Lovells is pressing ahead with its limited liability partnership (LLP) conversion even though the move means its French partners could become employees of the firm.

The top 10 City firm is voting on the change and intends to convert on 1 May, although it is still waiting for confirmation from the French tax authorities on the tax treatment of UK LLPs.

The firm is proposing to give partners in France the choice of either remaining equity partners in the UK LLP and risking double taxation or becoming employees of the firm, rather than partners.

Lovells' decision to move ahead without the ruling comes after the firm was forced to delay its plans to convert by two years because of tax concerns in France.

The firm has around 20 partners in its Paris office, which is headed by recently-appointed managing partner Philippe Thomas, and is expecting that most will opt to become 'employed equity partners' rather than risk tax problems in the future.

Senior partner John Young told Legal Week: "The French partners will have the option to become employed equity partners. Legally, they will be employees, but they will be treated like equity partners in everything except voting rights. I would expect most of them to take this option. If and when the French tax rules change, people will probably be able to come back in."

Several other jurisdictions, including Hong Kong and some parts of Central and Eastern Europe, will be left out of the UK LLP altogether because of local laws, but Lovells' decision for France will give it the benefits of limited liability without the tax problems or the complication of setting up a separate partnership there.

Lovells' LLP vote is due to close on 5 March to give it time to convert for 1 May.

Lovells was one of four firms that shelved plans to convert on 1 May last year because of the French tax issues. Together with Norton Rose, Freshfields Bruckhaus Deringer and Linklaters, it chose to wait in the hope that the French authorities would change the tax rules.

City firms have been lobbying the authorities intensively to secure amendments to the rules to avoid the double taxation of local practices within UK LLPs.

Norton Rose and Ashurst's plans to convert are currently on hold while they wait for clarification from the French, while other firms including Clifford Chance (CC) and SJ Berwin have initially left France out of their UK LLPs. CC converted to UK LLP status at the end of last year but was only able to include some of its international offices in the UK LLP. Its US and French practices remain in a US LLP.

Colin Ives, head of professional practice tax at Smith & Williamson, said: "France says it is going to agree to change its regime and treat the UK LLP as tax-transparent, but it has not done that yet, so a number of firms have missed France out for the time being or are delaying their conversion.

"I hope that [Lovells' choice to make French partners employees] is only a temporary arrangement until the French interpretation changes."

Top UK firms have faced a number of problems as they battle to convert to LLP status. Last year there was turmoil in Germany when new tax laws threatened firms with a substantial tax hike if they converted to a UK LLP. However, in November the rules were amended.