Why "Form" LLCs are Used and Not Modified

“Form” LLCs with their pre-drafted “form” LLC operating agreements and few LLC options and choices are organized in abundance for two reasons.

First, it is too time consuming (time is money) for most attorneys to either draft original LLC operating agreements or to stray very far from the pre-printed text of “form” LLC operating agreements. To economically modify a “form” LLC operating agreement, draft an original LLC operating agreement, or know what LLC options and choices are available and/or advisable to offer LLC clients, an attorney needs to study and stay current on LLC law and literature. It is the studying and staying current takes time.

Second, LLC clients are satisfied with “form” LLCs because they do not realize what they are missing. (See “Form” LLCs Are Everywhere).

“Form” LLC operating agreements are not often modified for a number of reasons. The following passage from an article written for attorneys by the law firm of Hartley & Hartley (see www.hartley.com/formbook.htm) comments on why attorneys do not like to modify and supplement someone else’s “form” document:

"The problems in modifying the existing form [document] include: Creating an ambiguity. Most forms are tightly worded. A change in the language in one section may impact on all the other sections. Unless you are extremely familiar with the nuances of your [form] document, you may be creating an ambiguity.... Creating contradictions. Worse than creating an ambiguity, you may create two sections that are at war with each other. Maybe you'll be lucky and the clients will catch it and all that happens is that you'll be a bit embarrassed. Creating a new problem. Change the wording of your form [document], and you may be adding a new issue. Have you thought out all the implications of the new language in addition to the above two items?"

For these reasons, it is safer, quicker and thus more cost efficient, and safer not to do any major modification or supplementation to a complicated pre-drafted “form” document, which includes “form” LLC operating agreements. Since it is not a legal necessity to modify or supplement a “form” LLC operating agreement and to do so may expose the modifying attorney to the problems stated above, “form” LLC operating agreements are not usually modified or supplemented