We all know that partners owe a duty of good faith towards the partnership as a whole, and also to their fellow partners. But, the rules are different for LLPs.

A 'member' of an LLP is not a partner; instead, he is an agent of the LLP. As such, he has the usual fiduciary duties to the LLP as a whole (ie to act in good faith, not misapply money or property; avoid confl ict of interest; not compete; and not to take a secret profit). However, although the position is not entirely settled, it does seem fairly clear that those duties are owed to the LLP only – they are not owed intra-member (ie they cannot be enforced by one member against another member). This assumes, of course, that there is no express agreement saying that an intra-member fiduciary duty does exist.

Firms that are constituted as LLPs should consider whether it is a good idea to have an express obligation of intra-member good faith. One point worth bearing in mind is that this may potentially open a can of worms in the future with unhappy members suing each other; the alternative is not to have intramember fiduciary duties, which means then that the LLP as a whole will then decide whether it is appropriate to take proceedings to enforce that duty. For an introduction see [2008] LSG 3 April 17 . © Practical Lawyer