Legal Definitions - L.L.P.

Definition:L.L.P. stands for limited-liability partnership, which is a type of partnership where a partner is not liable for the negligent acts committed by another partner or an employee not under their supervision. All states have enacted statutes that allow a business, typically a law firm or accounting firm, to register as this type of partnership.

Example: A law firm is registered as an L.L.P. One of the partners makes a mistake that causes harm to a client. The other partners are not personally liable for the mistake and their personal assets are protected.

Explanation: In an L.L.P., partners have limited liability protection, which means that their personal assets are not at risk if the partnership is sued. This type of partnership is often used by professional service firms, such as law firms and accounting firms, where partners may not have direct control over the actions of their colleagues. The example illustrates how an L.L.P. protects partners from being held personally liable for the mistakes of their colleagues.