Nothing concentrates the mind of a managing partner like the prospect of paying a huge malpractice award out of his own pocket. With all eyes fixed on the Enron Corp. pileup – and the resulting suits leveled at Arthur Andersen, Vinson & Elkins and Kirkland & Ellis – several large law firms are considering restructuring to erect stronger legal shields around their partners’ assets.
The firms debating a change are general partnerships, an organizational form that offers virtually no protection to equity partners. If a general partnership, such as Chicago’s Kirkland & Ellis, is found liable for damages that exhaust its insurance policies, each equity partner could be on the hook – personally – for the remaining damages.
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