There has been a significant change in the way partners approached partnership since the advent of LLPs. The new approach became, "I don't have to care as much about what the partner in the office next to me, down the hall, downstairs, in another city or in another country is doing because I won't be liable for the loss anymore. No more unlimited joint and several liability exposure. I am limited to my capital investment in the firm as the measure of liability. With many clients, strong skill sets and a good reputation, I can start over anywhere. I can concentrate on my work, avoid politics and the nonsense of firm governance. It matters not that control of the firm is delegated to others, or what their decisions might mean to the survival of the enterprise." That flawed assumption for many helped facilitate significant changes not only in the discipline of practice, but in law firm governance and participation of partners in the operation of their own firms. The transition to “law as a business” also promoted “more corporate like” leadership and control in the hands of fewer and fewer people. Lateral mobility began to pick up in this era as well, as barriers to entry were lowered. Growth through mergers and opening of new offices became much easier to accomplish. Transparency in financial reporting and compensation in many firms disappeared.
It has become clear that it would be difficult to have been more wrong about what the LLP entity choice really meant to partners and their law firms.
(Reprinted with permission of the Daily Journal Corp-copyright 2012)
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