Changes in Limited Liability Partnership Rules Proposed

Added: (Thu Jan 14 2010)

Pressbox (Press Release) - Alan M. Insul, a Los Angeles-area lawyer who limits his practice to the areas of corporate, business, and real estate, offers insight into the proposed changes.

The California State Bar has proposed a comprehensive set of changes to the rules governing law firms that operate as limited liability partnerships (LLPs). A LLP is a form of doing business which is authorized in virtually all jurisdictions, however, in California it is limited to being used by lawyers, architects, and accountants, and certain limited related entities. “Its primary advantage is that it marries the flexibility of allowing professionals to act as general partners with some of the liability protection typically enjoyed by those who are limited partners or shareholders of a limited partnership or corporations, respectively,” said Alan M. Insul, a Los Angeles-area lawyer who limits his practice to the areas of corporate, business, and real estate. As a member of the steering committee of the real estate brokerage subsection of the State Bar of California’s Real Property Law section, he is also the author of a chapter on Limited Liability Partnerships in the recently published book “Selecting and Forming Business Entities” (2nd Ed.) published by the Continuing Education of the Bar. The proposed rule revisions were not intended to substantially change current requirements, but they include modifications that reflect current practice and enhance operational efficiency.

“The rules being discussed here are related to how the state bar controls lawyer Limited Liability Partnerships (LLPs),“ Insul asserts, “For example, the LLP has to file and become certified as a law firm LLP. This requires compliance with a number of requirements such as providing adequate client protection for malpractice claims. State bar rules for attorney LLPs have been in place since 1995 and were amended in 1997 and again in 2000. The proposed State Bar revised rules for Limited Liability Partnerships are part of an ongoing effort to clarify the organization and language of State Bar rules,” Insul said.

The proposed rule changes will be open to comment through January 15, 2010. If comments do not require substantive changes necessitating another comment period, the board will be asked to adopt the proposal at its March or May 2010 meeting for an effective date of July 1, 2010.