LLPs need to watch out for bullying risks

THE pressure on partners to perform is a constant characteristic of a professional firm. In such an environment perhaps it should not come as a surprise when the behaviour of some high calibre individuals falls short of the mark. Generally, firms are alive to the dangers of employees being bullied, particularly following the case of Helen Green. Damages of £828,000 were awarded to Green, who suffered a nervous breakdown as a result of workplace bullying while at Deutsche Bank. However, when it comes to bullying between partners, City firms are often not so assiduous in tackling the problem.

Most firms try to deal with behaviour that does not conform to the business’s values. However, partners are not always treated the same; a big billing partner, for example, may be tolerated more than others. The typical set of circumstances is of bullying causing illness which affects performance, leading to the victim partner leaving the firm and then facing great difficulty finding an alternative position.

What kind of behaviour should firms look out for? Case law shows that a group of partners ganging up on a fellow partner to pressure him into accepting a position to his detriment can be treated as bullying. Foul and abusive language, behaviour designed to humiliate or embarrass, or to intimidate or demoralise a fellow partner all fall within the scope of bullying.

Less obvious examples include a partner persistently dismissing or belittling the input of a fellow partner. Bullies might say that this is part and parcel of being a partner in a high pressured environment. Are they right? All partners in a general partnership owe a duty of good faith to their fellow partners. There is case law authority to the effect that bullying can amount to a breach of the duty of good faith. This may give the victim partner the right to claim damages and even the right to apply to wind up the firm.

If the firm is a limited liability partnership (LLP), a member in a LLP owes a duty of good faith to the LLP. There may also be an express provision in the members’ agreement imposing an obligation of good faith between the members. Even if there is no express term, there may be a duty of mutual trust and confidence between the members and the LLP. Bullying would be a clear breach of this kind of duty. Also, the common law duty of care to maintain a safe workplace should apply equally to a partnership and an LLP.

The firm may also find that it is liable to the victim partner under the Protection from Harassment Act 1997, which provides that a person must not pursue a course of conduct which he knows or ought to know amounts to harassment. The partner responsible for the bullying will not be able to defend a claim on the basis, for example, that the victim was overreacting, if a reasonable person would have judged the behaviour as harassment. Once guilt has been established, both the bullying partner and the firm could be liable for damages and the firm may also be liable for harassment under the Equality Act 2010.

While many City firms are holding up in the current climate, in countless cases partners are running faster in order to stand still, with the attendant pressure this creates. Firms should be aware of the potential risk posed by a successful but acerbic and dominating partner and, where bullying behaviour comes to the attention of the firm, it needs to take action.

Doug Preece and James Daughtrey are partnership law experts at Fox Williams LLP