Will an LLC Protect Me as a Counselor in Private Practice?

QUESTION:
Hi, I am not sure who to address this to, so if I’ve guessed wrong, please excuse the intrusion and, if possible, please forward to the correct person – thank you.

I’ve tried searching this on the internet, but haven’t found a clear answer, so I thought ACA might be able to answer this.

I’m a member of ACA (~15 years) and have liability insurance through HPSO. My question is, does it make sense to also set up an LLC? If I operate under an LLC, would that protect my assets (house, in particular) in the unlikely event of a lawsuit? I set up an LLC for this reason, but I’m not sure now that it makes sense to maintain it. I’d appreciate any input or education on the subject you might have.

Thank you. – Jim

ANSWER:
Greetings Jim,

This is a good question, and one that I get often. Before I try and answer your question I want to start by saying this: I must disclaim that I am not an attorney. I am not qualified to give legal advice. I am not giving legal advice. And I advise you to consult with an attorney about this matter that could affect you and your business. Even though I myself have an LLC, I feel much safer after making those disclaimers 🙂

Moving on! My understanding is that an LLC will provide you some liability protections, under some conditions and in some instances.

The limited liability of an LLC tends to hold up best when the owner (or owners) of the LLC are careful not to mix their personal funds and monies and the funds of the LLC.

Let’s start with this: the more one co-mingles their funds, and the less clear the lines of personal and business are drawn, the more likely that someone will be able to “pierce the vail” of your LLC and pursue you personally for damages—and, ultimately, get you into trouble.

In regards to liability protection, your LLC may protect your personal assets in some situations. For instance, if someone trips over a chair in your and breaks their arm (also, as an aside, think about general liability insurance in addition to professional liability insurance).

However, I’m guessing that you’re more concerned with a patient suing your business for malpractice. In instances such as malpractice lawsuits, it is common that a patient will sue the company (the LLC) and go ahead and also sue you personally to get whatever they can. In this case, even with an LLC your personal assets are perhaps still at risk (again, don’t take my amateur understanding as legal advice. Talk with an attorney!).

I hope this helps!

–Anthony