|With the new year comes the exclusive application of the Uniform
Partnership Act of 1994 (California Corporations Code ("Cal. Corp. C.")
§§16100 through 16692, inclusive, generally, the "UPA," or specific reference
to sections thereof) to all California limited liability law partnerships (and all foreign
limited liability law partnerships conducting intrastate business) (domestic or foreign
"LLP"). The former California Uniform Partnership Act (Cal. Corp. C. §§15001
through 15058, inclusive) has been repealed. Prior to 1998, an LLP which registered on or
before Dec. 31, 1996, was governed by the former statutory provisions (and an LLP which
registered on or after Jan. 1, 1997, could have elected to be governed by the former
Domestic LLPs must satisfy the initial and annual renewal registration
requirements of the California secretary of state and the State Bar (annual renewal
relative only to filing with the State Bar) to secure limited liability protection against
damages caused by certain tortious and contractual breach conduct. (Cal. Corp. C.
§16306(c)). First, the domestic LLP must register with the California secretary of state.
Second, Cal. Corp. C. §16306(f) requires that a Certificate of Registration as a Limited
Liability Partnership be issued by the State Bar. To implement this latter requirement,
the State Bar has adopted the Limited Liability Partnerships Rules and Regulations
(California Court Rules - Attorneys and State Bar ("LLP Rules")). The LLP Rules
were first approved by the State Bar board of governors on Oct. 28, 1995 (effective Jan.
1, 1996). The LLP Rules were revised as recently as June 1, 1997. Third, the LLP must also
meet certain security requirements. (Cal. Corp. C. §16956). Foreign LLPs are subject to
special rules regarding registration which are discussed below.
Updated information concerning LLP registration with the secretary of state can be
obtained from its web site at www.ss.ca.gov/business/llp. The business filings section LLP
unit provides forms with instructions and a fee schedule. All of the available forms may
be downloaded and printed through portable document format (PDF) and completed for
submission by mail. In addition, a listing of frequently asked questions (FAQs) and
answers is posted along with links to other resources and a means of electronically
contacting the business filings section LLP unit.
In order to become a registered LLP, a general partnership must file Form LLP-1,
Registered Limited Liability Partnership, with the secretary of state (Limited Liability
Partnership Unit). There presently is a $70 filing fee (as set by statute). The
registration must be completed in compliance with Cal. Corp. C §§16951 through 16962,
inclusive. In particular, Cal. Corp. C. §16955(a) provides that a domestic law
partnership may convert to an LLP by majority vote or by a different vote as may be
required in its partnership agreement. (Cal. Corp. C. §16953(a) permits any partnership,
other than a limited partnership, to register.)
Item 11 of LLP-1 requires execution by one or more authorized partners. Presumably, the
vote of the partners possessing a majority profits interest (or other means of voting)
must include the appropriate delegation of authority to a partner or partners to execute
and file the registration. Generally, the registration is effective as of the date of
receipt by the California secretary of state. However, Item 9 permits a delayed effective
For example, a law firm may decide to use a delayed effective date of registration so
as to comport with an appropriate accounting period or fiscal year. A foreign LLP must
also register with the California secretary of state (in order to lawfully conduct
intrastate business, meaning repeatedly and successively providing legal services). In
that case, a certificate of good standing from the jurisdiction under which the foreign
LLP is organized must also be submitted. (Cal. Corp. C. §16959(a)(2)).
Cal. Corp. C. §16954(a) provides that the original registration must be amended under
certain circumstances. An amendment must be filed with the California secretary of state
as soon as reasonably practical after any information set forth in the original
registration, or any previously filed amended registration, becomes inaccurate, or to add
information to the original registration or amended registration. For registered LLP
terminations, there is no timeliness provision with respect to the filing of a notice of
cessation. With respect to both registration and amendments and cessation notices, Form
LLP-2, Amendment to Registration of Limited Liability Partnership, is used accompanied by
a $30 filing fee (mandated by statute, Cal. Corp. C. §16954(d)). The specific information
to be reported in the amended registration includes changes in the LLP name, the address
of its principal office, the name of its agent for service of process, a change in the
delayed effective date of the original registration, or any other matter reported in the
original registration, or any previously amended registration, which has materially
Several provisions of the UPA concern termination of registered LLP status. These are
Cal. Corp. C. §§16954(b) (domestic LLPs), 16960(b) and 16960(c) (foreign LLPs ceasing or
otherwise no longer required to be registered). Cal. Corp. C. §16954(b) requires the
filing with the California secretary of state of a notice if an LLP ceases to be a
registered LLP. Form LLP-4, Limited Liability Partnership Notice of Change of Status, is
used accompanied by a $30 filing fee.
Registration with the bar
Cal. Corp. C. §16306(f) provides that the limitation upon a partner's vicarious
liability for claims based upon acts, errors or omissions arising from legal services does
not apply unless the registered LLP has a currently effective certificate issued by the
State Bar (office of certification, phone: 415/538-2100, press option 3 to connect with
the LLP information line, then press option 1 for information about receiving an
application by fax or mail). LLP Rules §1.0 requires California attorneys to register to
practice law as an LLP. Additionally, LLP Rules §10.0 requires each LLP to file an annual
renewal. Failure to complete the annual renewal results in involuntary termination of the
LLP as a registered LLP. (LLP Rules §8.1.1).
Certificate of registration
In order to obtain a certificate of registration, all domestic and foreign LLPs
conducting intrastate business must file an application on a form published by the bar's
office of certification. Forms may be obtained through fax on demand (application fax
retrieval phone number 415/561-8883 if calling from a fax machine equipped with telephone
handset; press option 6 to receive an LLP application packet). There is presently a
non-refundable $50 per partner filing fee (not to exceed $2,500 as set by administrative
The names of all LLP partners must be listed on Attachment 1, and the names of all
non-partners (including associates, of counsel, contract lawyers and licensed persons
sharing office space) must be identified on Attachment 2.
Attachment 3 includes a declaration of an authorized partner made under penalty of
perjury of compliance with Rule 1-400, Rules of Professional Conduct (regarding
limitations upon advertising and solicitations to prospective clients not constitutionally
protected from abridgment). An original, certified copy of LLP-1 as filed with the
California secretary of state must also accompany the application. (LLP Rules §4.0 et
Security for claims
LLP Rules §5.0 et seq. requires all domestic and foreign LLPs (conducting intrastate
business) to maintain security for claims of negligent or intentional acts, errors and
omissions arising out of the practice of law (by reference to former Cal. Corp. C.
§15052, presumably to be amended to refer to Cal. Corp. C. §16956). Otherwise, the
limitation on vicarious liability provided by Cal. Corp. C. §16306(c) lapses during any
period security is not maintained (again, presumably the rule will be amended to refer to
the applicable UPA provision).
Amendments made to LLP Rules §5.0 repealed the requirement that a form of written
security agreement be submitted to the State Bar (effective June 1, 1997, deleting LLP
Rules §5.2 which directed that evidence of the required security for claims be furnished
to the State Bar with the original registration application).
Nonetheless, LLP Rules §3.4 requires that all domestic and foreign LLPs have at the
time of the filing of the original application for registration (and agree to maintain
during the entire period of certification) the security for claims mandated by Cal. Corp.
To implement the requirement of Cal. Corp. C. §16306(f) that a currently effective
certificate of registration be issued by the State Bar, LLP Rules §10.0 requires the
filing of an annual renewal. The failure to file the annual renewal results in involuntary
termination of the certificate of registration.
The due date for filing the annual renewal is set by the office of certification. For
certificates issued on or before Oct. 1, 1998, the renewal due date is Oct. 1, 1999.
Certificates issued on or before Oct. 1, 1997, were required to be renewed by a filing
submitted no later than Oct. 1, 1998.
The office of certification automatically mails annual renewal forms to all currently
registered LLPs, preprinted with the appropriate information of record (LLPs registered
before Oct. 1, 1997, were mailed renewal forms on Aug. 3, 1998).
Any changes to the information last furnished must be noted on the form, such as
whether the name of the law firm or its address has changed (Part 1), or whether there has
been a change in the number of partners and non-partners who practice for the firm
including their names and State Bar numbers, or the State Bar Law Corporation Certificate
of Registration Number of any incorporated partners or non-partners (Part 2).
However, any change in the name, address or designated partner (authorized to act on
behalf of) the LLP must be submitted by special report to the State Bar within 45 days of
the change. (See LLP Rules §11.0).
Once a certificate of registration has been involuntarily terminated for failure to
file timely the required annual renewal, the LLP must file a new Form LLP, Application for
Issuance of Certificate of Registration as a Limited Liability Partnership, together with
appropriate attachments. A new filing fee (up to $2,500) must also be paid. An original,
certified copy of LLP-1 as filed with the California secretary of state must also
accompany the application.
Annual renewal fee
The annual renewal fee is determined by the number of LLP partners reflected on the
records of the office of certification as of the preceding July 31. The filing fee is $75
for a two-partner firm plus $25 for each additional partner, up to a maximum of $2,500.
Given the benefits of limited liability protection the properly registered domestic LLP
has to offer its partners, it is indeed surprising that some California law firms have
failed to complete annual registration renewals (or have even failed to file Form LLP with
the office of certification). The personal liability for malpractice or LLP debts and
obligations attributable to non-compliance can be astounding:
Example 1: Assume that a four-person registered LLP has a $900,000
money judgment entered against it for the negligence of one of its partners. Assume
further that it maintains no malpractice liability coverage. Each non-negligent partner's
personal liability is limited to $500,000 determined on a joint and several basis.
Example 2: Assume the facts as Example 1 except that at the time of
the error or omission the LLP had failed to file its annual registration renewal with the
office of certification. Each partner's personal liability (whether or not that partner
acted negligently) reaches to the full amount of the money judgment determined on a joint
and several basis.
A review of Cal. Corp. C. §§16959(a)(2)(j) and (k) suggests that foreign LLPs may be
treated dissimilarly from domestic LLPs relative to the limited liability protections of
Cal. Corp. C. §16306(c) solely by reason of the failure to register (either with the
California secretary of state or the State Bar).
The following examples demonstrate these consequences:
Example 3: Assume that a 12-person Oregon LLP which conducts
intra-state business in California has a $3.5 million money judgment entered in California
against its partners (all domiciled in Oregon) for malpractice committed by an associate
attorney. Assume that the firm maintains $2 million malpractice liability coverage but has
no then-current registration filed with the secretary of state.
While the Oregon LLP may be subject to penalties (of $20 for each day that unauthorized
intrastate business is transacted, up to a maximum of $10,000), each partner would not
have unlimited joint and several liability ($3.5 million) solely by reason of the LLP's
failure to register. (See Cal. Corp. C. §16959(j)).
Even if the LLP had registered with the secretary of state (and the office of
certification), the automatic guarantee provision of Cal. Corp. C. §16956(a)(2)(C) would
operate to expand the personal liability of each partner beyond the $2 million malpractice
liability coverage (unless the law firm also then had a confirmed net worth of at least
$15 million (see Cal. Corp. C. §16956(a)(2)(D)). Presumably, collection upon the money
judgment could be made in Oregon by filing a sister state judgment.
Example 4: Assume the facts as Example 3 except that the malpractice liability coverage
is $7.5 million. Assume further that the law firm has a currently effective registration
filed with the State Bar. Each non-negligent partner would have no personal liability for
the money judgment and no penalty would be assessable against the Oregon LLP.
Initial application and annual registration renewal with the State Bar is a simple and
important matter to complete. Registration renewal is an event which should be calendared
by all domestic and foreign LLPs conducting intrastate business. Renewal forms are usually
mailed in August and are due by Oct. 1. The stakes for failure to renew timely are far too
high to disregard.
The office of certification presently has no discretion to waive timely filing, grant
extensions or retroactively recognize late compliance with the renewal requirements of the
LLP Rules. Clearly, noncompliance with the administrative registration requirements
precludes domestic LLP partners from benefiting under the limited liability protections of
Cal. Corp. C. §16306(c).
Examples 3 and 4 given earlier demonstrate that the incentive for registering with the
State Bar is less clear for foreign LLPs. Although the California Supreme Court has not
addressed the issue to date, nonetheless a comparison of the LLP law of other states
suggests that, at all events, compliance with all administrative registration requirements
(by both domestic and foreign LLPs) ensures limited liability protection against vicarious
Dean I. Friedman of Clark & Trevithick
P.C. of Los Angeles is a certified specialist in taxation law and former chair of the
California Board of Legal Specialization of the State Bar. He also is a contributing
author of Limited Liability Partner-ships, Formation, Operation and Taxation (1997).