Thursday, May 17, 2007

Limited Liability For Partner Misdeeds

The Lawyers' Manual on Professional Conduct reports on an interesting recent decision of the North Carolina Court of Appeals. A partner of a lawyer who had misused trust funds from an estate had been sued by the successor trustee. The court held that the state limited liability company law protected the partner from civil suit so long as the innocent partner had no actual knowledge of the defalcations. The court further found that the partnership agreement of the firm did not create any duties to third parties that could be enforced in civil litigation absent evidence of an intent to confer such benefits on the purported third pary beneficiary. (Mike Frisch)

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