Arizona LLC for Attorneys Law

Limited Liability Company – General – Arizona

The laws of the State of Arizona provide for the creation of both a limited liability company (LLC) and a professional limited liability company (PLLC).

While a PLLC has to meet the statutory requirements of the Arizona Limited Liability Company Act, it is also specifically required to meet the requirements of ยงยง 29-841 through 29-847, that portion of the Act dealing with professional limited liability companies.

Additionally, a PLLC organized to engage in the practice of law is governed by the various rules of the Arizona Supreme Court, particularly Rules 33-37 and Rule 42, the Rules of Professional Responsibility.

The following general statutory provisions are applicable to a PLLC:

A “licensed person” is an individual who is duly licensed by at least one board to provide at least one of the categories of professional service rendered by the PLLC.

A “PLLC” is a limited liability company organized for purposes that include rendering one or more categories of professional services.

A “professional service” is a service that may be lawfully rendered only by a person licensed or otherwise authorized by a licensing authority in Arizona to render the service.

A “disqualified person” is an individual or entity that is not or ceases to be a qualified person.

A PLLC may employ persons who are not licensed to perform professional services that are rendered by the PLLC if those persons:

1. Work at the direction or under the supervision of those who are licensed persons.
2. Do not hold themselves out to the public generally as being authorized to perform the professional services rendered by the PLLC.
3. Are not prohibited by the board regulating any of the professional services rendered by the PLLC from being so employed.

A PLLC is governed by the laws applicable to other limited liability companies except insofar as such laws must be limited or enlarged by or contrary to the provisions of the Arizona Limited Liability Company Act, in which event Arizona Limited Liability Company Act controls.

A PLLC may render a professional services in Arizona only through its members, managers, officers, agents and employees who are themselves licensed persons qualified in Arizona to perform that category of professional services. This restriction does not:

1. Require an individual who is employed by a PLLC to be licensed to perform services for the PLLC if a license is not otherwise required or prohibits the PLLC from employing that individual.
2. Prohibit a licensed individual from rendering professional services in an individual capacity whether the licensed individual is a member, manager, officer, employee or agent of a PLLC or foreign PLLC or any other person or prohibit a licensed individual from being a member, manager, officer, employee or agent of more than one PLLC or foreign PLLC or other person.
3. Prohibit an individual licensed in another state from rendering professional services for a PLLC in Arizona if not prohibited by the board.

A PLLC may issue membership interests only to:

1. Individuals who are licensed by law in this or another state to render a professional service described in the articles of organization of the PLLC.
2. General partnerships, registered limited liability partnerships, other partnerships and joint ventures, domestic or foreign, in which all of the partners are licensed persons with respect to the profession to be conducted by the PLLC and in which at least one partner is authorized by law in Arizona to render a professional service described in the articles of organization of the PLLC.
3. Professional corporations, professional limited liability companies and other persons, domestic or foreign, authorized by law in Arizona to render a professional service described by the articles of organization of the PLLC.
4. Other persons, if after the issuance of voting membership interests, the other persons in the aggregate do not hold more than forty-nine per cent of the membership interests entitled to vote for the election of officers and managers of the PLLC, unless a greater or lesser percentage is prescribed by the board.
5. Issuance of a membership interest in violation of the above restrictions is void.

However, the following are not violations of the restrictions on ownership of a membership interest:

1. Any community interest of an unlicensed spouse in the membership interest issued to a licensed spouse in which the unlicensed spouse with a community interest in the membership interest does not have the right to vote the membership interest.
2. Issuance of a membership interest to a trust established for the benefit of a licensed individual or members of the licensed individual’s immediate family in which the licensed individual has the right to vote the membership interest and the trust and the members of the licensed individual’s immediate family do not have the right to vote the membership interest.

Membership interests and rights or options to purchase membership interests of a professional LLC may be conveyed only to persons qualified to be issued voting membership interests and to the PLLC. A transfer or pledge made in violation of this restriction is void.

A PLLC may adopt a name consisting of the full or last name of one or more of its members or, if not otherwise prohibited by law or the canons of ethics of the profession concerned, may adopt a fictitious name. However, The name of a PLLC must contain the words “PLLC” or the abbreviations “P.L.L.C.”, “P.L.C.”, “PLLC” or “PLC”, in uppercase or lowercase letters.

The Arizona Limited Liability Company Act does not alter any law applicable to the relationship between a person performing professional services and a person receiving those services, including liability arising out of those professional services. Each member, manager or employee performing professional services remains personally liable for any results of the negligent or wrongful acts, omissions or misconduct committed by him or by any person under his direct supervision and control while performing professional services on behalf of the PLLC. The liability of a member, manager or employee of a LLC is several only, and a member, manager or employee of a PLLC is not vicariously responsible for the liability of another member, manager or employee unless such other member, manager or employee was acting under his direct supervision and control while performing professional services on behalf of the PLLC.

No PLLC may do any act which is prohibited to be done by individuals licensed to perform professional services that are rendered by the PLLC.

Each member, manager, officer, agent and employee of a PLLC who is a licensed person in the jurisdiction in which the person performs professional services must be subject to the rules and regulations adopted by and the disciplinary powers of the board or boards regulating the professional services rendered by the PLLC in the jurisdiction in which he performs professional services.

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