notice, with a particular focus on how this might affect how law firm mergers operate in practice.
 
The full Warning Notice can be accessed here.

If you have any questions in relation to the SRA’s Warning Notice or wish to discuss mergers and acquisitions more generally, please contact Corinne Staves, Zulon Begum and Andrew Pavlovic.

Making decisions on partner remuneration and promotion can be hard – and this is the time of year when it all happens!  There are so many factors to consider – both human and legal, big picture and small but important. Questions those managing these processes in all sizes of professional services firms may be asking include:

  • Does rewarding partners in this way help to achieve our overall strategy and business plan?
  • Will that reward incentivise that individual?
  • Will it drive someone to look elsewhere and what would that mean for our growth and vision?
  • Is it fair to others in the firm?
  • Am I acting in the best interests of the business?
  • Do I need to or should I take into account a partner’s behaviour as well as their work product and financial contribution, and what weight should I give it?
  • Is there a risk of discrimination – are there specific factors we need to take account of?
  • Does my LLP Agreement give me/us the power to move someone down the equity and by how much?
  • Does our partner performance review process support the decisions we need to make?
  • Are we rewarding our stars appropriately and sufficiently?
  • What changes can I consider making to our partner remuneration system to adjust for individual partner over-and underperformance?

Join us on Thursday 11 July for an interactive discussion which will answer these questions and leave you feeling more confident in your decision making process, and how you can use it to drive your strategic vision and mitigate risk.

Our panel brings together expertise in remuneration structures and their implementation and application, managing partner performance – both over and under performance, fair and lawful decision making and discrimination law. They will share their experience and insights on these issues, which affect all professional services businesses on a regular basis.
 
Co-Chairs: 

Guest Speaker:

  • Jeremy Callman, Barrister, Ten Old Square – A leading expert in partnerships and LLPs and renowned authority on the issues relating to discretionary decisions making in this context, having advised and litigated on numerous cases in this field.

PPA Speakers:

Date: Thursday 11 July 2024
Time: 9.00am-10.00am BST

Registration:
Register to attend here.