I always wondered why law firms used partnership structures, but this seems like the core reason (most other reasons could would still work within a limited liability corporate structure).
I know opportunity costs are a thing but a lawfirm seems like the one of the worst possible targets for a lawsuit even without attorney-client priveledge complicating matters. Barring smoking gun damning evidence (which they would be skilled at knowing how to avoid both in terms of not doing it and not getting caught).
I would have guessed it as more a result of billable hour basis means it is practically "pure per person labor" dependent even with structures of management, less experienced lawyers and paralegals to effectively transmute the less experienced working hours into more experienced hours by them reviewing and signing off on the work of underlings.
Without the head partner you have 400 billable hours of junior lawyer and paralegal work. With one you effectively have 410 hours of partner legal work and they have staked their reputation and used their expertise on it to verify it. If the partner spent those 10 hours day drinking and signing off without reading it turns out to be 400 hours of soverign citizen tier pseudolegal nonsense arguments is their head essentially.
> I know opportunity costs are a thing but a lawfirm seems like the one of the worst possible targets for a lawsuit even without attorney-client priveledge complicating matters.
If you're suing someone else's lawyer, yah. But if you're suing your own lawyer... that privilege is client's privilege, and they can waive it if they want to sue their attorney (AFAIK).
there is a concept in RICO law called 'piercing the corporate veil,' where lawsuits against a company can 'pierce through' layers of holding company structures, to exactly prevent people from creating shell companies to limit liability.
In practice, however, it is another line of defense, because you have to argue in court for each layer to peel back.
In the U.S., law firms are very often structured as "limited liability partnerships," a.k.a. LLPs. In most versions of LLPs, each individual lawyer is responsible for her own malpractice and that of the people she supervises, but not of the malpractice of others. [0]