Venture-cap funds eschew investments in LLCs; benefits of the LLC form, such as flow-through taxation, are of little value to venture funds

Article Abstract:

Venture capitalists view the management and taxation of the limited liability company (LLC) as disadvantages and are not likely to choose this business format. The flow-through tax treatment is not an advantage for start-up companies as most generate losses in their first years. The rules for exercising corporate stock options, commonly used as part of compensation in both business formats, also differ in these two. Taking a business public, often seen as a key goal by venture capitalists, is not available with the LLC format.

Management, Taxation, Venture capital

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Efforts to limit firms' liability often thwarted: even where state law permits professional LLCs, courts can assert control over attorneys

Article Abstract:

Law firms that structure themselves as limited liability companies or partnerships (LLCs and LLPs) often find that courts do not recognize the advantages such a structure should bring. Several state courts have held that despite the state legislature's limited freedom to regulate the practice of law, the courts remain sovereign in that area, so legislation is not always an adequate solution. Law firms practicing in several states face the greatest problem as many states handles the issue differently.

Attorneys, Lawyers, Malpractice, Legal malpractice

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Do LLCs really limit liability? On the whole, yes; cases to date indicate that the courts have upheld protections envisioned by legislatures

Article Abstract:

The trend of judge-made law to extend to limited liability companies (LLCs) those protections envisioned by the legislature is discussed. Conditions when such liability can be overridden and when LLC members might be personally liable are also discussed.

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