ARBITRATION

By , March 29, 2017 9:30 am

It is often appropriate to include arbitration clauses in the operating agreements of multi-member LLCs, and these clauses should often provide “delegation clauses” providing that all issues under the agreement, including even issues about the arbitration clauses themselves, must be addressed by the arbitrator. The link below addresses a 10th circuit case on the issue whether these delegation clauses are valid. If you are engaged in LLC formation practice in the 10th circuit, you need to know about this case.

Here is the link: http://arbitrationnation.com/10th-circuit-resolves-one-arbitrability-circuit-split-but-creates-another/

HOW TO BILL FOR LEGAL SERVICES

By , March 28, 2017 10:32 am

The article under the link below will be of interest not only to LLC lawyers but also to lawyers (and other professionals) in all other fields of practice.  It’s about the continuing primacy of hourly billing over all other forms of billing.

Here is the link:  http://www.insidecounsel.com/2016/12/20/the-billable-hour-just-wont-die-report-finds?eNL=58589de3160ba02828d830e0&utm_source=IC_Scoop&utm_medium=EMC-Email_editorial&utm_campaign=12202016

SERIES LLCS

By , March 27, 2017 12:19 pm

Below are (i) a citation to a  law journal article about series LLCs in general and in South Dakota; and (ii) a summary of the article.

61 S.D. L. Rev. 361
South Dakota Law Review
2016
Article
THE SERIES LLC: FURTHER LIMITING LIABILITY WITHIN THE LLC OR CREATING LIABILITY IN THE BUSINESS ORGANIZATION ARENA? ONLY TIME WILL TELL
Heath Oberloh
Copyright 2016 by the South Dakota Law Review; Heath Oberloh

From its origins in Delaware, the Series LLC structure has now been adopted in a handful of states. While the Series LLC provides some unique benefits, those who implement the Series LLC structure encounter a world filled with uncertainties. Some of those uncertainties include whether the internal liability shields between series will be respected, how a series will be treated in the bankruptcy context, how a series will be taxed, and how a series would be treated under the UCC. These uncertainties have been aggravated by the lack of uniformity among the states that have adopted the Series LLC structure. While some attempts at uniformity have been made, planners are currently stuck with the proverbial chicken and the egg conundrum: clarity and certainty may only come with increased use of the Series LLC structure, while increased use may only come with additional clarity and certainty. This article will explain the Series LLC structure and its uncertainties, examine the efforts at uniformity, and explore how the Series LLC could be implemented in South Dakota.

RECENT NY APPELLATE DECISION

By , March 24, 2017 6:48 am

The decision discussed in the post under the link below holds, in essence, that under New York LLC law, a minority member can be bound by a written operating agreement even if the member never did (and never would) sign it.  I’m sure some other states have LLC act provisions generally similarly to the provisions cited by the New York decision.  If you even occasionally represent minority LLC members, you will find the decision sobering and perhaps even shocking.

Here’s the link: http://www.lexology.com/library/detail.aspx?g=6c13dc38-0d60-4959-95af-5046e5f9d33f&l=7TTTF71

S CORP ISSUES ON WHICH THE IRS WILL NOT ISSUE PRIVATE LETTER RULINGS

By , March 23, 2017 9:44 am

An ever-increasing number of LLCs are making S elections; so LLC lawyers who advise their clients about S corporation matters need to follow IRS Subchapter S developments.

Under the link below is a new post about a recent IRS announcement as to three S corporation issues on which the IRS will no longer issue private letter rulings to taxpayers including, of course, LLCs taxable as S corporations and their members.  These issues involve disproportionate distributions, certain types of agreements and other arrangements among shareholders raising single-class-of-stock issues, and certain types of defective S corporation filings.

Here is the link: http://www.lexology.com/library/detail.aspx?g=b82bfc37-1bf2-4217-b510-5afd783485ef&l=7U9VCHQ

NEW LLC ACT IN CONNECTICUT

By , March 22, 2017 1:30 pm

The post under the link below will be of particular importance to lawyers in Connecticut and elsewhere who form LLCs under Connecticut law and to lawyers interested in the Revised Uniform Limited Liability Company Act.

Here is the link:

http://www.lexology.com/library/detail.aspx?g=3b9e0dca-29a5-4b39-bcac-0774fa206fb0&l=7U9VCC2

Here is the first paragraph of the post:

The Connecticut Uniform Limited Liability Company Act, Public Act 16-97 (the “New Act”) will become effective for all existing and new Connecticut LLCs on July 1, 2017. The New Act is more comprehensive, modern and well written than the current Connecticut LLC Act (the “Current Act”). The New Act is patterned after the most recent version of the Uniform LLC Act adopted by the Uniform Law Commission. Connecticut is the 17th state to enact a version of the Uniform LLC Act.

EMPLOYMENT LAW CHECKLIST

By , March 21, 2017 4:29 pm

The list of most common employment law violations under the link below concerns employment law in New Hampshire, my home state;  but I suspect the list would be pretty much the same in all other states, and it may be useful to clients of LLC lawyers in all states if these clients have employees.

Here’s the link:  http://www.employmentlawbusinessguide.com/2016/12/its-that-time-of-year-again-dol-is-making-its-list-and-checking-it-twice/?utm_source=McLane+Middleton+-+Employment+Law+Business+Guide&utm_campaign=89085171d2-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_cb3d2edd77-89085171d2-71829489

LLCS AS S CORPS

By , March 17, 2017 9:44 am

The post under the link below contains a brief but useful discussion concerning the basic pros and cons for LLCs in electing to be S corporations. The big pros of Subchapter S as compared with the default federal tax regimens of sole proprietorship and partnership tax are greater ease in reducing member Social Security Tax burdens and, in general, in achieving pass-through taxation.  However, the post fails to discuss or even to mention many of the unique sole proprietor and partnership tax benefits that LLC members will forgo if they make S elections.  The partnership tax benefits include, above all, those under Sections 701, 704, 721, 734,743, 754 and 752.

 

Here’s the link:  http://www.lexology.com/library/detail.aspx?g=0787f2eb-5fdd-479b-aacf-951af7768bae

DON’T BE A MINORITY MEMBER IN AN LLC THAT LACKS AN OPERATING AGREEMENT

By , March 16, 2017 8:57 am

The excellent post by Peter Mahler under the link below addresses the risks under New York LLC law for minority members in multi-member LLCs that lack written operating agreements; but the post applies also to non-New York LLCs.

Here’s the link:

http://www.nybusinessdivorce.com/2017/01/articles/capital-call/thinking-becoming-minority-member-new-york-llc-without-operating-agreement-think/

WHO IS THE TAXPAYER?

By , March 15, 2017 10:10 am

Under the link below is another excellent post by Lou Vlahos on a basic issue of federal income taxation.  Even lawyers who make no claim of tax expertise should be familiar with the tax doctrine stated so clearly in Lou’s post.

Here’s the link:   http://www.taxlawforchb.com/2017/01/who-is-the-taxpayer/