Bird & Bird has secured an innovative debenture agreement with Royal Bank of Scotland (RBS) to provide flexible credit.

The unusual agreement, signed on 6 May in the wake of the City firm's conversion to a limited liability partnership (LLP) last year, gives the bank security over the firm's assets.

The facility secures against Bird & Bird a flexible credit line of around £10m to be used as and when needed. The amount the firm will use at any one time will vary from month to month.

Before converting to an LLP the firm required partners to build up cash capital in the firm through personal resources or out of their profits rather than borrowing from the bank.

On converting to an LLP, the bank said partners could either take on personal liability by borrowing themselves, or borrow through a debenture secured on the firm's assets. Bird & Bird opted for a debenture to remove liability from individual partners.

Bird & Bird chief executive David Kerr said: "One of the drivers of converting to LLP status was ending any personal liability of the partners for the firm's debt. This is a structural change we have taken with the bank on our borrowings. It is an unusual but positive move, using a debenture in a different light to before. It was a prudent decision in this environment.  Others could follow."

BDO Stoy Hayward head of professional services tax Colin Ives said: "The move to use a debenture in a positive way is a good thing for partners who are no longer personally liable for the funding of the firm's business. This arrangement is breaking the mould and is a sign of financial strength."