Much has been written about the advent of legal disciplinary practices (LDPs) and the regulation of alternative business structures (ABSs) and their potential impact on the legal marketplace. But what has gone largely unnoticed is their potential impact on partnerships and LLPs which simply have no desire to go down the LDP route at this stage. It might be thought that for such firms there would be nothing to fear – but that couldn't be more wrong.

Example 1: Take the firm (partnership or LLP) which, in common with so many others, decides to widen the expertise of its management board by inviting an eminent non-lawyer to become a member. All board members have a vote on decisions within their remit. Nothing wrong there, is there? Wrong. Under the 'management and control' requirement, which forms part of rule 14 of the revised Code of Conduct from the end of March 2009, every person who exercises any voting rights in a partnership or LLP must, in effect, be legally qualified or both approved by the SRA and what is unattractively styled a 'manager' (i.e. a partner/member of the firm).

Accordingly, there are two choices: disenfranchise that board member or seek SRA approval and admit him to the firm. Semi-compulsory LDPs: is that really what the Government intended when enacting the Legal Services Act 2007?

Example 2: Take the US firm which has representative partners in a UK partnership who for many years have held their shares on trust for the US firm. Nothing wrong with that surely, as all the US partners are clearly not members of the UK partnership? Wrong. Rule 14, also now for the first time, prohibits a partner in a partnership from creating any third party interest over his share, even if the beneficiaries of that trust are all registered foreign lawyers (RFLs). Yet it seems that the SRA is quite content for such a partner to hold his share of profits on trust for the US firm. Moreover, if the UK practice had been carried on through a company, it would be permissible for a member to hold his shares as nominee for the US firm, provided that all the partners in that firm are RFLs. Logical or what?

Example 3: Take a traditional solicitors' partnership in which two groups of partners are in dispute. They decide to split the practice and assets between them in order to form two new firms. Whichever firm is not regarded as the successor practice must arrange PI cover, but surely all that is otherwise necessary is to formally notify the SRA once the two new firms are up and running. Wrong. The existing firm will, from April 2009, have been automatically 'passported' into recognised body status and it will be for the SRA to determine which (if any) of the two new firms is to be regarded as 'inheriting' that recognition. The other new firm must apply for recognition afresh. To commence practice without such recognition will not only be professionally improper but also illegal, and the new firm will be automatically dissolved whether the partners realise it or not. The only good news is that emergency recognition can be obtained over the telephone subject to the satisfaction of certain conditions.

Example 5: Take a firm which inadvertently breaches the management and control requirements under the Code by granting voting rights to a non member. Unless that breach is remedied within the grace period of 28 days, its recognition can be removed by the SRA. If, however, the breach results from a change in a partnership, then subject to the grace period the partnership must cease practice forthwith. No such requirement applies where there is a change in the members of an LLP. It makes Tesco Law look like a doddle, doesn't it?

Roderick I'Anson Banks is a tenant at Partnership Counsel.