Question

Clark and Kent are attorneys and have formed an LLP. They take on various debts and obligations to operate the firm, including an installment contract to purchase computers and copy machines for the office. The LLP law in their state provides for liability protection for innocent partners should another partner cause liability through a tortious act. Clark is sued by Lois for civil assault and battery after he improperly touches her during an office meeting to discuss her divorce, in which Clark is representing her. The amount of her judgment exceeds the assets of the LLP, and the LLP dissolves. What is Clark and Kent's liability for the judgment and other firm debts?

Answer 1

In an LLP, the liability of Partner's is limited to the amount of Capital Contributed by them generally. However one partner is not responsible for other Partner's Misconduct and liability arising out of the same, while the LLP is liable for such liability. The partner behind such misconduct is personally liable for excess of liability over the LLP's Assets.

In the given case, LLP dissolves as a result of liability arising out of Judgement due to Civil Assault by Clark one of the partners of LLP. In this case any excess liability is to borne by Clark which LLP is not able to due to the Judgement.

Kent is not responsible for any Excess liability which the LLP is not able to bear, including other firms debts.

It is pertinent to note that Clark is not personally liable for Other Firm's Debt due to dissolution of LLP and his liability being limited in such case.