Linklaters, Freshfields Bruckhaus Deringer and Clifford Chance are holding urgent discussions to tackle 11th hour obstacles to limited liability partnership (LLP) conversion that have arisen in proposed German tax laws.

The three firms have held high-level talks this month to explore a solution to the difficulties thrown up by the proposed new legislation, which could require the firms either to take a major tax hit or to separate their German partner-ships in order to convert.

It is feared that the reforms, which are due to be implemented in December, will only treat contributions from European Union-resident partners as tax-neutral. This would lead to significant tax charges for Asian and North American-based partners.