High Drama and Hindsight: The LLP Shield Post-Anderson

Authors

Susan Saab Fortney, Texas A&M University School of LawFollow

Document Type

Article

Publication Date

2-2003

Journal Title

Business Law Today

ISSN

1059-9436

Abstract

This article explores several disadvantages associated with limited liability partnerships (LLPs) in the wake of the Anderson-Enron debacle. The article explains how conversion to LLP from a traditional partnership may undercut the incentive for partners to devote time and resources to monitoring and risk management activities. Additionally, the article notes that conflicts may arise regarding the payment of debts when a firm, without sufficient malpractice insurance, converts to an LLP. The article delves into the exodus problem caused by the lack of partners’ commitment to the firm. The article also describes the tension between partners over malpractice insurance decisions that arise with LLPs. The article cites asset insufficiency and the potential of moral hazard as potential problems caused by LLPs. The article urges firms to carefully evaluate these potential negative consequences when deciding to transition from a traditional partnership to an LLP.

First Page

47

Last Page

49

Num Pages

3

Volume Number

12

Issue Number

3

Recommended Citation

Susan S. Fortney, High Drama and Hindsight: The LLP Shield Post-Anderson, 12 Bus. L. Today 47 (2003).
Available at: https://scholarship.law.tamu.edu/facscholar/35

File Type

PDF