the company does not have any assets so there's nothing to take from a court loss.

so you get sued as a partnership /individual which is likely to make them untractive to do business with

the LLP is limited liability, and unless in a case of criminal negligence that cannot be broken, so it's difficult to go after individuals. This model depends on working with people you trust not to be criminals, and as I mentioned above works only for relatively small consultancies where everyone can be trusted.

in terms of 'make them untractive to do business with', since the company was restructured in this way we worked with some of the worlds largest investment banks, big telecoms companies, and a ton of other parties that require a lot of paperwork. nobody seemed to mind that we're structured this way or find us unattractive to work with.

I suppose that might work if you just a body shop rather than actually delivering something tangible.

I have had bad experiences with clients acting in bad faith destroying one of the companies I worked for

one nice aspect of being a small company that doesn't chase assets is that you can choose who you work with, and don't have to accept jobs just to keep employees working. generally if someone is too much hassle that shows early on and we just don't work with them.

most small companies don't have that luxury or the reserves to do that.