Here’s a LinkedIn question about LLC operating agreements. The poster wonders whether the operating agreement he received from the entity formation company is a little “generic” and asks the forum for specific advice about what should be included.
The answers point to some provisions that should be included (division of gains and losses, breakup/buyout/dissolution schemes, and tax matters). To their credit, although the typical reader in this situation won’t necessarily see it that way, the lawyers all mentioned that the poster should use a lawyer to get the right agreement.
Just because you can put down the same words on paper that a lawyer uses doesn’t mean you have a good agreement. (Personal example: I recently reviewed a document that the other lawyer assured me was used by several lawyers in that field and “no one had a problem with it.” That claim unfortunately led me to believe that several of the lawyer’s professional colleagues also could not draft well-written agreements. The caveat about copying down words not being the same as drafting applies to lawyers, too!)
After all, there is always a disconnect between the universe of possible terms and those that are right for you and your company and your team and your investors and your business partners and your suppliers and your customers.
This is why we have lawyers. I don’t create value by keeping a generic form secret from you. Good lawyers don’t create value by hiding explanations of the form from you (see my discussion of Wilson Sonsini’s term sheet generator).
Great lawyers create value by giving you reliable outcome-focused answers like these:
- Here’s the absolute right answer.
- Here’s the best answer for you, balancing everything in the way that I understand everything that I know is important to you and everything that I know would be important to you if you knew about it.
- Here’s the mostly right answer for your situation, and the cost of having the wrong answer now isn’t worth the cost of getting the absolute right answer.
- Here’s a good working answer, and we’ll hedge our bets in case I’m wrong.
- I don’t know, and we’ll find the answer.
- I don’t know, but I do know that this is a big freaking deal so don’t do anything until I come back to you with the absolute right answer.
… and explaining those things to you. What I do for clients, across all kinds of engagements, transactions, litigation, counseling, and advising, often falls into one of these big three areas: identifying risks, managing (by eliminating or mitigating) risk, and helping them make informed decisions.
That’s how a lawyer creates value for you. If you’re not getting that, and you don’t have the experience to supply those answers yourself, keep looking.