Can a New York lawyer practice through an LLC or LLP to limit personal liability for the malpractice of partners the lawyer did not supervise?

Plain-English summary

New York had recently enacted Limited Liability Company Law and Partnership Law provisions that shield a lawyer from professional liability for the acts of other associates or partners in the LLC or LLP, while preserving the lawyer's liability for his own malpractice and that of persons under his "direct supervision or control." The committee was asked whether a lawyer who adopts that protection by practicing in LLC or LLP form would violate DR 6-102(A), which bars a lawyer from seeking to limit prospectively his individual liability to a client for malpractice.

The committee concluded there was no violation. It reasoned that the statutory protection limits only the lawyer's vicarious liability arising from practicing through a general partnership, and does not absolve the lawyer from liability for his own malpractice or that of anyone he supervises, so the statutes are consistent with DR 6-102(A). The committee drew support from the Code's treatment of professional corporations: New York's Professional Corporation Law, in effect for about 24 years, contained a virtually identical limitation, and EC 6-6 expressly recognized the ethical validity of limiting a shareholder lawyer's vicarious liability for other shareholders' malpractice "to the extent permitted by law." Because the LLC and LLP limitations mirror that provision, EC 6-6 should be deemed to apply. The committee also noted that the LLC and LLP statutes preserve existing law except where in conflict, reflecting a legislative intent that the statutes prevail. On client notice, it observed that the statutes require designating the limited-liability form in the firm name (for example, "LLC" or "LLP"), that most committees treat that designation as adequate notice, and that lawyers should be prepared to answer client questions about the change.

Currency note

This opinion was issued in 1995, before New York replaced the Code of Professional Responsibility (the Disciplinary Rules and Ethical Considerations cited here) with the New York Rules of Professional Conduct, effective April 1, 2009. The statutes the opinion construed may since have been amended. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer use an LLC or LLP to limit liability for a partner's malpractice?

A: The opinion concluded yes; the statutory protection limits only vicarious liability for others' acts and does not touch the lawyer's liability for his own malpractice, so it does not violate DR 6-102(A).

Q: Why isn't this an improper prospective limit on the lawyer's own liability?

A: Per the opinion, DR 6-102(A) bars limiting one's "individual" liability, and the statutes preserve full liability for the lawyer's own malpractice and for that of anyone the lawyer directly supervised or controlled.

Q: Does the lawyer have to tell clients about the limited-liability form?

A: The committee noted the statutes require designating the form (for example, "LLC" or "LLP") in the firm name, that this is generally sufficient notice, and that lawyers should be prepared to answer client questions about the change.

Background and rules framework

The opinion applied New York Code DR 6-102(A) (no prospective limitation of a lawyer's individual malpractice liability) and EC 6-6 (recognizing limits on vicarious liability for associates' malpractice to the extent permitted by law), reading them against New York's then-new LLC and LLP statutes and the longstanding Professional Corporation Law. The analysis corresponds to ABA Model Rule 1.8(h) (limiting liability to clients).

Citations and references

Rules of Professional Conduct:

• New York Code DR 6-102(A); EC 6-6 (applied in the opinion)
• MR 1.8(h) (limiting liability to a client)

Statutes:

• New York Limited Liability Company Law (including the liability-limitation and firm-name-designation provisions)
• New York Partnership Law (registered limited liability partnership provisions)
• New York Professional Corporation Law (cited as the analogous, longstanding limitation)

Other opinions cited:

• District of Columbia 235 (1993), amended by 254 (1995); Kansas 94-03; Michigan R-17 (1994); N.Y. County 703 (1994): client-notice requirements for LLC/LLP practice

See also

• NYC Bar Formal Op. 1995-8: Affiliations and "Of Counsel" Designations
• NYC Bar Formal Op. 1995-9: Same Firm Name Across Two Jurisdictions
• ISBA Ethics Op. 684: Law Firm Employing a Nonlawyer Labor Specialist

Source

• Landing page: https://www.nycbar.org/reports/formal-opinion-1995-7-prospective-limitations-on-liability-limited-liability-companies-llcs-and-limited-liability-partnerships-llps/