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Limited Liability Limited Partnerships

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A Limited Liability Limited Partnership (LLLP) is a relatively recent modification of a traditional limited partnership, and about half of the states in the U.S. have adopted statutes for their formation. In this article, I will highlight some of the most prominent features of the LLLPs.

As I already mentioned above, LLLPs are a modification of limited partnerships. By definition, limited partnerships consist of one or more general partners, and one or more limited partners. In a standard limited partnership, the general partners have joint and several liability for the debts and obligations of the limited partnership, whereas limited partners will not have such liability for these debts and obligations beyond any amount of their capital contributions.

In contrast, in an LLLP, general partners will also have limited liability for the debts and obligations of the limited partnership that arise during the time that the LLLP form is elected. Thus, general partners in an LLLP may have significantly less liability, and are not likely to be personally liable for the debts and obligations of the partnership; rather, the liability of a general partner is limited to the amount of his capital contribution.

Despite the differences in the liability, LLLPs are usually managed in a manner similar to the LPs – in an LLLP, general partners usually manage the partnership, while limited partners only have a financial interest. Similarly, tax-wise, an LLLP election has no effect on the pass-through taxation aspects of a partnership.

As noted above, only about half the states allow for an LLLP form; therefore, you need to check your local statutes to see if you have an option to make such an election. In practice, LLLPs are often formed by converting existing limited partnerships into such a form (in order to take advantage of the benefits of an LLLP).

Contact Sherayzen Law Office NOW For Legal and Tax Help With Partnerships

Forming partnerships, LLPs, LLLPs, and other similar business entities involve complex issues, and often legal issues arise that necessitate experienced planning beyond merely the formation of an entity. This article only attempts to provide a general background information that should not be relied upon in making the determination of your specific situation. Please contact Sherayzen Law Office for legal help with this issue. Our experienced business firm will guide you through the complex web of rules concerning business partnerships and their various forms (general, LPs, LLLPs, et cetera).

Business Lawyers Minneapolis: Preparing for Initial Consultation I

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Preparing for the initial consultation with your Minneapolis business lawyer usually involves at least two steps. First, gathering the information you need to supply to your business attorney. Second, preparing the questions you want to ask your business lawyer. This essay deals with the first part of the preparation.

It is important to understand that your Minneapolis business lawyer will initially have to rely almost exclusively on the information that you supply to him. Moreover, failure to supply the necessary information during initial consultation may lead to significant delays in your case and increase your legal expenses. This is why it is very important to come prepared to the initial interview.

The first step is to ask your Minneapolis business lawyer about what you should bring with you. While Minneapolis business lawyers commonly recommend that you should bring all documents that are related to your case, I usually list specific documents which are customary in a given business situation.

“Everything related to the case” usually includes all documents, statements, e-mails, letters, corporate business documents, et cetera. Sometimes, this would mean divulging sensitive financial and personal information. You should not feel uncomfortable in doing so, because a lawyer will guard all of this information. Client confidentiality is the cornerstone of Sherayzen Law Office’s practice. We jealously guard all client information that a client supplied to us in confidence.

The second step is for you to review what documents you actually have against the list of the documents requested by your attorney. It is possible that you may lack some documents. The purpose of this step is to identity the missing information.

The third step is to try to obtain the missing information before meeting with your business attorney. If this is not possible, then let your attorney know during the consultation what information you are missing and whether you will be able to find it after the meeting.

Once you go through these three steps, the first part of the your preparation for the initial business consultation is finished. I will discuss the second part of your preparation in the next article.

Remember, Sherayzen Law Office can help you with your business issues, whether they are concerned your business license, administrative appeals, litigation, business organization or business planning.

Contact Sherayzen Law Office to discuss your business case with an experienced business attorney!

Business Lawyers Minneapolis: Legal Fee Issues

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When you are about to hire a business lawyer in Minneapolis, you need to discuss the following top three legal fee issues:

1. Payment Structure

There are three main models of payment that lawyers use: hourly fee, contingency fee, and flat fee. The hourly fee is the most common form of business lawyer compensation in Minneapolis because it is fairly simple and, yet, flexible – the business attorney is paid only based on the time he spends on the case. If you are paying your business lawyer by the hour, the agreement should set out the hourly rates of the business attorney and anyone else in this attorney’s office who might work on the case.

A contingency fee, where a Minneapolis business attorney takes a percentage of the amount the client wins at the end of the case, is very rarely used by business attorneys in Minneapolis. In the unlikely case that this latter type of fee arrangement is used, the most important issue to understand is whether the business lawyer deducts the costs and expenses from the amount won before or after you pay the lawyer’s percentage. Obviously, you will pay more in attorney fees if your business lawyer deducts the litigation costs based on the latter scenario (i.e. after you pay the lawyer’s fee).

Finally, in a flat fee arrangement, you pay an agreed-upon amount of money per job/case. For example, you pay $5,000 to your business attorney to organize your corporation with all of the corresponding corporate documents. While a flat fee arrangement is possible in a small project, it is generally disliked by business lawyers in Minneapolis because it often lacks the necessary flexibility to account for the client’s individual legal situation. Usually, some sort of an additional payment arrangement is built into such fee agreements to make sure that the balance between the client’s legal needs and the business attorney’s fees is maintained.

Remember,out-of-pocket expenses (e.g. long-distance calls, mailing costs, photocopying fees, lodging, etc.) and litigation costs (such as court filing fees) are usually billed to you in addition to your business lawyer’s fees.

2. Retainer

Most business lawyers in Minneapolis require their client to pay a retainer. Retainer can mean two different fee arrangements. First, retainer may be the amount of money a client pays to guarantee the lawyer’s commitment to the case. Under this arrangement, the retainer is not a form of an advance payment for future work, but a non-refundable deposit to secure the lawyer’s availability. Second, a retainer is simply the amount of money a business attorney asks his client to pay in advance. In this scenario, the lawyer usually deposits the retainer in a client trust account and withdraws money from it for the work completed according to the fee agreement. The fee agreement should specify the amount of the retainer and when the lawyer can withdraw money form the client trust account (usually, on a monthly basis).

3. Timing of Billing

Usually, business attorneys in Minneapolis bill their clients on a monthly basis. Sometimes, however, when the project is not large, the fee agreement will specify that you will be billed upon completion of the case. In a flat-fee scenario, it is likely that the client will be obligated to pay either a half or even the whole amount immediately as a retainer. It is wise for a client to insist in paying some part of the fee upon completion of the case to retain a degree of control over the case completion.

Conclusion

Generally, before you sign the fee agreement, business lawyers in Minneapolis will discuss with you many more topics than what is covered in this article. The three issues explained here, however, are crucial to your understanding of how the business relationship with your Minneapolis business attorney will work. Before you sign the fee agreement with your business lawyer in Minneapolis, you should ask at least these three questions and make sure that the answers are complete and to your satisfaction.