LAW FIRMS' ENTITY CHOICES: REFLECT APPEAL OF NEWER BUSINESS FORMS

Lawyers associated in firm practice could choose any organizational form they wished, so long as it was a general partnership. To be sure, commercial enterprises had the choice of corporate or partnership forms, but professionals in practice were denied the option of incorporating, leaving the partn...

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Bibliographic Details
Published in:Business Entities 2014-07, Vol.16 (4), p.16
Main Authors: Martin-Rhodes, Allison, Hillman, Robert W, Tran, Peter
Format: Article
Language:English
Subjects:
Attorneys
Business forms
Law firms
Liability
Limited liability companies
Organizational structure
Popularity
Professional liability
Professionals
Sole proprietorships
Startups
Taxation
Trends
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Summary:Lawyers associated in firm practice could choose any organizational form they wished, so long as it was a general partnership. To be sure, commercial enterprises had the choice of corporate or partnership forms, but professionals in practice were denied the option of incorporating, leaving the partnership as the only "choice." With the near elimination of tax differences, limitations on personal liability are the primary motivation behind law firm movement away from general partnerships to newer associational forms. Although no entity form shields a lawyer from personal liability for his or her own professional negligence or that of lawyers that he or she immediately supervises, the PC, LLC, and LLP each afford some level of protection against vicarious liability for the professional negligence of other lawyers in the firm. Over time, the PC form can be expected to decline in usage, in part because newer firms with the ability to choose forms without conversion costs likely will favor LLP and LLC options over the PC.
ISSN:1524-3583