Member Managed LLCs

As noted in our discussion of manager-managed LLCs, an LLC can be managed by managers or its members.

An Illinois LLC is presumed to be member-managed, unless the Articles of Organization or the Operating Agreement state otherwise.

The Illinois Limited Liability Act (“Act”) says management decisions shall be made by those stakeholders with interests that constitute the majority of the LLC’s book value. This statutory feature provides far more possibility for stakeholder participation (as compared to limited partners or corporate shareholders.)

If an LLC is member-managed, it must be remembered that every member has authority to bind the LLC unless otherwise limited in the Operating Agreement. This would not be the case in a limited partnership, in which the general partners have such sole authority, and certainly not in a corporation where authority is vested only in the directors and officers, but not in shareholders.

In contrast to limited partnerships or corporations, LLC members generally can retain direct authority to make management decisions for the LLC without personal liability exposure.

Also, since LLC members can be managers if the LLC determines to be manager-managed, members can have the right and power to control the LLC in both capacities. This can be attractive for small, closely held entitled, although it a member-managed LLC carries with it greater risk for members to become personally exposed.

Our discussion of limitations on personal liability for those involved in LLC is here and here.

The LLC lawyers at Lubin Austermuehle have many years of experience defending and prosecuting claims involving LLC members including breach of fiduciary duty and fraud claims and claims involving the freeze-out of members in the federal and state Chancery courts in Illinois in a wide variety of business dispute lawsuits. We are knowledgeable regarding the changes and complexities of LLC law. We are committed to fighting for our clients’ rights in LLC dispute cases at both the trial and appellate court levels. We have successfully defended or prosecuted LLC cases achieving large settlements for our clients or winning them control of their business. Conveniently located in Chicago and Elmhurst, Illinois, we have successfully litigated business separation, accounting and breach of fiduciary duty cases for clients all over the Chicago area. To schedule a consultation with one of our skilled attorneys, you can contact us online or give us a call at 630-333-0333.