Multi-Member LLC Operating Agreement Cost

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What does a multi-member LLC operating agreement cost? This is a common question that LLC members ask when they establish a new multi-member LLC. So let’s explore this question and review some general information about multi-member LLC operating agreements.

How Much Does a Multi-Member LLC Operating Agreement Cost?

A multi-member LLC operating agreement is a formal legal contract that summarizes how a multi-member LLC will operate and govern the business. Multi-member LLCs are very similar to a standard LLC. The only difference is that a multi-member LLC has multiple owners called members.

An operating agreement is especially important for multi-member LLCs because it defines the roles and responsibilities of each member.

Multi-member LLC operating agreements will usually include information about the following business elements:

  • Management structure
  • Percentage of ownership by each member
  • Investments
  • Taxes
  • Profit-sharing

A well-thought-out and drafted operating agreement is key to the success of a business. In addition, it can be a crucial document in avoiding and resolving disputes among members and allows each member to understand their role in the company.

For these reasons, LLC members are encouraged to seek help from a business lawyer to draft an operating agreement. A lawyer familiar with operating agreements will ensure that your agreement includes all necessary information to protect the company and each member of the LLC.

Based on ContractsCounsel’s marketplace data, the average cost of a project involving a multi-member LLC operating agreement is $717.08.

What’s Included in a Multi-Member LLC Operating Agreement?

Multi-Member LLC operating agreements will vary based on several factors. For example, the type of business, number of members, size of the company, and management organization will all affect the provisions included in the operating agreement.

Even though specific clauses may differ, it is common for operating agreements to include the following information:

  • Member Information. All members' names and contact information should be recorded in the operating agreement. It should also have its respective percentage of ownership of the company.
  • Organization Details. The organization is when the LLC was established. This includes the date the company was formed and the ownership structure.
  • Management Structure. The two main ways that LLCs can be managed are member-managed or manager-managed. The management structure affects how the company is run and must be clearly defined.
  • Voting. Each member will have specific voting rights for making decisions within the company. How voting will take place should be defined in the agreement.
  • Capital Contributions. A record of which members contributed money to start the LLC and how members can raise additional money.
  • Distributions. The distributions section will dictate how the company’s profits and losses will be shared among the members. This can include actual money, property, or business assets.
  • Membership changes. An LLC operating agreement needs to include rules for adding or removing members from the company. This section will lay out rules for transferring ownership or what happens if a member dies.
  • Dissolution. The final section will outline the ways a company can be dissolved.
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Who Needs a Multi-Member LLC Operating Agreement?

Only five states require operating agreements by law. It is good practice for any LLC, especially a Multi-Member LLC, to have an operating agreement. When more than one member runs an LLC, disagreements can occur. An operating agreement can help avoid disputes and resolve them.

The five states that require operating agreements by law are:

  • California
  • Delaware
  • Maine
  • Missouri
  • New York

Multi-Member LLC Operating Agreement Projects

Multi-Member LLC Operating Agreement Drafting

It is common for LLC members to hire a knowledgeable lawyer to draft an operating agreement that fits their business needs. Of course, the business will incur legal fees. Still, many members feel that having a complete and legally binding operating agreement is worth the expense.

Multi-Member LLC operating agreement drafting typically involves a consultation with the LLC members to learn about the terms they want to include in the agreement. The lawyer will then draft an operating agreement that implements those terms.

Multi-Member LLC operating agreement costs will vary based on the length and complexity of the document and how many custom terms are added.

Multi-Member LLC Operating Agreement Review

Once a company has an operating agreement, there are instances where the agreement may need to be reviewed and updated. For example, as a business grows and evolves, it may need to change management structure or voting rights.

Suppose an operating agreement needs to be updated or changed. In that case, a business can hire a lawyer to conduct a document review. The lawyer will go over the current agreement and make suggestions for updates.

Multi-Member LLC Operating Agreement Drafting Cost

Drafting a Multi-Member LLC operating agreement comes with costs because it requires a licensed lawyer's time and legal expertise.

ContractsCounsel’s marketplace data shows the average Multi-Member LLC operating agreement drafting costs are $791.87 across all states and industries.

Multi-Member LLC Operating Agreement Review Cost

Hiring a lawyer to review a Multi-Member LLC operating agreement will also come with fees. The attorney will read over the agreement to analyze the terms and consult with the partners.

ContractsCounsel’s marketplace data shows the average Multi-Member LLC operating agreement review costs to be $567.50 across all states and industries.

How Do Lawyers Charge for a Multi-Member LLC Operating Agreement?

Multi-Member LLC lawyers can charge for legal services in several ways. Depending on the project's complexity, the lawyer will typically suggest fee options to the client.

Hourly Rates for Multi-Member LLC Operating Agreements

Hourly rate billing is a popular fee structure among lawyers across all legal fields. Using this fee structure, the lawyer will provide the client an hourly rate and then log the hours spent working on a client’s case in a timesheet. At the end of the case, the client is invoiced for the total amount of hours.

This fee structure ensures that lawyers are paid for their work, especially if the project takes longer than expected.

ContractsCounsel’s marketplace data shows the average hourly rate for a Multi-Member LLC lawyer ranges from $250 - $350 per hour.

Flat Fee Rates for Multi-Member LLC Operating Agreements

Flat fee billing structures are becoming popular among attorneys hired for a specific task like a contract drafting project. When using this fee structure, a lawyer will provide a flat-fee rate to the client for the entire case or project. The benefit of flat fee billing is that it gives certainty to the client on the project's total cost.

ContractsCounsel’s marketplace data shows the average flat fee rate for a Multi-Member LLC operating agreement is $717.08.

Get Help with a Multi-Member LLC Operating Agreement

Do you need help with a Multi-Member LLC operating agreement project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from business lawyers to handle your project. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.

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