Part owners win whistle-blower rights in ruling

A LANDMARK judgement by the Supreme Court yesterday confirmed that limited liability partnership (LLP) members are entitled to the same whistle-blowing rights as other employees.

The ruling, which determined that former Clyde & Co employee Krista Bates Van Winkelhof can claim status as a whistleblower despite owning a part of the firm, may have wide-ranging consequences for other law firms and other organisations who use an LLP arrangement.

An LLP arrangement means that someone working at a firm owns a portion of the business, but would not be left liable for financial losses if it went under.

“LLP members have access to financial documentation and management information that most employees would not see, and are therefore more likely to be aware of wrongdoing than more junior members of staff,” said Michelle Chance, partner at Kingsley Napley.
Chance added: “LLPs should encourage a culture of compliance and transparency in which members are valued for doing the right thing and bringing wrongdoing to their firm’s attention, so that it can be dealt with.”

In the Clyde case, the ruling did not determine the validity of Van Winkelhof’s complaints, but simply confirmed that she would be able to pursue them under the same procedures as any employed worker.

“Partners are the people most likely to become aware of wrongdoing in LLPs but risked being at the greatest disadvantage with respect to protection. High profile collapses like Enron and Arthur Andersen demonstrate why we need Partners to speak out if they spot wrongdoing. It is in everyone’s long-term interests,” said Joanna Blackburn, head of Mishcon de Reya’s employment section.