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Preface to the Fifth Edition
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VOLUME 1
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PART I OPERATING AGREEMENT BASICS
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LLC Formation Master Checklist
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Main Types of General-Purpose Forms
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Chapter 1
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Twelve Statutory Characteristics of LLCs
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§ 1.01
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LLC Statutory Law Structure
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§ 1.02
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Twelve Statutory Characteristics of LLCs
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§ 1.03
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Series LLCs
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§ 1.04
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LLC Uses
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§ 1.05
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Self-Test on Chapter 1
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Exhibit 1-1
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Characteristics of LLCs
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Chapter 2
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Choosing the Right Model Operating Agreement
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§ 2.01
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Importance of General-Purpose Forms
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§ 2.02
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Number of General-Purpose Forms Needed
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§ 2.03
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Three Structures Critical to Classifying LLCs
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§ 2.04
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Ownership Structures LLCs
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§ 2.05
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Management for Single-Member LLCs With an Individual Member
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§ 2.06
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Management for Single-Member LLCs With an Entity Members
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§ 2.07
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Management for a General Partnership Structure
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§ 2.08
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Management for a Limited Partnership Structure
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§ 2.09
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LLC Corporate Management Structures
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§ 2.10
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Federal Tax Structures LLCs
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§ 2.11
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Best General-Purpose Form
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§ 2.12
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Self-Test on Chapter 2
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Exhibit 2-1
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Most Common Types of LLCs and the Model Operating Agreements Required
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Exhibit 2-2
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Main Types of General-Purpose Forms
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Chapter 3
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General Drafting Guidelines
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§ 3.01
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Drafting Operating Agreements
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§ 3.02
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Criteria for Evaluating Operating Agreements
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§ 3.03
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LLC Formation Master Checklist Tasks Relevant to Operating Agreements
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§ 3.04
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Operating Agreements Drafted by Other Lawyers
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Exhibit 3-1
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Criteria for Evaluating Operating Agreements
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Exhibit 3-2
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Guidelines for Good English Prose
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Exhibit 3-3
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Guidelines for Good Contract Format and Style
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Exhibit 3-4
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Specific Tasks in Drafting Operating Agreements
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Exhibit 3-5
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Evaluating a Draft Agreement by Another Lawyer
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Chapter 4
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Using Case Law for Guidance
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§ 4.01
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Using Case Law for Drafting Guidance
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§ 4.02
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Purpose Provisions in Operating Agreements of Multi-Member LLCs
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§ 4.03
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Expulsion Provisions in Agreements with Two Unequal Members
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§ 4.04
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Hidden Risks in Drafting Disability Provisions
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Chapter 5
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Single-Member LLCs with Individual Members
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§ 5.01
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Individuals as Single-Members
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§ 5.02
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Single-Member LLCs vs. Two-Member LLCs
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§ 5.03
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Choosing the Best LLC Act
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§ 5.04
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The LLC Members
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§ 5.05
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One Entity or Two?
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§ 5.06
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Sole Proprietorship vs. Single-Shareholder Corporation vs. Single-Member LLC
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§ 5.07
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Best Management Structure
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§ 5.08
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Best Federal Income Tax Regimen
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§ 5.09
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Best Tax Regimen for Social Security and Medicare
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§ 5.10
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Single-Member LLCs Need Written Operating Agreements
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§ 5.11
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Forms for LLCs With Individual Members
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§ 5.12
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Fiduciary Issues in Forms 1.1 Through 1.6
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§ 5.13
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Miscellaneous Legal Issues
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Exhibit 5-1
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Individuals as Both Members and Managers
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Chapter 6
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Single-Member LLCs with Entity Members
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§ 6.01
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Entities as Single-Members
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§ 6.02
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Choosing the Best LLC Act
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§ 6.03
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Business Entity Form of the Subsidiary
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§ 6.04
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Best Management Structure
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§ 6.05
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Best Federal Income Tax Regimen
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§ 6.06
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Single-Member LLCs Need Written Operating Agreements
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§ 6.07
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Forms for LLCs Whose Members Are Entities
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§ 6.08
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Miscellaneous Legal Issues
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Exhibit 6-1
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Considerations When Using a Subsidiary
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Chapter 7
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Business Organization Law Plug-In Provisions
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§ 7.01
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Replacement and Supplemental Provisions
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§ 7.02
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Other Sources for Plug-In Provisions
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§ 7.03
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Provisions Combining Sections 7 and 9
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Exhibit 7-1
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Replacement and Supplemental Provisions
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Exhibit 7-2
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Form 6.2—Cover Page and Tables of Contents
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Chapter 8
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Multi-Member LLCs
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§ 8.01
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Operating Agreements for Multi-Member LLCs
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§ 8.02
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Importance of Operating Agreements
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§ 8.03
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Expertly Drafting Operating Agreements
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§ 8.04
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Necessary Tasks in Drafting Operating Agreements
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§ 8.05
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Master the Drafting Process
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Exhibit 8-1
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Model Memorandum for Clients
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Exhibit 8-2
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Necessary Tasks in Drafting Operating Agreements
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Chapter 9
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Evaluating and Using Model Operating Agreements
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§ 9.01
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Introduction
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§ 9.02
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Evaluating Individual Model Operating Agreements (“Forms”)
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§ 9.03
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Evaluating Sets of Model Operating Agreements
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§ 9.04
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Forms in This Book vs. Forms from Other Sources
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§ 9.05
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Adapting the “Generic” Forms in this Book for Use Under Specific LLC Acts
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§ 9.06
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Guidelines for Using the Forms in this Book
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Exhibit 9-1
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Guidelines for Using the Forms in this Book
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Chapter 10
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Inter-Spousal LLCs
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§ 10.01
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Introduction
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§ 10.02
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Form 4.1 as the Basis for Form 1-S
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§ 10.03
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Management Structure
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§ 10.04
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Best Federal Income Tax Regimen
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§ 10.05
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Comments on Forms 1-K and 1-S
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Chapter 11
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Short-Form Operating Agreements—Form 3-K
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§ 11.01
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Importance of Comprehensive Operating Agreements
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§ 11.02
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Situations Appropriate for Short-Form Operating Agreements
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§ 11.03
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Form 3.1 as the Basis for Form 3-K
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§ 11.04
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Necessary Provisions
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§ 11.05
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Deletions from Form 3.1 Reflected in Form 3-K
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§ 11.06
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Specific Provisions Retained in Form 3-K
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Chapter 12
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Freedom of Contract
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§ 12.01
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Freedom of Contract
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§ 12.02
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Contractarianism and § 18-1101(b)
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§ 12.03
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Freedom-of-Contract and Enforceability Rule
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§ 12.04
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Limits of Contractual Freedom
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§ 12.05
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Section 18-1101(b) Interprets Other Provisions
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§ 12.06
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The Elf Atochem Case
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§ 12.07
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Rulings in Elf Atochem
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§ 12.08
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Conclusion
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§ 12.09
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Self-Test on Chapter 12
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Chapter 13
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Statutory “Pick-Your-Partner” Provisions
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§ 13.01
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Pick-Your-Partner Provisions
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§ 13.02
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Relevant Definitions
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§ 13.03
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Pick-Your-Partner and Related Provisions
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§ 13.04
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DLLC Act Pick-Your-Partner Provisions
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§ 13.05
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Unavailability to Single-Member LLCs
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§ 13.06
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Member Bankruptcies
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§ 13.07
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Divorce
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§ 13.08
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Statutory Conversions to Obtain Pick-Your-Partner Provisions
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§ 13.09
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Chapter 14
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Statutory Charging Order Provisions
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§ 14.01
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Charging Orders
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§ 14.02
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Relevant Definitions
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§ 14.03
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Charging Order and Related Provisions
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§ 14.04
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DLLC Act Charging Order Provisions
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§ 14.05
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Unavailability to Single-Member LLCs
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§ 14.06
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Federal Income Tax Consequences; Consequences for Creditors
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§ 14.07
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Member Bankruptcies
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§ 14.08
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Creditor Foreclosure on Interests of Member-Debtors
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§ 14.09
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Miscellaneous Planning and Drafting Issues
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§ 14.10
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Statutory Conversions of Corporations
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§ 14.11
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Legal Grounds for Charging Order Provisions
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§ 14.12
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Multi-Jurisdictional Issues
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§ 14.13
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Bibliography
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§ 14.14
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Summary and Conclusions
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PART II ESSENTIAL TASKS
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Chapter 15
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Initial Contacts with Clients
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§ 15.01
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Mary Jones, An LLC Formation Client
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§ 15.02
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Handling Client Questions
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Exhibit 15-1
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Matters to Address in Your Initial Contact
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Exhibit 15-2
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Tasks to Provide in Basic LLC Formation Services
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Exhibit 15-3
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Comprehensive, Intermediate, and Basic Services
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Exhibit 15-4
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Model Engagement Letter
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Chapter 16
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Issues of Professional Ethics
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§ 16.01
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Professional Ethics Issues
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§ 16.02
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The Attorney-Client Relationship
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§ 16.03
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Model Rule 1.1—Competence in Forming LLCs
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§ 16.04
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Model Rule 1.2—Scope of Representation
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§ 16.05
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Model Rule 1.3—Diligence
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§ 16.06
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Model Rule 1.4—Communication with Clients
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§ 16.07
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Model Rule 1.5—Fees
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§ 16.08
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Model Rule 1.6—Confidentiality
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§ 16.09
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Model Rule 1.7—“Concurrent Conflicts”
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§ 16.10
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Joint Representations—Detailed Discussion
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§ 16.11
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Model Rule 1.8(a)—Accepting Equity Interests
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§ 16.12
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Model Rule 5.5—Unauthorized Practice of Law
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§ 16.13
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Self-Test on Chapter 16
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Exhibit 16-1
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ABA Model Rules of Ethics
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Exhibit 16-2
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Joint Representation Agreement
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Exhibit 16-3
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Key Issues on Which You Agree
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Chapter 17
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ABA Rules of Professional Conduct and Malpractice
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§ 17.01
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Ethical and Malpractice Risks
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§ 17.02
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ABA Rules and the Civil Rules
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§ 17.03
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Rule 1.7(a)(2) “Current Client” and Malpractice
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§ 17.04
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Impact of Breaching Rule 1.7(a)(2)
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