As any LLC lawyer can tell you, there is not just one kind of New Hampshire multi-member LLC; there are two—namely, small LLCs and large ones; and there are very few in between.

And LLC lawyers will tell you that these two kinds of LLCs different dramatically, not only in their chief characteristics but also, and even more, in the operating agreements that govern them.

Most of the LLCs owned by readers of this column are small LLCs, but a few are large; a few of the small ones will become large; and a few that remain small will find themselves doing deals with large ones, including joint venture deals.

So small the members of small LLCs need to understand large ones. The chief characteristics of both kinds are numerous — at least 15 for each by my count. But the most important characteristics are these:

The members of small LLCs are individuals, and they have known one another for years before they formed their LLCs together. So they trust each other.

Few if any small-LLC members are wealthy.

Each of them has contributed only a few thousand dollars to their LLCs to get them started, and sometimes only a few hundred dollars. They have made no post-formation contributions to their LLCs.

Small LLCs make only modest annual net incomes — perhaps in the tens or hundreds of thousand dollars but never in the millions.

Because of the mutual trust among their members, the same lawyers have represented all of the members in forming their LLCs, and they have charged the members only modest fees for their work — perhaps, on average, $2,500.

The lawyers who have drafted the operating agreements for the members of small LLCs have understood at some level that the members want operating agreements they can actually understand. Sometimes their lawyers have accommodated them.

By contrast:

The members of LLCs that, even when first formed, have been large LLCs are mainly entities, not individuals.

These members did not know each other before coming together to form their LLCs, and while they do not deeply distrust one another, neither do they deeply trust them.

Each of the members has substantial financial resources.

The members have made substantial initial cash contributions to their LLCs and have often made substantial post-formation contributions.

Large LLCs earn substantial annual net business income — at least several hundred thousand dollars and sometimes a million dollars or more.

Each of the members of large LLC can afford their own lawyers in forming their LLCs, and each is represented by its own lawyer.

Large-LLC formations are time-consuming and heavily negotiated.

For the members, legal fees for LLC formations are substantial, amounting to many thousands or even tens of thousands of dollars.

The operating agreements of large LLCs are written in horrible legalese and horrible taxese that only LLC specialists can understand.

I represent both small and large LLCs, and I’ve drafted operating agreements for both kinds. In drafting these agreements, I’ve always done my best to use only plain English. For me, plain English is a religion. And I’ve always hated to review large-LLC operating agreements because, in my experience, all of them are horribly written. I’ve never understood why lawyers like to draft these agreements this way. I never will.

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