According to Washington’s LLC Act, an LLC Agreement “means the agreement, including the agreement as amended or restated, whether oral, implied, in a record, or in any combination, of the member or members of a limited liability company concerning the affairs of the limited liability company and the conduct of its business.”
A carefully crafted LLC Agreement forces the members to deal specifically and concretely with “the affairs” and the “conduct” of the LLC’s business. In particular, your LLC Agreement should carefully deal with organization, how and when capital must be contributed, tax and distribution issues, decision making duties and processes, transferability and liquidation. While an outline is easy to state, working with our clients through each portion of the outline is a terrific business planning exercise to be sure our clients have thought through each element of their business.
Each part of the outline must work together with the other parts to create a coherent structure. For example, does voting on a one vote per member basis make sense if only one member is contributing all of the capital? How does allowing voluntary withdrawal impact the operation of the company and the decision-making process? Will the capital contributing member receive a preferred return on their capital? What about the return of capital upon liquidation?
LLC Agreements are not “one size fits all”. In fact, our clients’ businesses are as unique as our clients’. As we take the time to work through the outline with our clients and carefully draft an LLC Agreement with them, we provide a service artificial intelligence and form drafting software cannot.
As business lawyers, we work on LLC Agreements every day of our practice. As you take the time to properly draft an LLC Agreement, you add value to your client’s business by forcing them to think through their business plan and the relationship among the members. You can help them solve problems and create solutions that make them more productive and efficient. We love to be a small part of our clients’ success.