What Does an LLP Lawyer Need to Know?

A partnership is a specific type of business management structure. While there are four different kinds of partnerships, a general partnership is elected most frequently by new business owners. A general partnership is generally formed by two or more people who want to be co-owners of a for-profit business. As long as both parties intended to make money from a product or service that they offer, they are legally considered to have entered into a general partnership.

In such a business management formation, general partners can be held both individually and jointly liable for any of the losses and/or debts that are incurred by the partnership. Additionally, they can be held liable to the other partners that are involved if they breach their fiduciary duty to the business. This liability also applies to third parties.

In contrast, a limited partnership has considerably stricter requirements than that of a general partnership. Limited partnerships must contain at least one general partner, who is to oversee and manage the company, as well as at least one limited partner. Because of this, limited partners will have limited authority over this type of partnership, and as such they can only be held liable to the extent of their investment. Similar to general partnerships, the general partners that are involved in a limited partnership can be held both jointly and individually liable for all company debts and/or risks.

In short, the limited liability partnership (“LLP”) is a type of partnership with limited liability status. As such, unlike general partnerships, individual partners are generally protected from individual liability for the misconduct of other partners.

Generally speaking, LLPs are reserved for professionals such as lawyers and accountants, so that the partners may avoid liability for the negligence or misconduct of the other partners. Because an LLP is a general partnership with limited liability status, it is conducted similarly to a general partnership and has the same flexibility of control. Income, losses, and gains pass to the partners according to the partnership agreement, or interests of the partners.

A limited liability company (“LLC”) and a LLP are essentially the same thing; however, it is helpful to discuss how the two structures differ from each other because they are so similar. The defining difference would be that an LLC has the same liability shield as a corporation; because of this fact, the members of an LLC may not be personally liable for the debts and obligations of the company.

Similar to most other limited liability organizations, LLPs are created by statute. What this means is that each state’s statute will specify who can form an LLP, as well as the process for becoming an LLP. In general, most states require filing for a certificate with the Secretary of State.

To reiterate, there are some states in which only people who are licensed to practice specific professional services are allowed to structure their business as an LLP. These states include but may not be limited to California, New York, Oregon, and Nevada. In other states, any group of two or more people can form an LLP.

What Kind Of Questions Will My Attorney Ask About My Limited Liability Partnership?

Working with an attorney who is familiar with the business structuring laws of your state can reduce the likelihood of legal issues later on. In order to best evaluate your claim and provide you with the most accurate legal advice, the lawyer that you are meeting with must have access to a considerable amount of information.

As such, it is important to prepare for your first appointment with an LLP or business lawyer by compiling this data in advance. While every lawyer has their own interview process, the following is a list of common questions that you can expect to answer during your initial meeting.

To reiterate, the process for creating a limited liability partnership varies from state to state. In order to guide you through your state’s specific procedure, the lawyer that you are meeting with will generally ask:

• Do you have an existing business organization?
• What kind of professional services do you perform, or will you perform?
• What name are you planning to give your LLP?
• What are the names and business roles of all of the partners who are involved in the LLP?
• What is your business address and contact information?
• Have you appointed a registered agent, also known as a statutory agent?
• Do you have malpractice and other business-related insurance?
• Do you have any existing business licenses, permits, and/or tax identification numbers?
• How financially secure is your business?

Additionally, you should be prepared to describe how your business currently operates.

Another service that your LLP lawyer can provide would be to create a limited liability partnership agreement. A business partnership agreement is a legal document that governs the terms and conditions for individuals, in order for them to conduct business as partners. The agreement outlines the duties and responsibilities of the partners, and it also defines the scope of activity for the partnership. Essentially, a partnership agreement is a contract among the various partners involved, which provides legal enforcement for the terms of the business operations.

A business partnership agreement may be referred to in instances of dispute or legal contention associated with the activities of the business and the partners. In the event of a lawsuit or a violation, the court may examine the agreement document in order to determine the partnership’s information and stance regarding specific legal issues.

A legally sound partnership agreement should use clear language, and should also include precise details regarding the company’s activities. Examples of such details include, but may not be limited to:

• Information regarding each partner, such as their names, contact information, etc.;
• The specific duties and responsibilities of all partners;
• Allocation of profits and losses for the partners, which are are generally equal;
• The scope of the partnership’s functions and activities;
• The goals and mission statements of the partnership;
• Restrictions placed on management and leadership; and
• Instructions regarding termination and dissolution of the partnership.

In addition to these details, some partnership agreements may contain a clause defining what should happen in the event of a legal dispute. An example of this would be how the agreement may state that legal disputes may only be resolved by lawsuit. Another example would be how the agreement may state that the parties involved must seek alternative methods first, such as dispute resolution or mediation.

If you have an existing partnership agreement, bring it with you when you meet with your lawyer. They will be able to examine the document and determine vital information regarding your legal rights and options.

What Should I Bring To My Appointment With An LLP Lawyer?

In addition to bringing a copy of your partnership agreement, it is important to bring any other information that you have to your first appointment. This generally includes, but may not be limited to:

• Any documents that are associated with your current business organization;
• The names and contact information for all of your partners;
• Information associated with your business’ finances;
• Any insurance or malpractice policies that you hold for your business; and
• Copies of all of your business licenses and permits.

Do I Need An LLP Lawyer?

Creating a legally sound limited liability partnership involves more than filling out forms and paying a fee. You will need to draft a detailed partnership agreement, obtain sufficient insurance coverage, and file ongoing reports with your state’s business agency.

An experienced corporate lawyer can evaluate your business model while helping you form the correct type of business. Additionally, an attorney will also be able to represent you in court, as needed, should any legal disputes arise.