TEN ISSUES OF LEGAL ETHICS IN FORMING LLCs

By , October 19, 2010 7:50 am

On Monday, October 18, 2010, I taught a one-hour national teleconference seminar for National Business Institute about the issues of legal ethics that often arise for lawyers in forming LLCs.  If this is a topic that interests you, you can access here the nine-page outline I prepared for seminar attendees. 

Below are the 10 main issues I believe are likely to be relevant to lawyers at least from time to time in handling LLC issues.  The rules cited below are the American Bar Association Rules of Professional Conduct.

1)     With which persons involved in the formation do you have an attorney-client relation? (Obvious, you have no ethical duties to persons who are not your clients in the formation.)

2)     What do you need to know and do in order to be competent in the formation?  (Rule 1.1.)

3)     How should you define for your LLC formation clients the scope of your representation of them in the formation?  (Rule 1.2.)

4)     What do you have to do in order to be diligent in the formation? (Rule 1.3.)

5)     What do you have to do in order to engage in adequate communication with your clients in the formation?  (Rule 1.4.)

6)     What fees may you charge your clients in the formation?  (Rule 1.5.)

7)     What types of client information must you treat with confidentiality in the formation?  (Rule 1.6.)

8)     What, in general, must you do in order to avoid conflicts of interest in the formation? (Rule 1.7.)

9)     Under what circumstances may you represent two or more persons in the same LLC formation in a joint representation, and what rules must you observe in order to ensure that no conflict-of-interest issues arise in the representation?  (Rule 1.7.)

What must you do in order to ensure that in handling the formation, you are not engaging in the unauthorized practice of law?  (Rule 5.5.)

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