The Research On Limited Liability Partnership Law Firm

Governing a country according to law and building a harmonious society are the main themes of our times. Attorney, as a profession, is an important part of our justice system. Approximately, it has been thirty years since we restored the lawyer system in1979and it has been twenty years since we started to reform the attorney system into a more market-oriented system. Along with the remarkable increase of China’s economy, legal service is in great demand and the attorney profession developed rapidly. The defects of law firm management and organization mode inherited from planned economy system were gradually unveiled.After study on several satisfactory-standing firms, we have settled on a universal rule that the larger the firm is, the riskier their practice would be. Particularly, lots of firms enlarged themselves aimlessly, and by doing this their inter-auditing among partners weakened dramatically. Additionally, a numerous amount of commission-based attorneys and contract-based attorneys have begun to practice without the supervision of partners. In recent years, courts’decisions indicated that there is an increase of civil compensation due to attorney malpractice. Therefore, law firm is facing a critical issue which is how to keep the big size of the firm without having the legal risk increased.Different organization modes of firms have different allocation of obligations, in my opinion, the perfect mode for big-sized firms is limited liability partnership, which combines unlimited liability and unjoint liability. On one hand, one partner do not need to take unlimited and joint several liability for others’intentional or gross negligence, and this will reduce the liability of partner; on the other hand, the partner still needs to take unlimited liability for him or her selF’s malpractice, and therefore the client’s rights will be well protected.The revised<Law of People’s Republic of China on Lawyers> and <Measures for the Administration of Law Firms> approval the limited liability partnership model for law firms, however, because of its simplicity and abstract style, the said law and regulation cannot give detail guidance to law firms and therefore rarely be applied in real life. The more detail guidance are needed, including ways to assess partner’s liabilities, how to allocate burden of proof, how to establish a fund and insurance for malpractice, debt bearing by wrongdoing partners, responsibility allocation after partner classified and protection of creditors and etc. Based on research of the said issues, this dissertation therefore comes up with limited liability partnership idea after carefully examining and reviewing all the problems emerging during the development of law firms.Six parts have been included in this dissertation:Introduction:This dissertation analyzes the needs in adopting the limited liability partnership mode among other organization modes and the way in perfecting such mode. The relevant articles and books from home and abroad have been reviewed, analyzed and commented, the characteristics of limited liability partnership have been summarized accordingly. Also, the shortage of the methodology used in this dissertation, the important and difficulty points, and the creativity of this dissertation have been discussed.Chapter One introduces the present situation of law firms in China. To develop the China’s economy at a rapid pace, we need maximize the advantage of larger-sized law firm. Various firms in China are not team-oriented; some consist of just solo practitioners. Classification of partners and pretended partnership relationship impeded the quality control of legal service and protection of client’s right. A reform is greatly needed in this area.Chapter Two analyzes the key factors being considered in choosing the mode for law firm. The most fundamental distinction of every type of model lies in the different liability allocation system. The choice of model should be based on comparison between the cost of management and that of transaction. After analyzing the type of liability and character of the legal service, the unlimited expert liability should come into play; however, because of the easiness in both distinguishing and separating the lawyers’liabilities, the unlimited joint and several responsibility can be excluded. It should be further noticed that through the history of accounting firm and law firm development, it is the different liability allocation system which separate one organization mode from another. Chapter Three discusses the choice of modes in reforming law firm system. It can be easily seen that law firm reforms in China are mainly leading by government. After giving detail analysis regarding the difference between the forms of general partnership, solo practitioner, limited liability partnership, and limited company law firm, it suggested that the great importance in adopting the mode of limited liability partnership, and at the same time, responds the question of downsides of such mode.Chapter Four analyzed the problem of present limited liability partnership model. Through reviewing and commenting on the western style of limited liability partnership, and the existing version presented by Chinese law, the chapter points out the problems we have, such as the shortage of the detailed regulation on the establishment requirements, publicity in the process of establishment, decision making management, allocation of interest and etc. Because of the controversial existence of commission-based lawyer and classification of partners, which contradict with traditional partnership theory, the perfection of limited liability partnership is therefore increasingly necessary.Chapter Five analyzes the ways to perfect the existing system for limited liability partnership. As to the liability bearing, Partnership Law> can be followed; as to perfecting the<Law of People’s Republic of China on Lawyers> and<Measures for the Administration of Law Firms>, the minimal requirements for law firm establishment in certain areas can be lowered, the debt identification should be clarified, as well as strategy for commercial debt, and different liability bearing method for different types of partners and salaried based lawyers should be adopted. It also analyzes the alternative protection in terms of creditor’s right, and solution for debt publicity and handling.Conclusion:it analyzes history of the law firm development along with social development, the freedom and limitation in choosing the mode for law firm organization. It is author’s perception that different liability allocation system made different organization mode. Limited liability partnership is the right form for good-size law firms:however, because of its short history both in legislation and in practice, it has certain limitation.The creativity of this dissertation is that by identifying that different mode will lead to different liability allocation, first time having the limited liabilitv partnership compared with other organization modes and presented the idea from all perspectives, in doing so, legal economics and organization choice theory have been used; it also pointed out the key factors, such as cost of lawyer supervision and the distinguishableness and measurableness of legal service, etc, in the process of making mode choice for law firms. Limited liability partnership is. the proper form for law firm. In writing this dissertation, the practicability is main concern, based on the statistical data as well as the present situation both domestically and internationally, problem and solution regarding limited liability partnership has been provided, and it is author’s best wishes that this dissertation will be of some help for the society in thorough understanding limited liability partnership mode.