Banks Ask UK Partners to Risk Assets for Law Firm Cash
Partners at law firms in the United Kingdom are being asked to risk their own assets to help keep loan money flowing to their law firms.
Banks in the country are leery of lending to law firms structured as limited liability partnerships and are asking partners to help shoulder the loan burden, Legal Week reports. Under the arrangement, banks increase lending to partners, who then provide more money to the law firm.
Colin Ives of accounting firm BDO Stoy Hayward told Legal Times that the banks want recourse against individual partners as well as the LLPs, which are structured to limit partners’ liability.
“Historically, law firms have been a good bet, but now banks are being more cautious in trying to reduce their risks,” Ives said. “If a bank lends to an LLP the only security is the assets of the LLP, whereas lending to partners puts the individual partner’s assets, such as houses, on the line–so it is theoretically safer lending as far as the banks are concerned.”
