diff --git a/src/lib/services/document-folders.service.ts b/src/lib/services/document-folders.service.ts
index abee0846..d94fd7f9 100644
--- a/src/lib/services/document-folders.service.ts
+++ b/src/lib/services/document-folders.service.ts
@@ -2,6 +2,9 @@ import { and, asc, eq } from 'drizzle-orm';
 
 import { db } from '@/lib/db';
 import { documentFolders, documents, type DocumentFolder } from '@/lib/db/schema/documents';
+import { clients } from '@/lib/db/schema/clients';
+import { companies } from '@/lib/db/schema/companies';
+import { yachts } from '@/lib/db/schema/yachts';
 import { createAuditLog } from '@/lib/audit';
 import { ConflictError, NotFoundError, ValidationError } from '@/lib/errors';
 
@@ -343,3 +346,161 @@ export async function ensureSystemRoots(portId: string, userId: string): Promise
     return row;
   });
 }
+
+// ─── ensureEntityFolder ──────────────────────────────────────────────────────
+
+export type EntityType = 'client' | 'company' | 'yacht';
+const ENTITY_TYPES = new Set<EntityType>(['client', 'company', 'yacht']);
+
+/**
+ * Returns the display name for an entity used to label its subfolder.
+ * Clients use `fullName` verbatim (matching rep-facing list views).
+ * Companies and yachts use their `name` column verbatim.
+ */
+async function resolveEntityDisplayName(
+  portId: string,
+  entityType: EntityType,
+  entityId: string,
+): Promise<string> {
+  if (entityType === 'client') {
+    const c = await db.query.clients.findFirst({
+      where: and(eq(clients.id, entityId), eq(clients.portId, portId)),
+      columns: { fullName: true },
+    });
+    if (!c) throw new NotFoundError('Client');
+    return c.fullName;
+  }
+  if (entityType === 'company') {
+    const co = await db.query.companies.findFirst({
+      where: and(eq(companies.id, entityId), eq(companies.portId, portId)),
+      columns: { name: true },
+    });
+    if (!co) throw new NotFoundError('Company');
+    return co.name;
+  }
+  // yacht
+  const y = await db.query.yachts.findFirst({
+    where: and(eq(yachts.id, entityId), eq(yachts.portId, portId)),
+    columns: { name: true },
+  });
+  if (!y) throw new NotFoundError('Yacht');
+  return y.name;
+}
+
+/**
+ * Returns true if the error is a Postgres unique-violation (SQLSTATE 23505)
+ * on the per-entity unique index (`uniq_document_folders_entity`). Narrowing
+ * to this specific constraint lets callers distinguish a concurrent-winner
+ * race (same entity_id inserted twice) from a sibling-name collision.
+ */
+function isEntityFolderConflict(err: unknown): boolean {
+  if (!err || typeof err !== 'object') return false;
+  const e = err as {
+    code?: unknown;
+    constraint_name?: unknown;
+    constraint?: unknown;
+    cause?: { code?: unknown; constraint_name?: unknown; constraint?: unknown };
+  };
+  const code = e.code ?? e.cause?.code;
+  if (code !== '23505') return false;
+  const constraint =
+    e.constraint_name ?? e.constraint ?? e.cause?.constraint_name ?? e.cause?.constraint;
+  return constraint === 'uniq_document_folders_entity';
+}
+
+/**
+ * Idempotently create the per-entity subfolder under the matching system
+ * root (`Clients/` / `Companies/` / `Yachts/`). Returns the folder row
+ * regardless of whether it was newly created or already existed.
+ *
+ * Concurrent callers race safely via the partial unique index
+ * `uniq_document_folders_entity` — the loser INSERT errors and the
+ * re-SELECT returns the winner's row.
+ *
+ * On sibling-name collision (two entities want the same display name),
+ * appends a numeric suffix `(2)`, `(3)`, …, until the insert succeeds.
+ * The `system_managed` flag stays true on the suffixed folder.
+ *
+ * Note: this helper deliberately does NOT use the no-args
+ * onConflictDoNothing() pattern from ensureSystemRoots. Entity inserts
+ * can conflict on EITHER uniq_document_folders_entity (race winner
+ * already inserted the same entity_id) OR uniq_document_folders_sibling_name
+ * (different entity, same display name). We need to discriminate so we
+ * can retry-with-suffix on the name collision and re-SELECT-and-return
+ * on the entity-id collision.
+ */
+export async function ensureEntityFolder(
+  portId: string,
+  entityType: EntityType,
+  entityId: string,
+  userId: string,
+): Promise<DocumentFolder> {
+  if (!ENTITY_TYPES.has(entityType)) {
+    throw new ValidationError(`Unknown entity type: ${entityType}`);
+  }
+
+  // Fast path: row already exists.
+  const existing = await db.query.documentFolders.findFirst({
+    where: and(
+      eq(documentFolders.portId, portId),
+      eq(documentFolders.entityType, entityType),
+      eq(documentFolders.entityId, entityId),
+    ),
+  });
+  if (existing) return existing;
+
+  // Locate the system root for this entity type.
+  const rootName: SystemRootName =
+    entityType === 'client' ? 'Clients' : entityType === 'company' ? 'Companies' : 'Yachts';
+  const root = await db.query.documentFolders.findFirst({
+    where: and(
+      eq(documentFolders.portId, portId),
+      eq(documentFolders.entityType, 'root'),
+      eq(documentFolders.name, rootName),
+    ),
+  });
+  if (!root) {
+    // Self-heal: the port-init hook may have been skipped (legacy port).
+    await ensureSystemRoots(portId, userId);
+    return ensureEntityFolder(portId, entityType, entityId, userId);
+  }
+
+  const baseName = await resolveEntityDisplayName(portId, entityType, entityId);
+
+  // Try the base name first; on sibling-name collision, append (2), (3)...
+  for (let attempt = 0; attempt < 50; attempt += 1) {
+    const candidate = attempt === 0 ? baseName : `${baseName} (${attempt + 1})`;
+    try {
+      const [row] = await db
+        .insert(documentFolders)
+        .values({
+          portId,
+          parentId: root.id,
+          name: candidate,
+          systemManaged: true,
+          entityType,
+          entityId,
+          createdBy: userId,
+        })
+        .returning();
+      if (!row) throw new Error('ensureEntityFolder: insert returned no row');
+      return row;
+    } catch (err) {
+      // If another caller won the entity-id race, re-SELECT and return their row.
+      if (isEntityFolderConflict(err)) {
+        const winner = await db.query.documentFolders.findFirst({
+          where: and(
+            eq(documentFolders.portId, portId),
+            eq(documentFolders.entityType, entityType),
+            eq(documentFolders.entityId, entityId),
+          ),
+        });
+        if (winner) return winner;
+      }
+      // Sibling-name collision (different entity, same name) → bump suffix and retry.
+      if (isSiblingNameConflict(err)) continue;
+      throw err;
+    }
+  }
+  throw new ConflictError(`Could not allocate a unique folder name for ${baseName}`);
+}
diff --git a/tests/unit/document-folders-system-folders.test.ts b/tests/unit/document-folders-system-folders.test.ts
index fd750f3f..6c1bd16f 100644
--- a/tests/unit/document-folders-system-folders.test.ts
+++ b/tests/unit/document-folders-system-folders.test.ts
@@ -1,5 +1,6 @@
 /**
  * Task 2 — ensureSystemRoots (TDD).
+ * Task 3 — ensureEntityFolder (TDD).
  *
  * Fixture convention: makePort from helpers/factories (async DB insert);
  * TEST_USER_ID resolved once via beforeAll from a seeded user — same pattern
@@ -11,8 +12,9 @@ import { and, eq } from 'drizzle-orm';
 
 import { db } from '@/lib/db';
 import { documentFolders } from '@/lib/db/schema/documents';
+import { clients } from '@/lib/db/schema/clients';
 import { user } from '@/lib/db/schema/users';
-import { ensureSystemRoots } from '@/lib/services/document-folders.service';
+import { ensureSystemRoots, ensureEntityFolder } from '@/lib/services/document-folders.service';
 import { makePort } from '../helpers/factories';
 
 let TEST_USER_ID = '';
@@ -61,3 +63,78 @@ describe('document-folders service · ensureSystemRoots', () => {
     expect(roots.map((r) => r.name)).toEqual(['Clients', 'Companies', 'Yachts']);
   });
 });
+
+describe('document-folders service · ensureEntityFolder', () => {
+  let portId: string;
+  let clientId: string;
+  let rootId: string;
+
+  beforeEach(async () => {
+    const port = await makePort();
+    portId = port.id;
+    await db.delete(documentFolders).where(eq(documentFolders.portId, portId));
+    const roots = await ensureSystemRoots(portId, TEST_USER_ID);
+    rootId = roots.find((r) => r.name === 'Clients')!.id;
+
+    const [client] = await db
+      .insert(clients)
+      .values({
+        portId,
+        fullName: `Smith, John ${crypto.randomUUID().slice(0, 8)}`,
+      })
+      .returning();
+    clientId = client!.id;
+  });
+
+  it('creates a subfolder under the matching system root with system_managed=true', async () => {
+    const folder = await ensureEntityFolder(portId, 'client', clientId, TEST_USER_ID);
+    expect(folder.systemManaged).toBe(true);
+    expect(folder.entityType).toBe('client');
+    expect(folder.entityId).toBe(clientId);
+    expect(folder.parentId).toBe(rootId);
+    // name is the client's fullName verbatim
+    const [row] = await db.select().from(clients).where(eq(clients.id, clientId));
+    expect(folder.name).toBe(row!.fullName);
+  });
+
+  it('is idempotent — returns the same row on second call', async () => {
+    const a = await ensureEntityFolder(portId, 'client', clientId, TEST_USER_ID);
+    const b = await ensureEntityFolder(portId, 'client', clientId, TEST_USER_ID);
+    expect(a.id).toBe(b.id);
+    const all = await db
+      .select()
+      .from(documentFolders)
+      .where(
+        and(eq(documentFolders.entityType, 'client'), eq(documentFolders.entityId, clientId)),
+      );
+    expect(all).toHaveLength(1);
+  });
+
+  it('appends a numeric suffix on name collision with an existing folder', async () => {
+    // Insert a second client with the exact same fullName as the first.
+    const [firstClient] = await db
+      .select()
+      .from(clients)
+      .where(eq(clients.id, clientId));
+    const sharedName = firstClient!.fullName;
+
+    const [collidingClient] = await db
+      .insert(clients)
+      .values({
+        portId,
+        fullName: sharedName,
+      })
+      .returning();
+
+    await ensureEntityFolder(portId, 'client', clientId, TEST_USER_ID);
+    const second = await ensureEntityFolder(portId, 'client', collidingClient!.id, TEST_USER_ID);
+    expect(second.name).toBe(`${sharedName} (2)`);
+  });
+
+  it('rejects unknown entity types', async () => {
+    await expect(
+      // @ts-expect-error -- runtime check
+      ensureEntityFolder(portId, 'boat', clientId, TEST_USER_ID),
+    ).rejects.toThrow(/entity type/i);
+  });
+});