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Due to concern over liability in what its partners see as an increasingly litigious society, Dechert has become one of the last large Philadelphia-based firms to become a limited liability partnership. “This is really an extension of [U.S.] culture,” Dechert chairman Barton Winokur said. “The spread of cases being filed all across the country was the motivation. It’s not an Enron thing or anything to do with the scandals. It has to do with the number of cases and the type of cases filed. The stakes are different today. It could get to the point where a lawyer with sizable personal worth is not going to want to practice anymore.” LLP status limits liability to those partners directly involved in a claim. With Dechert having become an LLP on Jan. 1, the only large Philadelphia-based firm not holding that distinction is Cozen O’Connor, a professional corporation. Tad Decker, Cozen managing partner, said the PC status — another form of a limited liability entity — was adopted in the 1970s for tax purposes. The system has worked just fine, he said, so the firm does not see a need to make a change. “We haven’t even looked at it,” Decker said. Dechert moved from a general partnership to an LLP in the United States, Frankfurt, Germany, and Brussels, Belgium, but not in London, Paris or Luxembourg. Winokur said the firm is investigating how to convert to an LLP in the latter jurisdictions. The shift to LLP status comes at a time of growing concern among law firms over the potential impact of a major claim in the wake of the numerous corporate collapses during 2002. Two of New York’s most prominent law firms also elected to become limited liability partnerships this year. Sullivan & Cromwell and Paul Weiss Rifkind Wharton & Garrison both acquired LLP status effective Jan. 1, ending a combined 250 years of operation as general partnerships. Though LLP status has been available in New York since 1994, many of the city’s more established firms have resisted changing their stripes, largely out of a sense of tradition and a fear of eroding trust and collegiality among partners. Instead, they have chosen to remain general partnerships, in which the partners are jointly and severally liable for malpractice claims against any individual partner. But the recent corporate scandals and the accompanying specter of crushing liability beyond that covered by malpractice insurance appear to have reawakened and recast firms’ consideration of the topic. Some states, including New York, have “full shield” LLP statutes, offering protection against malpractice, tort and contract claims. Other states, such as Pennsylvania — where LLP status became an option in the 1990s — have “partial shield” LLP statutes, offering protection only against malpractice claims. Illinois, notably, permits lawyers to adopt LLP status only if they waive its protection against liability. According to Dilworth Paxson managing partner Stephen J. Harmelin, there is a movement among local bar associations to move LLPs to full-shield status in Pennsylvania so that there is a level of equality with limited liability corporations and professional corporations — both of which have full shields. Anthony Lin of the New York Law Journal contributed to this report.

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