Outline Answer

LPC Outline
Task 1
a) It is important to consider whether there may be a possible conflict of interests. This not only includes whether the firm has acted for any of the individuals concerned and has obtained confidential information but whether it is likely that a conflict of interests may occur in the future. (Conduct Question - see solicitors Practice Rules 1990)
b) The nature of entering into a general partnership agreement is that 2 or more people agree that they will run a business together. Section 1 Partnerships Act 1890 determines partnerships as the "relation which subsists between persons carrying on a business in common with a view to profit". It does not have a separate legal existence. It can exist for a specified period of time or for a purpose or for as long as partners want (at will). They share decision-making rights which can be limited and share assets, profits and responsibility for debts.
c) Under the Limited Partnerships Act 1907, one partner must have unlimited liability. However, there can be a limited partner provided that he takes no part in running the business. This is good for joint ventures and investments and as such is ideal for Alan as a sleeping partner since his liability will be limited.
d) Partners in a LLP under Limited Liability Partnerships Act 2000 have full limited liability. It is a corporate body with separate identity from the partners. LLP are expected to be used mostly for professional firms, Alan would still be protected as a sleeping partner from unlimited liability but unlike Limited Partnership it is unclear whether the duty of good faith applies, a clear drawback.

Task 2
a) The legal risks include fines for non-compliance of obligations such as those relating to the business name (Business Names Act 1985). She could be expelled for misconduct or breach of the agreement. She may also be made financially liable for her actions and the actions of the other partners. As a part-time partner she will have unlimited liability and could face financial ruin to satisfy the firms debts.
b) Alan can take limited liability since he intends to take no part in the running of the partnership. Since Bernadette wishes to work part time she faces the prospect of unlimited liability and it is unlikely she could do the same unless she was a sleeping partner.
c) For Bernadette the risks of this option are that she alone would have full unlimited liability since Alan is a sleeping partner and has limited liability and Charles would not be a partner he would have no liability at all. Also she alone would indemnify Alan against any loss.
For Charles, the risks of this option are that he would not have the guaranteed rights that Bernadette and Alan have as partners. He would have no say in how the firm is run and wouldn't be able to share in the profits. He would not be able to insist on honesty from the partners since there would be no obligation of good faith on a non-partner.

Task 3
a) The firm name goes into clause 3 as written (of the precedent)
b) The £100,000 from Alan is inserted into the clause 8, the 'Capital' clause, with the figure next to his name.
c) The indemnity for Alan is inserted into clause 11, (the indemnity clause) as being from Bernadette and Charles.
d) Bernadette's £30,000 investment is inserted into clause 8 under capital, whilst her liability is inserted into clause 10 as unlimited and for the full share. Her 30-hour week is inserted into clause 12; (the management clause) and finally the three weeks paid annual leave is inserted into clause 7; the holidays clause.
e) Charles' salary is entered into clause 9 of precedent (salary clause) and that he works full-time is entered into the management clause (clause 12).
f) The 10% return on investment is entered into clause 8 under capital and the date inserted.
g) The order for priority of payments should be inserted in clause 10 under profits as listed.
h) This provision for profit sharing and building up capital needs to be inserted into clause 10 under profits detailing exactly how the profit is to be shared and that it is to be paid into capital until the figure of £100,000 is reached by all participants.

Sources:
The Law Society, "The Guide to the Professional Conduct of Solicitors", 8th edition
Trevor Adams, Alexis Longshaw, Christopher Morris, (2002/2003), "Business Law and Practice", Jordans

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