If you have or are thinking about going into business with others, then you know how important it is to get the right legal foundation in place for your company. A solid foundation means less time spent debating issues as they arise and more time focused on what matters for your business. For new or growing LLCs, the most important legal document is an Operating Agreement, the document that governs key terms about ownership, management, transfers, buyouts, and resolving disputes. A comprehensive LLC Operating Agreement can be hard to come by just off the internet and can be cost-prohibitive with law firms.
The solution! The launch of the Washington State LLC Builder, an online tool that enables business partners to create customized LLC Operating Agreements with support from a lawyer on our team.
Using a combination of automated workflows and real-life traditional lawyering, the LLC Builder leverages technology for an efficient, low-cost, and high-quality experience to solve the problem of being stuck with two unappealing choices–a generic online LLC Operating Agreement form or an expensive (and often slow coming) custom agreement created by a law firm.
The LLC Builder is the first tool in Foundry Law Group’s new initiative, Foundry Legal Tools. More to come soon!
A Hybrid Workflow: The Best of Both Worlds
After years of helping business partners start new businesses as an LLC, we have honed our workflow and developed a streamlined process that results in a final comprehensive LLC Operating Agreement customized to our client’s particular situation. However, even after incorporating some online tools, this was still being done mostly the traditional way. We knew there had to be a better way for clients that wanted a more efficient and less expensive solution. The LLC Builder is taking that existing workflow half online, the client experience and input component, with lawyer support. The LLC Builder is not a form generation tool. The lawyers at Foundry Law Group are still behind the scenes reviewing the answers, available for calls and questions, and preparing and checking documents before they go out.
How the Washington State LLC Builder Works:
- Questionnaire: You then complete the LLC Builder Questionnaire. You can complete this as many times as you want until the terms are finalized, or save your answers and complete it later.
- Lawyer Review: A lawyer at Foundry Law Group reviews your answers to the Questionnaire and finalizes an LLC Term Sheet based on your response. This process generally takes 1 business day.
- LLC Term Sheet: You and your business partners review the LLC Term Sheet and consider whether you have any questions, concerns, or want to make any changes.
- Consultation (optional): You and your partners can schedule a follow-up call to talk over any questions or concerns, to receive assistance finalizing the LLC Term Sheet.
- Finalize Operating Agreement: Based on the final LLC Term Sheet, a lawyer at Foundry Law Group prepares the LLC Operating Agreement (and ancillary documents, such as, contribution and intellectual property agreements, and Section 83(b) elections, if applicable).
An online sign-up and automated logic-based questionnaire that enables clients to consider different options.
The Questionnaire covers four major topic areas: ownership (including ownership vesting), management (including approval rights), transfer restrictions (including company repurchase rights), and dispute resolution. Because of the logic and structure built into the Questionnaire, clients don’t have to wade through irrelevant questions. Suggestions and notes throughout the Questionnaire are based on years of advising and answering client questions on the same topics.
The Importance of a Term Sheet. The Key to Getting the Right Set-Up.
After you complete the Questionnaire, you will receive an LLC Term Sheet covering critical terms for the Operating Agreement. The LLC Term Sheet is a discussion document for you and your business partners to reach common ground on how the company will be set-up. It’s much easier to come to an agreement in a summarized term sheet before drafting an Operating Agreement.
We have seen all too often that people jump right to an Operating Agreement after only just a couple of informal discussions between business partners that overlook critical legal issues. Most business deals (investments, M&A, joint ventures) start with a term sheet, in order to agree upon critical business terms at the outset. It only makes sense to use this tried-and-true process for new business partners when drafting an Operating Agreement.
Sometimes people ask whether adding this LLC Term Sheet step to the process will slow down getting everything done and final. In most cases, this added step actually speeds the overall process up. The most common hold-up in getting a final Operating Agreement in place is hidden disagreements that can be harder to work through once an Operating Agreement is on the table. We find that once an agreement is reached on the LLC Term Sheet, there is very little left to discuss or negotiate in the full Operating Agreement.
Finally, a lawyer on our team will draft a customized Operating Agreement based on your LLC Term Sheet.
You can schedule an optional call with a lawyer if you have any questions about whether the LLC Builder is right for you or during your time using the LLC Builder.
Get started with the LLC Builder today!