This article discusses how entity structures interact with insurance. It isn’t legal or tax advice — make entity decisions with a business attorney and CPA.
Every few weeks a lawyer tells us some version of: “I don’t need much coverage — I’m a PLLC.” That sentence funds a lot of plaintiff-side malpractice work. Here’s what your entity actually does, insurance-wise, and what it never will.
The short answer
No entity — LLP, PLLC, or PC — protects a lawyer from liability for their own malpractice. What the structures do is protect you from liabilities that aren’t yours: your partner’s error, the firm’s lease, a vendor dispute. That protection is real and worth having. But the exposure that ends careers — a claim on your own work — passes straight through every structure ever invented, which is why malpractice coverage is the load-bearing wall and the entity is the trim.
What each structure is, briefly
- LLP — a general partnership with liability limitation; historically Texas’s invention. One thing to un-learn: the old requirement that Texas LLPs carry $100,000 of liability coverage was repealed effective September 2011 — guides still citing it are fifteen years stale.
- PLLC — the professional-services LLC; the common modern choice for new Texas firms for its flexibility.
- PC — the professional corporation; less common for new firms today, sometimes retained for historical or tax reasons.
Tax treatment, ownership mechanics, and admission of partners differ meaningfully — that’s the attorney-and-CPA conversation. The insurance story, though, is nearly identical across all three.
The three-layer way to think about it
Layer 1 — Your own malpractice: entity irrelevant. You are always personally liable for your own professional negligence. Only insurance responds here.
Layer 2 — Your partners’ malpractice: entity matters. This is the core value of LLP/PLLC/PC status: a claim on your partner’s work generally can’t reach your personal assets. But note what can be reached: the firm’s assets, including your interest in them — which is why firm-level policy limits should reflect the whole firm’s practice, reviewed as you grow.
Layer 3 — Non-professional liabilities: entity plus the right policies. Slip-and-fall, employment claims, lease disputes, cyber incidents — the entity helps, and general liability, EPLI, and cyber coverage do the actual paying.
Where entity choice really touches insurance
Applications ask your structure; carriers price the firm, not the wrapper. The places it genuinely matters: who must be named on the policy (partners vs. members vs. shareholders), how incoming laterals are endorsed, what happens to coverage when the entity dissolves or merges, and coordination between firm assets and umbrella limits. None of these change whether you need coverage — they change how it should be structured, which is a curation question, not a form field.
Choosing a structure for a new firm? Get the legal advice, then have the coverage panel built to match it — same week, not next quarter.
FAQ
Does a PLLC protect a lawyer from malpractice claims?
Not from claims on the lawyer’s own work — personal liability for your own professional negligence passes through every entity type. PLLCs protect against partners’ liabilities and firm-level obligations.
Do Texas LLPs still have to carry $100,000 in insurance?
No — that requirement was repealed effective September 1, 2011. Sources still citing it are out of date.
Which entity do most new Texas firms choose?
Commonly the PLLC, for flexibility — but the right answer depends on tax and ownership plans and belongs with your business attorney and CPA.
Does entity choice change malpractice premiums?
Essentially no — carriers underwrite the practice (areas, headcount, history), not the wrapper. Structure affects policy mechanics, not price.
Companions: Texas requirements (incl. the LLP repeal) · Starting a firm in Texas · Solo to five
