As a California attorney, are you weighing options for liability protections and tax advantages when starting a private practice of working as an independent contractor?

California Attorneys Cannot Practice Law Using LLCs

While most people in California are permitted to use Limited Liability Companies (LLCs) to run their business, California attorneys are prohibited from doing so when it comes to the practice of law.

California Corporations Code §17375

Unlike most business owners, attorneys cannot legally practice law through Limited Liability Companies (LLCs) in California. Corporations Code §17375 prohibits those licensed by state agencies from using LLCs for licensed activities.

Specifically, California Corporations Code §17375 does not allow any person who holds a license, certification, or registration issued by a state agency to engage in a business, trade, or profession regulated by that agency from using an LLC for that licensed activity.

According to the State Bar of California, “’LLC’ is not permitted as a corporate designation, and the State Bar does not certify an ‘LLC’ within California for the purposes of practicing law, based on underlying Corporate Code concerning Professional Corporations.”

California Attorneys Can Use Professional Law Corporations

While California attorneys cannot use LLCs to engage in the practice of law, they are permitted to use California professional law corporations (also known as PCs).

California Law Corporations Can Provide Liability Protection & Tax Savings

While PCs do not shield California attorneys from malpractice liability, they can provide liability protection in other circumstance. Examples include breach of contract, employee lawsuits or accidental injuries in the office unrelated to the practice of law. PCs can also provide substantial tax savings.

Need Help Forming a California Professional Law Corporation?

If you need help forming a California law corporation, or other entity type, LawInc can assist.

We have decades of experience helping attorneys and other licensed professionals form professional corporations.

Also See

How to Form a Professional Law Corporation in California