The Perils and Pitfalls of Practicing Law in a Texas Limited Liability Partnership
![handle is hein.journals/text43 and id is 581 raw text is: THE PERILS AND PITFALLS OF PRACTICING
LAW IN A TEXAS LIMITED LIABILITY
PARTNERSHIP
Elizabeth S. Millert
I. INTRODUCTION ............................................563
II. GENERAL RULE: FULL LIABILITY LIMITATION ......................564
III. EXCEPTIONS TO TORT-TYPE LIABILITY PROTECTION ..... .....565
IV. EXPIRATION OF PROTECTION AND OTHER TIMING ISSUES..............569
V. INSURANCE OR FINANCIAL RESPONSIBILITY. .................576
VI. NAME ......................................... .....578
VII. BACK DOORS AND END-AROUNDS: BUY-OUT, CONTRIBUTION,
AND INDEMNIFICATION OBLIGATIONS IN THE PARTNERSHIP
AGREEMENT ......................................... 579
VIII. COMPARATIVE COST OF LLP VERSUS PROFESSIONAL LIMITED
LIABILITY COMPANY OR PROFESSIONAL CORPORATION................582
IX. WINDING UP ISSUES IN LLP VERSUS PROFESSIONAL LIMITED
LIABILITY COMPANY OR PROFESSIONAL CORPORATION................583
X. CONCLUSION. .........................................586
I. INTRODUCTION
A limited liability partnership (LLP) is a partnership that has availed
itself of statutory procedures so as to alter the traditional rule that the
general partners have personal liability for all of the partnership's debts and
obligations The statutory provisions applicable to general partnerships (or
those applicable to limited partnerships in the case of a limited partnership
that has registered as an LLP) continue to apply to a partnership after it
registers as an LLP-it is the same entity as it was prior to registration.2
The LLP provisions of the Texas Business Organizations Code (TBOC)
f Professor of Law, Baylor University School of Law.
1. See generally 19 ROBERT W. HAMILTON, ELIZABETH S. MILLER & ROBERT A. RAGAZZO,
TEXAS PRACTICE SERIES: BUSINESs ORGANIZATIONS §§ 12.01-12.43 (2d ed. 2004 & Supp. 2010)
(discussing the general nature of an LLP and the liability protection provided to the partners).
2. See Formation of Texas Entities FAQs-Limited Liability Partnerships (LLPs) and Limited
Liability Limited Partnerships (LLLPs), SECRETARY OF STATE, Nos. 1, 6, and 7, http://www.sos.
state.tx.us/corp/formationfaqs.shtml (last visited Jan. 10, 2011). The common misconception that an
LLP is formed by filing an application for registration with the Secretary of State is addressed on the
Secretary of State's website. See id. (pointing out that an LLP is merely an optional registration made
by an underlying, pre-existing partnership, that [a]n LLP is not an entity separate and apart from the
underlying partnership, that [r]egistering an LLP does not create a partnership, and that the statutory
conversion provisions cannot be used to convert into an LLP).
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The Perils and Pitfalls of Practicing Law in a Texas Limited Liability Partnership
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