Nevada Multi Member LLC Operating Agreements Require Thought and Customization

New York "business divorce" lawyer Peter Mahler blogs about his experiences involving two members of a New York limited liability company who relied on LegalZoom to draft their LLC's operating agreement. New York's LLC laws differ from Nevada's, but the key takeaways may be the same for Nevadans considering entering into a partnership based on an online, cookie-cutter document:

[When] the members’ relationship turned bitter .... shortcomings in the operating agreement also contributed significantly to the parties’ legal postures and willingness to risk litigation.... I’m not suggesting that every lawyer-drafted LLC agreement is a model of perfection, but I found ... that a standard form operating agreement being sold online by a major company to the unknowing public as a more affordable alternative to using a lawyer ... suffer[ed] from such a fundamental flaw that, in the end, only intensified the parties’ legal conflict.

LegalZoom LLC Agreement: Bargain or Blunder?

Nevada Cracks Down on Incorporation and Registered Agent Firms

Some non-attorney Nevada incorporation services are operated by convicted felons, Reuters reports:

Reuters detailed its discovery of former felons in the mass-incorporation industry to Nevada state officials. In response, [Secretary of State Ross] Miller said he plans to introduce a bill barring felons from running incorporation firms. In early September, he announced the creation of a Corporate Ownership Fraud Task Force to fight abuses of Nevada incorporation rules.

Special report: Nevada's big bet on secrecy, September 26, 2011

See also Shell games: A cautious crackdown in Nevada, Reuters, September 26, 2011:

Early this month, Nevada Secretary of State Ross Miller's office shut down a Las Vegas registered agent called Power Point Management and revoked the corporate status of its 427 active clients.

It was an example of how his office will "aggressively enforce our statutes and regulations," Miller said, warning that his state's 'business friendly' ethos "should not be interpreted to mean 'haven for bad actors.'"

Power Point is part of Nevada's booming industry of business incorporators and registered agents, more than 700 firms in all, whose key service is to receive on behalf of the companies they've registered any notices of litigation, tax documents and other records required by the state. Like most, it's a small operation. It has offices at the end of a winding interior hallway in a faded, stucco, two-story office park on Las Vegas' Flamingo Road. The building's rental manager, Laba Singh, says the firm sends in its "$200-something" rent check by mail each month, but he has never seen the tenant.

The issue that got Power Point in trouble seems minor: It claimed that it, and every one of its clients, was a home-based business making under $27,000 a year. Such businesses don't have to pay Nevada's $200 annual licensing fee. If all 427 of Power Point's clients falsely claimed the $200 exemption, then Nevada lost out annually on $85,400 in total. ...

Nevada incorporation attorney
Nevada registered agent service (a/k/a resident agent service)