From Volume 76, Number 2 (January 2003)
This Article discusses a survey on limited liability companies (LLCs) to which 770 attorneys responded in California, Delaware, New York, and Pennsylvania. Of the 770 attorneys who responded in these states, Delaware respondents reported a higher rate of experience with disputes than respondents in New York and Pennsylvania, and reported a higher rate of lawsuits filed than the respondents from California, New York, and Pennsylvania who stated they had handled majority/minority disputes. The findings challenge the view that greater contractual flexibility will necessarily lead to a decrease in disputes and/or judicial intervention. Many respondents lacked a basic understanding of the LLC members’ statutory default buy-out rights, and only fourteen percent said their usual LLC agreement included the minority contractual protection of a dissolution for illegal, fraudulent, or oppressive majority conduct. The Article analyzes the survey results in light of recent LLC litigation, discusses the important role that courts can be expected to play in the articulation of standards of LLC member and manager conduct, and makes several policy recommendations regarding the course of future business entity education and research.