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Give Me Shelter: The Appropriateness of Inter-Partner Contribution Agreements
In the wake of the recent corporate scandals, such as Enron and WorldCom it is only a matter of time before the sanctity of Limited Liability Partnerships (LLPs) is challenged. Jonathan D. Glater, 'Enron's Many Strands: Accounting; Suits Against Anderson May Test Partners' Risks,' N.Y. Times, February 12, 2002, at C6. Providing lawyers in law firms registered as LLPs with additional liability shields from third parties will undoubtedly become a critical issue and, ultimately, it will be up to the courts to determine the scope and power of LLPs. Nevertheless, as a prophylactic device, it makes sense for law firms registered today as LLPs to consider whether it is appropriate for the partners to agree in the firm's partnership agreement to inter-partner contribution with respect to partner malpractice or other partner-generated liabilities.
To date, all U.S. jurisdictions have adopted some version of an LLP statute. Bromberg AR, Ribstein LE: Bromberg and Ribstein on Limited Liability Partnerships, The Revised Uniform Partnership Act, and The Uniform Limited Partnership Act (2001), NY, Little, Brown: '1.01(e); 2002. Many have adopted statutes similar to the Revised Uniform Partnership Act's model LLP statute, which provides limited liability for all partnership debts and obligations. Bromberg & Ribstein, '3.03. For example, California (Cal. Corp. Code ”16100 Corp. to 16962 Corp.), Connecticut (C.G.S.A. ”34-300 to 34-434), Delaware (Del. Code Ann., tit. 6 Del. C. '15-101 to 6 Del. C. '15-1210), New Jersey (N.J. Rev. Stat. NY, Little, Brown: '42:1A – 1-42:1A-56) and Texas (Vernon's Ann. Civ. St. art. 6132b-1.01 REV. CIV. STAT. To 6132b-11.04 Rev. Civ. STAT.) are among the states that have adopted versions of R.U.P.A. (For a complete listing of all the states that have adopted the R.U.P.A., see Bromberg & Ribstein, Ch.8.)
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