Certainly, their LLCs could be subject to attorneys fees if the Court awards fees (which it generally only does in exceptional cases) or for sanctions based on attorney behavior.

However, normally, only their LLCs would be liable rather than the owners personally--unless they fail to observe the corporate formalities.

It spreads downside risk directly. It also makes unraveling the real interests harder.

It's a clever, evil hack of the justice system. It's very cool this judge uncovered it. I hope they get nailed and I hope we close these loopholes.