It stands to reason that as firms move to become limited liability partnerships (LLPs), they should also start looking to cap their liability on individual deals. The protection LLPs offer has its limits. Partners with LLP protection will no doubt sleep a little more soundly in their beds at night, safe in the knowledge that their villas in Tuscany will not be taken away from them if their firm is sunk by a massive negligence claim. But they will still worry about the long-term safety of their jobs.
Imagine how much more soundly they would sleep if they knew that their firms had protected themselves against that once in a lifetime mega-claim. Liability caps on individual transactions offer the prospect of such a safeguard. They also hold out the prospect of cheaper insurance, as sound risk management is a passport to lower premiums.
