LLPs and Professional Malpractice Insurance: Grading the Mortgage Grader Decision

A limited liability partnership (LLP) is first a general partnership that makes a special election for LLP status, thereby achieving limited liability for the partners. Many states, including New Jersey and Kentucky, require that, in order for a law firm to elect LLP status, it must have in place malpractice insurance or similar protections for clients. The rules as to the maintenance of malpractice insurance are, however, generally silent as to the consequences when that requirement is not satisfied.