Consultants line up to embrace limited liability partnerships after EC Harris' move to raise more capital.
Consultant EC Harris is to become a limited liability partnership, a move that will greatly increase the amount of capital at the firm's disposal

It is also likely to signal a period of rapid growth among the country's largest QS and project management groups as they, too, move to become LLPs. Gardiner & Theobald and Davis Langdon & Everest have indicated that they plan to follow suit next year.

EC Harris, which has a turnover of £140m and employs 2300 people, will change its status in November. Richard Clare, the firm's chairman, said the restructuring would create 100 additional equity partners.

Clare said: "It gets more capital into the business. It will be available for ongoing growth, maybe for some acquisitions or mergers. The buys are more likely to be sector-driven than geographical."

Clare was bullish about the decision. He said: "It is the best thing that has happened to the business for a very, very long time. To be able to move the ownership from 40 partners to 140 is staggering, and one which is so motivational to the staff."

Philip Youell, chief executive of EC Harris, who took up his role on 1 May, said that the LPP structure would create a more transparent business, giving international clients and banks more confidence.

G&T senior partner Colin Wyatt confirmed that his firm would make the move next year. He said the move would reduce partners' liabilities (see "What is an LLP?").

It is the best thing that has happened to the business for a very long time

EC chairman Richard Clare

Accountant Ernst & Young made the switch to LPP after 2001 because of fear that it would be liable for the Enron-style collapse of a client.

The Enron case led to severe problems at Arthur Anderson, which acted as auditor for the company and approved its accounts.

Wyatt said: "You cannot have a large partnership with a litigious atmosphere in the world. There are all sorts of benefits and very little downside to the move."

DL&E is due to decide on whether it will become an LLP next month, however senior partner Rob Smith said the step was inevitable.

What is an LLP?

Limited liability partnerships were introduced by the government in 2000. They offer partners a way of capping liability without becoming a limited liability company. The advantage of the LLP is that the liability of partners against possible legal action is limited. In a normal partnership, partners accept unlimited liability.