Question

A client of the CPA firm of Smith and Wesson is a medical practice of seven local doctors. One doctor has been sued for several million dollars as the result of a recent operation. Because of what appears to be this doctor's poor judgment, a patient died. Although that doctor was solely involved with the patient in question, the lawsuit names the entire practice as a defendant. Originally, four of these doctors formed this business as a general partnership. However, five years ago, the partners converted the business to a limited liability partnership based on the laws of the state in which they operate.

Explain what liability the other six partners in this medical practice have in connection with this lawsuit, and what factors will be important in determining the exact liability, if any, of these six doctors.

Answer 1

A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. In an LLP one partner is not responsible or liable for another partner's misconduct or negligence.

So since the lawsuit on the business is as a result of negligence form one of its partners only that partner will be liable for the lawsuit. Thus the other six partners have no liability.

The main factor determining the exact liability for all partners will be the jurisdiction (State) in which the business is located.In full-shield states, a partner is generally liable for his or her own malpractice and misconduct but not for malpractice committed by other members of the LLP when he or she is not involved. Partners are not liable for other types of liabilities, including ordinary business debts of the partnership. Thus, the full-shield LLP offers much the same liability protection as the LLC