Multi-Member LLC

[mircpa]

One of my client floated a LLC which is going to have multi members, purpose of which is owning/leasing commercial real estate. As an accoutant can i help them in preparing custom made operating agreement or should it be referred to an attorney

thanks for your help

[joelgilb]

One of my client floated a LLC which is going to have multi members, purpose of which is owning/leasing commercial real estate. As an accoutant can i help them in preparing custom made operating agreement or should it be referred to an attorney

thanks for your help

Most States consider the drafting of legal documents as "The Practice of Law" (unless of course you are drafting soley for yourself) and it is illegal for anyone but a lawyer to perform legal services. Although, you would probably get away with it, all you need is one disgruntled member down the road to cause you major grief. Refer them to an attorney.

[joelgilb]

Oh and an addendum:

It used to be that drafting of Articles of Incorporation, Organization etc was considered the practice of law. Today, most States allow anyone to prepare these documents, so you are allowed to prepare those.

[mircpa]

Joelgilb

thanks for your response, your response looks conflicting, it is still unclear for me

can i prepare operating agreement or refer to attorney ?

thanks again

[kcjenkins]

Joel's point is that, in many states [but not all] you COULD prepare them, but you might be smarter not to. This is a legal document, and if you leave anything out, or word it in a way that allows an attorney to later challenge part of it, or how it is being implemented, you could be the target of a lawsuit for doing it wrong. It's not really worth it, you save the client a small amount, but expose yourself to serious damages. Why?

[jainen]

>>preparing custom made operating agreement<<

Surely this post is tongue-in-cheek. mircpa wouldn't seriously ask such a question if he had experience in this sort of thing, i.e., already knew the answer. And obviously the client is likewise a newbie, or at least doesn't have any regular way to get the job done.

So the proposition is: Should this custom contract for running commercial real estate with multiple partners be drafted by someone who doesn't even know if he is licensed for the task?

[mircpa]

Jainen

thanks for your response, you are right, i am defnitely a newbie in context with LLC paperwork, but this inexperience in itself does not warrant any member of fraternity question my ethics. Human beings are in learning phase until we die including me, go back and figure out what stages of professional life have you had to take help from senior/mentors had you been in situations like this. Wish everybody was born perfect

thanks again

[jainen]

>>this inexperience in itself does not warrant any member of fraternity question my ethics<<

Sorry. I removed the word ethics from my post because the main point of your question was the scope of your license, not standards of professional conduct. The answer, as Joel says, varies by state so you should ask your licensing board. If you get a green light, then you can deal with the issues of providing such a technically complex service to a client.

[Randall]

I don't prepare these at all, even the simplest ones. I recommend they contact an attorney. If it's only one owner (or two spouses) and the business will be very simple, I tell them they can do it themselves. They can go to the state website. I think Ky has a simple one page form or whatever. They can also go to an office supply store and get some forms or buy some software. BUT I don't and won't do it for them. If they have two or more partners (not spouses), I definitely recommend they see an attorney and not try to do it themselves.

On the other hand, I've seen attorney prepared docs that have such lengthy boiler plate language that doesn't really address some specifics of what they want to do. I don't think clients know what it says or means.

[Gail in Virginia]

Usually, if they want me to do it rather than going to an attorney, it is because they want to save money. Why should I risk a possible lawsuit, or action for practicing law without a license, for a very meager fee? I would only take risks like that if I were being paid at least as much as an attorney would charge, so they might as well pay the fee and get advice from an attorney, IMO.

Besides, if I wanted to practice law I would go to law school.

[kcjenkins]

Well, FORMING an LLC is very simple, it's a one page form in most states. But the Operating Agreement is where all the important stuff is, and that is often not done well at all, if they use a 'canned' version. A really good one is usually worth the money it costs, because that is what protects the members from the IRS [somewhat] and from the creditors [somewhat] and from each other as well. Sadly, I see more poor ones than good ones.

[ed_accountant]

My clients have asked me also to prepare operating agreements and I always refer to an attorney or for the do it yourself clients, Nolo Press self help books. $60 bucks and they can download an LLC operating agreement...

http://www.nolo.com/article.cfm/ObjectID/E...11/182/245/ART/

Thanks