Can West Virginia lawyers practice in a limited liability partnership or limited liability company without violating the malpractice-limitation rule?

Plain-English summary

The Lawyer Disciplinary Board addressed the effect of two West Virginia statutes potentially affecting attorneys: one authorizing registered limited liability partnerships (W. Va. Code §§ 47B-10-1 et seq.) and one adopting the Uniform Limited Liability Company Act of 1996 (W. Va. Code §§ 31B-1-101 et seq.). Both statutes permit professionals to limit their liability for the acts of other partners or members they do not directly supervise, and both require an LLP or LLC consisting of professionals such as lawyers to carry malpractice insurance of $1,000,000.

The passage of these statutes raised the question whether a lawyer may participate in an LLP or LLC without violating Rule 1.8(h), which provides that a lawyer shall not make an agreement prospectively limiting the lawyer's liability to a client for malpractice unless permitted by law and the client is independently represented in making the agreement.

The Board concluded that Rule 1.8(h) speaks to a lawyer's personal liability to a client, rather than the law firm's liability as a whole. Therefore, a client need not be independently represented before hiring an LLP or LLC for legal representation. The Board noted its opinion is consistent with those of New York City (Opinion 1995-7), the District of Columbia (Opinion 254), Alabama (Opinion 93-16), Michigan (Opinion R-17), and Mississippi (Opinion 222). The Board expressly limited the opinion: it did not purport to address any legal issues arising from the enactment of the two bills and addressed only whether Rule 1.8(h) prohibits participation in an LLP or LLC.

Currency note

This opinion was issued in 1996, before the West Virginia Supreme Court of Appeals' comprehensive 2015 revision of the West Virginia Rules of Professional Conduct (effective January 1, 2015). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could West Virginia lawyers practice in an LLP or LLC?

A: Yes. The opinion concluded that Rule 1.8(h) did not prohibit participation in a limited liability partnership or limited liability company.

Q: Did the client have to be independently represented before hiring such a firm?

A: No. The Board concluded that because Rule 1.8(h) addresses a lawyer's personal liability rather than the firm's liability as a whole, a client need not be independently represented before hiring an LLP or LLC.

Q: What did the statutes require of a professional LLP or LLC?

A: The opinion noted both statutes required an LLP or LLC consisting of professionals such as lawyers to carry malpractice insurance of $1,000,000, and allowed professionals to limit liability for the acts of partners or members they do not directly supervise.

Background and rules framework

The opinion interpreted Rule 1.8(h) (within Model Rule 1.8's prohibited-transactions framework) as it stood in 1996. Rule 1.8(h) barred a prospective agreement limiting a lawyer's malpractice liability to a client unless permitted by law and the client was independently represented in making the agreement. The Board read the rule as directed at the individual lawyer's personal liability, distinguishing the firm-wide liability shield created by the LLP and LLC statutes. The opinion was expressly narrow, declining to address other legal issues raised by the statutes.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.8 / WV Rule 1.8(h) (prospective agreements limiting malpractice liability to a client)

Statutes:

• W. Va. Code §§ 47B-10-1 et seq. (registered limited liability partnerships)
• W. Va. Code §§ 31B-1-101 et seq. (Uniform Limited Liability Company Act of 1996)

Other opinions cited:

• New York City Opinion 1995-7; District of Columbia Opinion 254; Alabama Opinion 93-16; Michigan Opinion R-17; Mississippi Opinion 222

See also

• Alabama Ethics Op. 1996-09: Lawyers May Form a Limited Liability Partnership
• Alabama Ethics Op. 1993-16: Alabama Limited Liability Provisions for Lawyers
• ABA Formal Op. 02-425: Arbitration of Fee Disputes and Malpractice Claims

Source

• Landing page: https://wvodc.org/Legal-Ethics-Opinion
• Original PDF: https://storage.googleapis.com/msgsndr/Rgd68xOkcVdteTsBkf6O/media/66a7ea7d2f3bf3452a14cbaf.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

L.E.I. 96-02
LAWYERS PRACTICING IN LIMITED LIABILITY PARTNERSHIPS OR LIMITED LIABILITY COMPANIES

The Legislature has enacted two bills potentially affecting attorneys, one authorizing registered limited liability partnerships (W. Va. Code §§ 47B-10-1 et seq.) and the other adopting the Uniform Limited Liability Company Act of 1996 (W. Va. Code §§ 31B-1-101 et seq.). Both of these statutes permit professionals to limit their liability for the acts of other partners or members with whom they practice if they are not directly supervising them. It is a requirement of both of these statutes that a limited liability partnership or limited liability company consisting of professionals such as lawyers carry malpractice insurance of $1,000,000.00.

The passage of these statues raises the question of whether a lawyer may participate in a limited liability partnership or a limited liability company without violating Rule 1.8(h) of the Rules of Professional Conduct, which provides in pertinent part:

(h) A lawyer shall not make an agreement prospectively limiting the lawyers' liability to a client for malpractice unless permitted by law and the client is independently represented in making the agreement . . . .

It is the opinion of the Lawyer Disciplinary Board that Rule 1.8(h) speaks to a lawyer's personal liability to a client, rather than the law firm's liability as a whole. Therefore, a client need not be independently represented before hiring a limited liability partnership or limited liability company for legal representation. This opinion is consistent with those of the following jurisdictions: New York City (Opinion 1995-7); District of Columbia (Opinion 254); Alabama (Opinion 93-16); Michigan (Opinion R-17) and Mississippi (Opinion 222).

This opinion does not purport to address any legal issues which may arise from the enactment of these two bills and only addresses the question of whether Rule 1.8(h) of the Rules of Professional Conduct prohibits participation in a limited liability partnership or a limited liability company.

Stephen G. Jory, Chairperson
Lawyer Disciplinary Board
State of West Virginia