In Ederer, the plaintiff, who was a former partner of a law firm, commenced an action for breach of a withdrawal agreement and for an accounting of his interest in the firm. The complaint included the individual partners of the limited liability partnership as parties. The individual defendants moved for summary judgment and argued that §26 of the New York Partnership Law, which authorizes the creation of limited liability partnerships, shielded the individual partners from claims by their former partner. The trial court denied defendant’s motion for summary judgment and found that §26: “has nothing to do with a partner’s fiduciary obligation to account to his partners for the assets of the partnership.” The First Department, on appeal, affirmed and similarly held that §26: “does not exempt . . . partners from their individual obligations to account to a withdrawing partner under the earlier enacted and unamended Partnership Law . . . and does not exempt the individual defendants from liability to plaintiff for breaches of firm-related agreements between them.”2 The Court of Appeals concurred and affirmed.

Accordingly, absent an agreement to the contrary, law firm partners in a limited liability partnership are liable to their partners concerning claims for breach of fiduciary obligations to account, and breaches of firm-related agreements.

Ederer demonstrates, once again, the importance of having a written partnership agreement. As the Court of Appeals stated at the conclusion of its opinion:

[W]e emphasize that the law of partnerships contemplates a written agreement among partners specifying the terms of their relationship. The Partnership Law’s provisions are, for the most part, default requirements that come into play in the absence of an agreement . . . . Partners might agree, as among themselves, to limit the right of contribution or indemnification or to exclude it altogether. 3


Accordingly, the partners of a limited liability partnership who intend to limit the liability of individual partners to one another and wish to avoid personal liability may wish to include a provision in their agreement which does so. A sample provision is as follows:

In the event any partner asserts a claim concerning the Partnership against any of the partners of the Partnership, any such resultant liability shall be satisfied by and limited to the assets of the Partnership and in no event shall any individual partner of the Partnership have any personal liability concerning such claim.

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