Queensland law firm Carter Newell will not incorporate until at least 2010, when the state will start to abolish stamp duty on the restructuring of private businesses. Peter Ellender, CEO of the firm, said this during an ALPMA seminar on incorporation last week.

In June last year, Ellender said the firm was planning to incorporate within six months after the Legal Profession Act 2007 came into force on 1 July 2007. However, the firm is still a partnership.

"The timing is not right," said Ellender at the seminar of the current deferment. "In Queensland, stamp duty will be coming off in 2010. We'll incorporate over the next few years."

Contrary to Victoria and NSW, Queensland has not introduced legislation that exempts partnerships from having to pay stamp duty when they incorporate, and this makes the change to a corporate model financially unattractive. But some law firms are also deterred because they are unsure about the processes involved in incorporation. The law firms that attended the ALPMA seminar indicated they still have questions about the valuation of their practices, in particular of goodwill and work in progress.

Dr Gillian McAllister of the University of Western Sydney, one of the speakers at the seminar, led a case study in which three Sydney law firms were examined after they had incorporated. These firms felt that the biggest change incorporation had brought them was the ability to grow because funding was easier to obtain, she found. It also made them more creative in thinking about the management of the firm.

Although incorporation brings additional costs with it, the law firms that were part of the study also reported several cost savings. For example, they found that partner time was saved, because fewer partners were involved in the management of the firm. It also meant decisions were made much faster. The study asked clients if they saw incorporation of their legal adviser as a reason to switch firms. "We found that this was not the case," said McAllister.

But not everybody welcomes the ability to switch to a corporate model. Critics say that the departure from a partnership model will affect the responsibility lawyers feel to the court and their clients. Peter Ellender opposed this suggestion and said that the general consensus in meetings with regulators was that 'if you're ethical as a practitioner, you're ethical as a director'.

Australasian Legal Business