Accountants have an often well-deserved reputation for being grey, unimaginative folk, locked into stuffy old partnerships that belong more to the last century than the modern world. But those at KPMG, Britain's second-largest firm with revenues of about pounds 600m, could be about to change all that by breaking the mould of their profession. Early next month, they are due to announce the result of a vote on incorporating the audit arm of the firm.
If, as is widely expected, they go ahead, the floodgates are likely to be opened. Coopers & Lybrand, Britain's biggest firm of accountants, Price Waterhouse and other members of the big six will step up plans already under way.
The ostensible aim of this move, like the decision last year of the leading US firms to adopt limited liability partnership status, is to provide protection against the increasing number of negligence suits being filed against auditors on both sides of the Atlantic. Ironically, the KPMG announcement will come just as the Law Commission - after years of campaigning by the big firms and the Institute of Chartered Accountants - is looking into the feasibility of reforming the law of joint and several liability, under which defendants can be forced to meet a total claim regardless of their degree of fault.
The accountants say they welcome the development, but for them it is all a bit late, and it is unlikely to dissuade them from the present course. Even if the Law Commission decides the issue is worth investigating further, there can be no change in the law for at least five years - by which time a number of firms could have been wiped out by claims of the scale of the $8bn suit hanging over PW and Ernst & Young.
There is more to the plan than this, however. In any case, the plan only provides partial protection, as Colin Sharman, KPMG's senior partner, has pointed out. Partners would no longer risk losing their homes as directors of a limited liability company, but they could still be sued personally and the organisation bankrupted.
The more compelling reason for abandoning the partnership ideal is that, for all the attempts to devolve day-to-day management to small groups of people, it is not an obviously satisfactory way of running a business in the late 20th century. When responsiveness is the order of the day, it is surely far better to have an organisation with a clearly accountable management structure. Nonetheless, many will mourn the passing of these ancient partnership structures. Even in the modern world, partnerships have some redeeming features, not least the maintenance of high professional standards. When it is your house as well as your colleague's which is on the line, there is a built-in check against negligence.Reuse content