LLCS AND VEIL PIERCING

By , January 9, 2014 12:29 pm

I’ve just finished reading the materials written by Elizabeth Fenton and Katherine Petroski for a seminar they taught recently for National Business Institute (“NBI”) entitled “Piercing the LLC Veil.”   The materials are useful both from an analytical viewpoint and because they cite a great many LLC veil-piercing cases.  (You can purchase the materials by visiting the NBI website.)  For example, at page 8, the authors cite numerous cases for the proposition that, unlike in corporate veil-piercing cases, plaintiffs can’t use the “failure to follow formalities” argument in LLC veil-piercing claims; and at page, 115, they cite cases that stand for the proposition that in order to pierce the veil of both corporations and  LLCs, plaintiffs must prove their claim on the basis of clear and convincing evidence.  Since the authors are litigators, they also provide a great many practical tips for bringing veil-piercing claims against LLC members and for defending against these claims.

Veil-piercing is addressed in substantial detail in Chapter 22 of my Wolters Kluwer LLC book.  I recommend the above NBI materials if you’re interested in the topic of LLC veil-piercing, and I intend to add case citations in that chapter from the above materials.

In my view, one of the most important tasks lawyers should perform in forming LLCs for their clients is to instruct their clients on how to avoid LLC veil-piercing.  That task is the central subject of the above chapter, and the above NBI materials can provide substantial help in handling it.  In a soon forthcoming blog, I will provide what I believe are the basic guidelines lawyers should follow in handling the task.

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