Limited liability limited partnership

The limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership, a form of business entity recognized under United States commercial law. An LLLP is a limited partnership and as such consists of one or more general partners and one or more limited partners. Typically, while the general partners manage the LLLP, the limited partners' interest is purely financial. Thus, the most common use of a limited partnership is for purposes of investment, often through a number of private equity firms. Despite their lack of control over day to day operations, the limited partners may nonetheless own substantially all of the equity in the partnership.

The difference between an LLLP and a traditional limited partnership lies in the general partner's liability for the debts and obligations of the limited partnership.

In a traditional limited partnership the general partners are jointly and severally liable for its debts and obligations; limited partners are not liable for those debts and obligations beyond the amount of their capital contributions.

In an LLLP, by having the limited partnership make an election under state law, the general partners are afforded limited liability for the debts and obligations of the limited partnership that arise during the period that the LLLP election is in place. Certain LLLP elections take the form of a limited partnership electing to be a limited liability partnership (this is the format used in Delaware, for example) while in other states the election is made in the certificate of limited partnership (examples being Florida, Hawaii and Kentucky). Most states require that an LLLP identify itself in its name, but those requirements are not universal.

Because the LLLP is so new, its use is not widespread. Arkansas, Arizona, Colorado, Delaware, Florida, Georgia, Maryland, Nevada, Texas, and Kentucky have all adopted statutes that allow formation of an LLLP, usually as a conversion of an existing limited partnership (the general partners might want to do this to reduce their legal liability).

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