Because larger LLCs, or those simply operating like a legit business, will carry the appropriate liability insurance in the event that it’s employees screw up or when accidents happen. That’s extremely common, a best practice, and the typical result to settle the claim.

Smaller LLCs, or ones that are badly managed, will be personally involved in operations including any negligent/fraudulent/illegal actions. That involvement negates the standard LLC protections and exposes the ownership to individual liability. You also run into situations where a member claims they weren’t “directly” involved in X matter, but somehow their specific LLCs are constantly being sued for the above issues. A strong argument to make and one that leads to a settlement in order to head off the much larger ramifications.

There’s also a crap ton of legislation coming down at a federal level which is focused on improving the transparency of beneficial ownership, including for LLCs, because such business setups are constantly used for financial crimes.