Tuesday, August 30, 2011

Pennywise Pound Foolish: Have a LAWYER draft LLC Documents (Part 1)

I realize start-ups and small businesses need to control costs, but failing to engage an experienced business/corporate lawyer is a serious mistake you will eventually regret   Let's take the example of the formation of the limited laibility company (LLC).  I agree, it is easy enough to form the entity yourself by filing a document you found online, but filing the Articles of Organization is only the beginning of the legal steps you need to take to ensure you properly set-up a multimember LLC.

In New York, a written Operating Agreement is required for an LLC.  In the absence of an Operating Agreement, the consensus is that the statutory provisions of New York's Limited Liability Company Law will govern your LLC.  See Limited Liability Company Law 417(a).  The problem is that many of the provisions LLC Law are not necessarily desirable, and often create more issues than solutions when you have disputes with the other members of the LLC.  Further, don't take any comfort in an Operating Agreement you purchased online as I have found that they don't address important matters the LLC members need to agree upon to avoid future disputes. 

In the next several posts I will cover several examples demonstrating that failing to have an experienced corporate lawyer draft your LLC Operating Agreement is Pennywise and Pound Foolish. 


No comments:

Post a Comment