LLP Agreement Drafting

An LLP agreement does two jobs at once. It governs the commercial relationship among the members and determines how profits are taxed in their hands. Get the second part wrong, and you have an HMRC problem. The LLP form is useful when members want partnership flexibility with limited liability, but it only works as intended if the agreement does what the form expects.

What a properly drafted LLP agreement does

A well-drafted LLP agreement replaces the default provisions of the LLP Regulations with terms that reflect the members' intentions and commercial arrangements. The agreement covers capital contributions, profit and loss allocation, drawings, management and voting, non-compete provisions, retirement, expulsion, and winding up.

Without a written LLP agreement, the default rules can produce unfair or unintended results, equal profit shares regardless of each member's contribution, or the inability to expel a member who is not fulfilling their obligations. A bespoke agreement puts the members in control and significantly reduces the risk of disputes.

The drafting needs to address capital contributions and how they are repaid; profit-share mechanics, including any priority profit shares; decision-making thresholds; the process for admitting and removing members; restrictive covenants on departing members; and the mechanism for valuing a leaver's interest. A blank or minimal agreement leaves you with all the limitations of a company and none of the flexibility of a partnership.

Example: a typical scope and fixed fee

For an LLP with two to four members and a straightforward profit-sharing structure, the typical scope looks like this.

What's included

• A consultation to understand the LLP structure, member roles, and commercial arrangements
• Drafting of an LLP agreement for up to four members, covering capital contributions, profit and loss allocation, drawings, management and voting, non-compete provisions, retirement, expulsion, and winding up
• One round of revisions based on your feedback
• Final version ready for execution by all members

What's outside this scope

• LLPs with five or more members (I can quote separately)
• Multi-tier profit-sharing structures or salaried member arrangements requiring detailed tax structuring
• Negotiation with the other party beyond the scope described above
• Tax advice

Fixed fee: £850, no VAT.

How I will approach your matter

Once you have instructed me, I will arrange a consultation to understand the LLP structure, member roles, and commercial arrangements before drafting. The first draft will reflect the structure we have agreed on; the revision round covers refinements to the mechanics. I will deliver a final version ready for execution by all members.