ATUL GAWANDE, CHECKLISTS AND LLC FORMATION PRACTICE

By , February 25, 2010 8:03 am

Atul Gawande

Several years ago I began developing what I intended to be a comprehensive business entity formation checklist. The list is now included as Exhibit 2-2 in Drafting Delaware LLC Agreements and as Exhibit 5-2 in Drafting Limited Liability Company Operating Agreements. It is the master checklist in these books. You can access it by clicking here.

When I first wrote my checklist, it identified just 10 professional tasks. Now the list is up to 23. I have no doubt that as time goes by, it will continue to grow.

Recently, I read The Checklist Manifesto—How to Get Things Right, a terrific book about checklists by Atul Gawande. As you may know, Gawande is a Boston surgeon who also teaches at Harvard Medical School, is a staff writer for the New Yorker magazine, publishes a best seller every year or so, has a wife and three children, appears on Jon Stewart’s “The Daily Show,” and, apparently, doesn’t need to sleep. Gawande’s photo is on the right. Here are the key ideas in his book:

  • Technical knowledge has become so extensive and complex in most contemporary professions that, when professionals are performing their work, it’s very difficult for them to avoid overlooking critical tasks.
  • However, there’s a remarkably easy and inexpensive way to avoid professional errors: Use checklists!
  • There is overwhelming empirical evidence of the efficacy of professional checklists—above all in the field of surgery and in the prevention of hospital infections, but also in flying airplanes, building skyscrapers, selecting venture capital investments and in many other fields.
  • Despite this evidence, surveys show that surgeons tend to resist the use of checklists in their operating rooms because they don’t think they need them and because they view them as mindlessly mechanical. But although only 80% of surgeons have been willing to use the checklist that Gawande and the World Health Organization developed to ensure safe surgery, 95% of them say that if they were the ones going under the knife, they’d want their surgeons to use it!

I read The Checklist Manifesto with tremendous interest because I found that all of the above ideas and most of the other ideas in the book can be applied in direct and powerful ways to LLC formation practice. In my experience, good checklists are all but indispensable in these formations if you want to avoid important omissions.

But for people like me, who write books about their specializations (and thus also for my readers), I’ve found there’s another huge benefit to checklists: If, once you feel you’ve mastered the topic you’re writing about—e.g., the topic of how to form LLCs or, more narrowly, how to do non-tax choice of entity—you try to reduce your ideas to one or more practice checklists, this will not only enhance the value of your ideas for fellow professionals; it will also almost always force you to expand and improve your ideas.

The proof: If you read my entity formation checklist, I suspect you’ll think of at least one professional task it fails to address. If you do, please send a comment to this blog. LLC checklists need to be social—they need to be the products of LLC lawyer dialogue.

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