The Evolving Partnership

Abstract:     
Versions of this article were prepared for conferences in 2001 and 2006 in Europe dealing with the reform of private company law. The basic point is that recent U.S. law holds important lessons for Europe as it embarks on private company reform and confronts the jurisdictional competition regime enabled by Centros and other cases. The article shows that this competition is preferable to a single set of business association rules issued by a central planner. U.S. law has evolved through a bottom-up process of experimentation, in which firms can pick suitable rules by making both "horizontal" choices among the various jurisdictions and "vertical" choices among business forms available within jurisdictions. New and more efficient legal structures have evolved that regulators could not have envisioned only a few years ago. The article describes partnership type firms, contrasting both the traditional and new varieties and the partnership form with the corporate form. It then discusses the forces that have shaped partnership in the United States, the evolution in partnership terms wrought by these competitive forces, and implications of this process for European law.

JEL Classifications: KO, K2, K4, L2

Working Paper Series