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Guide to Limited Liability Partnership

Limited Liability Partnership

Limited liability partnerships (LLPs) are still relatively uncommon in the United States, as they are still only recognized in 40 states and portions of Canada. But the overall number of these organizations are growing, especially in the legal profession, due to the decline and crisis experienced by many traditional partnership law practices in the early 1990s.

Basically, they are as their name describes, in that allow the incorporation of a company or firm among many partners, where the partners are able to protect themselves from being held liable for the losses incurred by one of their business partners. While LLPs can be implemented in many different forms of corporate venture, they began to emerge in the legal profession after many traditional partnership firms began to falter due to years of poor planning and business decisions.

Most of the poor business decisions on the behalf of traditional partnerships were represented in their relative zeal in promoting numerous undeserving candidates to the level of partner based mainly on organizational tenure and less on individual merit. led to many legal firms, which already were predicated on poor foresight to become overburden by legal partners who themselves were loyal to the flawed system that had benefited them, and were thus less likely to implement major changes.

As legal costs continued to escalate industry wide, many organizations tried to offset these rising costs by delegating many of their usual chores to paralegals, who could perform some of the same tasks for far less money. These firms could not match the decreased costs of service, and a number of them downsized considerably in order to cover their losses and match the decreasing legal costs in the industry.

It was with this in mind that many LLPs came into being in the early to middle 1990s, as individual lawyers, who recognized the benefits of combining resources with other lawyer in the same vein of traditional partnerships, also did not want to be held liable if their partners in the venture made decisions that could jeopardize the firm. In LLPs, the partners are usually protected from the financial failures of their partners; as a result of this, the partners in these firms can often behave somewhat autonomously of other partners in the same firm.

As such, This occasionally presents office environments which different sections may not always be able to become involved in the legal cases of other areas of the same firm, because they fall under the overview of another partner.

In most other respects, working for an LLP should be no different for a paralegal than entering into any other legal firm, as LLPs are generally created to be run like a normal corporation, with shared leadership stake by each partner, who has a say in how the company is run.

However, given the steady emergence of LLPs in both the legal profession and throughout the American business community, LLP incorporation and its legalities is one of the more common courses taught today

NEXT: What is a Professional Corporation?

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