The Lawyer For the LLC Does Not Represent the Members

A limited liability company (LLC) is a distinct entity and the lawyer for the LLC does not represent the members, absent evidence to the contrary, such as an engagement letter. Cafe Holdings, Inc. v. Burke, Warren, Mackay & Serritella, 2024 IL App (1st) 230091 discusses this case and holds that the lawyer for the LLC does not represent the members and had no duty to the members. Thus, Cafe Holdings lawsuit against the lawyers for the LLC was dismissed. The dismissal was affirmed by the Appellate Court. The reasoning:

¶ 28 From what we can discern, on appeal, CHI does not address the first issue. CHI raises two arguments in its appellate brief. The first is that dismissal was premature in that questions of fact remain regarding the circumstances surrounding the settlement agreement and the assignment of the legal malpractice claim. Its second argument is that public policy, under the Learning Curve test, favors assignability here. In neither argument does CHI claim to have an attorney-client relationship with the Silver defendants. And as we review the pleadings below, CHI did not assert an attorney-client relationship between itself and the Sliver defendants before the circuit court, either.

¶ 29 CHI, in other words, does not challenge the trial court’s first ruling that the Silver defendants did not owe a legal duty to CHI, as CHI was not their client, and thus a legal malpractice brought cannot ordinarily lie. See Northern Illinois Emergency Physicians v. Landau, Omahana & Kopka, Ltd., 216 Ill. 2d 294, 306 (2005) (among other things, claim for legal malpractice must establish duty arising from attorney-client relationship). And CHI did not raise that argument below, either. So any such argument is forfeited twice over. See Ill. S. Ct. R. 341(h)(7) (eff. Oct. 1, 2020) (arguments not raised in appellate brief are forfeited); Hebert v. Cunningham, 2018 IL App (1st) 172135, ¶ 37 (argument not raised by appellant in circuit court is forfeited on appeal).

¶ 30 In any event, it is not a controversial question, and the principle is helpful for our analysis, so it is worth addressing. As the circuit court correctly recognized, a limited liability company (LLC) is a legal entity separate and distinct from its members. Peabody-Waterside Development, LLC v. Islands of Waterside, LLC,2013 IL App (5th) 120490, ¶ 9. The attorney for an LLC does not enjoy an attorney-client relationship with the LLC’s members. Blue Waters Partners, Inc. v. Edwin, Mason, Foley & Lardner, 2012 IL App (1st) 102165, ¶ 38. The Silver defendants’ client was Dollop Coffee, not any of its members. Id. So without more, such as the purported assignment at issue here, CHI would have no legal basis to assert a legal negligence action against the Silver defendants. Landau, Omahana & Kopka, Ltd., 216 Ill. 2d at 306.

Comment: I agree with the holding. As a lawyer you should protect yourself by drafting an engagement letter that states who you represent and who you do not. That is your best defense to liability.

Ed Clinton, Jr.