I normally use \usepackage[T1]{fontenc} without giving it any thought. The package libertine seems to provide more ligatures with the LY1 encoding.
\documentclass{article}
\usepackage{libertine}
\usepackage[LY1,T1]{fontenc}
\newcommand{\f}{fb ff fh fi fj fk fl ft}
\begin{document}
\fontencoding{T1}\selectfont\f
\fontencoding{LY1}\selectfont\f
\end{document}

Are there any drawbacks to using LY1?

