Bob Blakely on the LLP
Adam:
The LLP is a great analogy because that’s exactly what the Limited Liability Partnership was, and is, for-controlling liability in transactions. The growth of the limited liability corporation allows me, as an investor, to invest a set amount of money, and know the limits of my exposure to management errors. But I can’t do that with myself. It’s all in, all the time.
Does this work under the law today? Could I just set myself up with a Delaware LLPartnership of one and go?
I’m going to use LLPartnership & LLPersona rather than writing “limited liability” each time.
I also offered Mike and Bob the ability to go ‘off the record.’
Bob Blakely:
There are probably some open questions here; we’re not lawyers so you should
ask one. However, the intention of using an LLC as an LLP (persona, not
partnership) is that you can endow it with a set of resources ( e.g. a secured credit card backed by a specific amount of money in an account opened for the LLP) which are thus not connected to your personal resources, give it its own name, give it its own address, and then use it (as the controlling director) to do business in a way which does not require you to reveal personal information and which does not attach your personal assets to transactions (and hence shelters your resources from the affairs of the LLP).
I definitely do not want Burton Group or us personally to be off the record on this; we are the inventors of this concept and we want it to be adopted and credited to us.
We also want to encourage related developments such as the Relational
Continuity Sockets Layer (which provides a meeting place for LLPs who can
interact according to a specified set of rules and generate public outcomes fortheir transactions), and the Identity Oracle, which is kind of a clearinghouse for creating LLPs and managing the relationship between LLPs and personal information about individuals (you’d go to an Identity Oracle, perhaps let it set up your LLP, and then tell it your personal information and give it specific instructions about how to act as your agent with respect to that information, with the intention that it should use the information in your interest to answer questions, but not divulge the information itself). All of these things are our inventions and we want to be publicly associated with them.
You read more about the identity oracle and the relational continuity sockets layer [link to http://identityblog.burtongroup.com/bgidps/2007/02/follow_up_on_re.html no longer works].
One problem I’d expect the LLP idea to run into is that LLP users may have difficulty finding commercial partners willing to transact with an LLP. At least as I understand it, the point of an LLP is to give a natural person the ability to limit the liability associated with a particular set of identity credentials. If one’s commercial partners know that there are few or no assets available from a claim against an LLP, they will refuse to consumate the transaction because they will have no protection (against, for instance, fraud) if they are not able to identify and are able to collect assets from the LLP owner. That is, the risks of transacting with an LLP will be too high if the other party does not have access to the LLP owner’s real identity credentials. This puts us back in the same place we were before: the LLP owner’s commercial partners will have to store the LLP owner’s real identity credentials.
This plays out in real world transactions today. To give an example, banks do not loan money to smaller businesses without loan guarantors. Typically, those guarantors are the businesses’ owners. Otherwise, the corporate owners could simply pay themselves the loan proceeds as a salary, and walk away from the business entity, leaving the bank with an bad loan. There’s a lot more written about the efforts taken to insulate individuals from liability. These efforts often play out very poorly in court [link http://www.assetprotectionbook.com/fapt.htm no longer works].
The LLP idea is laudable, but does not directly (as I understand it) address the problem of revocable credentials that cannot be repudiated. I can see a system where only the SSA (or some other authority) and I know my SSN, but I can distribute an infinite number of hashes of my SSN that 1) I cannot repudiate because they could only be calculated with my SSN, but 2) I can revoke, providing prospective notice that a particular hash has been compromised and may be involved in fraud, and 3) I can distribute individual hashes to individual vendors, so I can detect where a particular hash came from, in the event of fraud.