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In its simplest form, a partnership is just two or more people getting together to own and run a business. But sometimes “simplest” doesn’t mean “right.” If you and your partners are lawyers and doctors, two professions at high risk for malpractice lawsuits, a limited liability partnership, or LLP, may suit your needs.
That’s because a basic doesn’t protect its owners’ personal assets against anyone demanding payment from the business. An LLP could be the solution to protecting yourself and the other partners. Or at least it’ll get you part of the way there.
An LLP is an unincorporated business owned and run by multiple people, all of whom share ownership and management responsibilities. These multiple partners enjoy limited personal liability for the business’s debts and the actions of the other partners.
This is crucial because, despite their efforts to do their jobs the right way, professionals may get sued when their clients aren’t happy with the outcome of their work. LLPs are commonly associated with businesses with licensed professionals, such as attorneys and accountants.
Say you’re a litigator and your clients disagree with your legal strategy, then lose their court case. They could sue you. You’re a doctor, and one of your patients gets seriously injured and dies under your care. Malpractice suit.
Malpractice cases can be costly. As a partner in a law firm or doctor’s practice, you have some control over your own risk for a lawsuit but little control over that of other partners. An LLP insulates your personal assets from others’ actions and the actions of the partnership’s employees.
That said, limited liability has limits. Each partner in an LLP remains personally liable for his or her own professional activities.
Note that an LLP is not the same as a ; they’re two different .
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