Rule 1:21-1B. Limited Liability Companies for the Practice of Law

(a) Attorneys may engage in the practice of law as limited liability companies in the same manner as an individual or a partnership may engage in the practice of law, provided that:

(1) All provisions of the "New Jersey Limited Liability Company Act," N.J.S.A. 42:2B-1 through 70, shall be complied with, except where inconsistent with these rules. (2) Any attorney who is a member, employee, agent, or representative of the limited liability company shall remain personally liable for his or her own negligence, omissions, malpractice, wrongful acts, or misconduct, and that of any person under his or her direct supervision and control while rendering professional services on behalf of the limited liability company. (3) The limited liability company shall comply with and be subject to all rules governing the practice of law by attorneys and it shall do nothing which, if done by an individual attorney would violate the standards of professional conduct applicable to attorneys licensed to practice law in this State. Any violation of this rule by the limited liability company shall be grounds for the Supreme Court to terminate or suspend the limited liability company's right to practice law or otherwise to discipline it. (4) The limited liability company shall obtain and maintain in good standing one or more policies of lawyers' professional liability insurance which shall insure the limited liability company against liability imposed upon it by law for damages resulting from any claim made against the limited liability company by its clients arising out of the performance of professional services by attorneys employed by the limited liability company in their capacities as attorneys. The insurance shall be in the amount for each claim of at least $100,000 multiplied by the number of attorneys employed by the limited liability company, provided that the maximum coverage shall not be required to exceed $5,000,000 for each claim, and further provided that the deductible portion of such insurance shall not exceed $10,000 multiplied by the number of attorneys employed by the limited liability company or $500,000, whichever is less. The limited liability company may enter into an indemnity agreement with its insurer under which the limited liability company agrees to indemnify the insurer for losses in excess of the amount of the permitted deductible provided that the insurer remains liable to pay all judgments against the limited liability company up to the policy limits regardless whether the limited liability company indemnifies the insurer as required under the indemnity agreement. (5) The limited liability company shall not engage in any business other than the rendering of professional legal services of the type provided by attorneys-at-law, except that a limited liability company shall not be prohibited from investing its funds in real estate, mortgages, stocks, bonds or any other type of investments, or from owning real or personal property necessary for, or appropriate or desirable in, the fulfillment or rendering of its professional legal services. (6) No limited liability company may render legal services in this State except through its members, employees or agents who are duly licensed and otherwise qualified to render legal services under these rules.

(b) Within 30 days after filing its certificate of formation or, in the case of a foreign limited liability company, the filing of its application for registration with the Secretary of State, each limited liability company engaged in the practice of law shall file with the Clerk of the Supreme Court a certificate of insurance, issued by the insurer, setting forth the name and address of the insurance company writing the insurance policies required by paragraph (a)(4) of this rule and the policy number and policy limits. The limited liability company shall also file such other information as the Supreme Court may from time to time prescribe. Amendments to and renewals of the certificate of insurance shall be filed with the Clerk of the Supreme Court within 30 days after the date on which such amendments or renewals become effective.

(c) The name of the limited liability company shall comply with the provisions of RPC 7.5 and shall contain only the full or last names of one or more of its present members, or one or more of the members, partners, or shareholders of a predecessor firm, whether living, deceased or retired. Wherever the name of the limited liability company is used it shall be followed by the phrase "A limited liability company," or by any other phrase or abbreviation authorized by N.J.S.A. 42:2B-3 to indicate that it is a limited liability company. In the case of a foreign limited liability company, the phrase shall also identify the jurisdiction of formation (e.g., "A limited liability company formed in the State of New York"). The limited liability company name shall be used on all pleadings, correspondence or other documents. Correspondence, pleadings and other documents executed in connection with the practice of law shall be executed on behalf of the limited liability company by one of its members, employees, agents or representatives who is an attorney licensed to practice law. Limited liability company documents executed other than in connection with the practice of law may be executed on behalf of the limited liability company by an authorized employee who is not licensed to practice law.

(d) No person shall hold any interest in any limited liability company engaged in the practice of law unless licensed to practice law and actually and actively engaged in the practice of law as a member, employee or agent of, or "of counsel" to the limited liability company, except for leave of absence not to exceed one year and for absences on account of illness, accident, time spent in the armed services and vacation. The legal representative of the estate of a deceased member, a member disqualified from the practice of law, or a member who is withdrawing from membership in the limited liability company or whose employment with the limited liability company is being terminated for any reason whatsoever, may continue to hold an interest in the limited liability company for the following periods and under the following conditions:

(1) Within 375 days following the date of death of a member or within 90 days following the member's disqualification from the practice of law, or the member's withdrawal from membership or termination of employment, all of the interest of the member shall be transferred to, and acquired by the limited liability company or attorneys qualified to own the interest. If the transfer and acquisition is not otherwise effected within the specified period, the limited liability company shall forthwith purchase and redeem all of the member's interest at the value established in the operating agreement or other agreement, if any. If the method of valuation is not established by agreement, redemption shall be at the book value of the shares, determined as of the end of the month immediately preceding death, disqualification, withdrawal or termination. For this purpose, the book value shall be determined by an independent certified public accountant employed by the limited liability company from the books and records of the limited liability company in accordance with the regular methods of accounting used by it. Nothing contained herein shall prevent the parties from agreeing, either through the operating agreement or otherwise, to another arrangement for the transfer of a member's interest to the limited liability company or persons qualified to own the interest, provided that within the periods specified, all of the interest involved shall have been so transferred. (2) The continued interest of a member as described in (1) above during the period specified shall not include the right to participate in any decisions concerning the rendering of professional legal services by the limited liability company, nor the right to receive any portion of the earnings or profits of the limited liability company derived from legal services rendered by the limited liability company subsequent to the date of death, disqualification, or withdrawal from membership or termination of employment. (3) Notwithstanding the foregoing, if any member, employee, agent or representative of the limited liability company becomes legally disqualified to engage in the practice of law, he or she shall forthwith sever all employment with the limited liability company. A limited liability company actually and actively engaged in the practice of law may hold shares of stock in a professional corporation covered by R. 1:21-1A, and may hold interests in another limited liability company covered by this rule.

(e) At least one member of the limited liability company shall be licensed to practice law in New Jersey. In addition, if the limited liability company has an operating agreement that provides for the management of the limited liability company by managers, at least one of the managers shall be a member who is licensed to practice law in New Jersey.

(f) A limited liability company may engage in the practice of law in partnership with another limited liability company or companies, professional corporation or corporations covered by Rule 1:21-1A, or with any attorney or partnership of attorneys, including limited liability partnerships covered by Rule 1:21-1C. The partnership name shall, in addition to meeting the requirements of Rule 1:21-1B(c), clearly designate that it is a partnership of or including other limited liability companies, professional corporations, partnerships, limited liability partnerships,or attorneys, as applicable. When any member of a partnership is a foreign limited liability company, foreign professional corporation, or foreign partnership or attorney, the required designation shall also state this fact. When the limited liability company is engaged in the practice of law in partnership with another limited liability company, corporation, partnership, or attorney, all disciplinary rules and rules of practice applicable to partnerships of attorneys will apply.