Member-Managed LLCs Versus Manager-Managed LLCs

Learn the difference between the two different management structures for LLCs.


When you form a limited liability company (“LLC”), you will need to decide how your LLC will be managed. With LLCs, there are two different possible management structures. You can choose to have a member-managed LLC where all the members (owners) participate in running the business. Or, you can have a manager-managed LLC where only designated members, or certain nonmembers/outsiders, or a combination of members and nonmembers are given the responsibility to run the business. The other members in a manager-managed LLC are passive investors who are not involved in business operations.

Member-Managed LLCs: The More Common Choice

Most people who set up an LLC choose member-management, meaning that all the members share responsibility for the day-to-day running of the business. This approach is more common in part because most LLCs are small businesses with limited resources and they don’t need a separate management level to operate. Unlike corporations, LLCs have a streamlined organizational structure, without officers or boards of directors. As a result, the LLC form is often chosen by people who want to be directly involved in managing and operating their business.

If you and the other members of your LLC want to run your own business—actually make and sell products, take orders, provide services—then you will want a member-management structure for your LLC. For example, if your LLC is a bakery and all your LLC members want to play an active role in the business — crafting recipes, baking goods, hiring employees, opening and closing the shop — then you will want to operate the LLC as member-managers.

In most states, LLCs are member-managed by default under state law. This means that if you don’t designate a management structure for your LLC either in your formation documents or operating agreement, then it will be considered a member-managed organization.

Manager-Management: Better in Certain Circumstances

In some situations, a manager-management structure may be preferable. The most common example is when some members only want to be passive investors in the business. These owners often feel more comfortable if the LLC delegates management responsibilities to one or more other members (or nonmembers).

Two other situations where LLC owners may prefer a manager-management structure are: (1) when your business or ownership is too large, diverse, or complex to efficiently allow for sharing management among all members; or (2) when some of your members are not particularly skilled at management. (Sometimes, of course, these two situations go together.) Delegating management to a smaller group of people or just one person can be an effective way of balancing the varied skills and interests of multiple LLC members. It can also ensure more competent management of the business.

While LLCs that appoint managers often rely on one or more of their own members to fill the role, you can hire a nonmember as manager.

Document Your Choice

If you choose member-management, you may not be required to formally document this choice anywhere (although many states ask you to state whether your LLC will be member-managed or manager-managed in the articles of organization that you file to form your LLC). Nevertheless, all LLCs should have a written operating agreement that defines the basic rights and responsibilities of the members (and managers, if you have them). In a member-managed LLC, this would include things like member voting rights, additional capital contributions, buy-out provisions, and other important management and operational issues for the owners. Without an operating agreement, you run the risk of finding yourselves in a full-blown crisis when something unexpected arises because basic issues weren’t clearly addressed and agreed to early on.

If you choose manager-management for your LLC, there very likely will be a legal requirement that you clearly spell out this choice somewhere in your LLC’s organizational documents. Typically this is either in the articles of organization that you file with the state or your operating agreement. In addition to the items mentioned above for members that you want to include in an operating agreement, you also will want your agreement to address what authority and responsibilities the manager, or managers, will have. For example, will the managers have sole authority for all hiring decisions? What about equipment purchases? Just like with the member provisions, documenting the extent of the manager’s—or managers’— authority can help avoid problems down the road.

If you fail to create your own operating agreement, then your state’s LLC rules will apply. These are not necessarily the rules that you want for your business so make sure you have your own written agreement for your LLC.

For more details about setting up a manager-managed LLC, see Nolo’s article on manager-management for LLCs.

In: nolo

Free Speech Advocate On The State Of College Campuses

Greg Lukianoff. Image:

Greg Lukianoff heads the Foundation for Individual Rights in Education, which advocates free speech. He tells Steve Inskeep that freedom of speech on college campuses has been attacked recently.


We are in the middle of college graduation season, which is a season of high-profile commencement speeches. In 2017, some of the speeches are about speech, how we debate one another. On Friday, for example, former presidential candidate Hillary Clinton told Wellesley College, her alma mater – the graduates there – that it’s too easy to avoid hearing anyone who disagrees with us.


HILLARY CLINTON: We can shut out contrary voices, avoid ever questioning our basic assumptions. Extreme views are given powerful microphones. Leaders willing to exploit fear and skepticism have tools at their disposal that were unimaginable when I graduated.

INSKEEP: Some of the shutting out of contrary voices happens on campus. This year, planned speeches have been shut down from Berkeley, Calif., to Vermont. Many of those kept from speaking were politically conservative. But it all bothers a man who identifies as liberal, Greg Lukianoff. He’s a First Amendment lawyer and the head of an organization called Foundation for Individual Rights in Education, which advocates for free speech on campus.

How common is it that a speaker who’s controversial or perceived as controversial is thrown off a campus or threatened with being thrown off the campus?

GREG LUKIANOFF: Overall – not that common. But it’s amazing that it happens at all, given that, particularly when it comes to commencement speakers, over the years, universities have become a lot more small-C conservative about who they invite. So they’re already being very careful with who they invite. So the fact that, in 2016, we saw 42 attempts to get speakers disinvited, both commencement and otherwise – we didn’t consider that a good trend. Let’s put it that way.

INSKEEP: How do people go about trying – attempting – to disinvite speakers?

LUKIANOFF: The way we distinguish is if the goal is either to get that speaker off the campus – essentially, that speaker can’t speak here – or to shout them down or, worst of all, of course, to engage in violence to prevent the speech from going on – like happened at Berkeley back in February.

INSKEEP: OK. So 42 times in one year – and there’ll be some more this year as you tally it up.

LUKIANOFF: And that was the worst year we’d seen. We have about 15 years of research on it. And we have – we actually have the largest database on disinvitation attempts because that’s really what we count because that is how we sort of take the temperature for tolerance, for listening to people you disagree with on campus.

INSKEEP: Is this reflecting the education itself – what’s happening in the classrooms?

LUKIANOFF: You know, I’m really wondering about that because, for most of my career – I’ve been working – fighting – for defending academic freedom and free speech on campus since about 2001. And for the overwhelming majority of my career, the single best constituency for free speech on campus were the students themselves. And people are sometimes kind of surprised to hear that.

And I’m like, no, no. Most of what we were fighting were administrators. It’s only around 2014 – 2013 – that we started seeing a lot of push by students for people to be disinvited, for new speech codes and new speech restrictions.

INSKEEP: Why don’t we listen to an example where there was a speaker on campus? And many people on campus disagreed with his point of view. It was the vice president of the United States, Mike Pence. He went to Notre Dame in my home state of Indiana and delivered a graduation speech. Let’s listen to a little bit of that.


VICE PRESIDENT MIKE PENCE: While this institution has maintained an atmosphere of civility and open debate, far too many campuses across America have become characterized by speech codes, safe zones, tone policing, administration-sanctioned political correctness – all of which amounts to nothing less than suppression of the freedom of speech.


INSKEEP: So Vice President Pence takes this opportunity on a campus to speak up for freedom of speech. As he’s doing it, some – not all – of the graduates are standing up and walking out of the speech. And there was a Notre Dame student who tried to explain to CNN why she thought that was. Her name is Aniela Tyksinski.


ANIELA TYKSINSKI: The walkout was in response to the fact that members of our own community felt unwelcome, uncomfortable, and even unsafe with the invitation of Mike Pence. And so political discourse should be happening in other contexts at this campus, not at our commencement.

INSKEEP: OK. So let’s just walk through that incident. Mike Pence speaking up for Notre Dame but criticizing campuses in general – the students saying, many of us felt unsafe. What do you make of all that?

LUKIANOFF: Well, I definitely think what the students did was entirely appropriate. I’ve been frustrated and saddened to see, in many cases, students either refused – they tried to shut down events in some cases or shout speakers down – in the case of Charles Murray and some cases – in the case of Ray Kelly at Brown several years back.

I do get a little worried when I hear people talking about using the word unsafe to mean basically uncomfortable. I do think that leads to problems where people sort of conflate opinions with violence. And that’s something that I’ve been increasingly seeing on campus. They don’t make a major distinction between those two things.

INSKEEP: Violence increasingly doesn’t mean setting a fire at Berkeley to stop an event. Violence means saying words that people don’t want to hear.

LUKIANOFF: And that’s a very bad trend. I wrote about – I wrote a short book called “Freedom From Speech” a couple years ago. And I said, if you create a situation in which a professor – when you say you feel unsafe, they assume nine times out of 10 you mean something more like uncomfortable. That’s a very dangerous situation for people who are genuinely unsafe. Certainly, like, when I was in college, if you said you were unsafe, you’d be like, oh, my God, we have to call the police. What do we need to do? Watering down terms that are so central to people’s actual safety is dangerous.

INSKEEP: So you like that the students at Notre Dame…


INSKEEP: Those who protested found a way to speak themselves…

LUKIANOFF: Absolutely, yeah.

INSKEEP: …Without actually interrupting Vice President Pence. What did you make of what Vice President Pence had to say?

LUKIANOFF: You know, of course, I’m always happy when people have nice things to say about freedom of speech. I did – we did chuckle a little bit, though, at the idea that Notre Dame is great on free speech. We classify them as a red-light school, which means that they have at least one speech code on campus. Now, Notre Dame doesn’t have to promise freedom of speech because it’s a private school. But they do.

INSKEEP: How common are speech codes, as you just called them?

LUKIANOFF: So when we first started evaluating most major colleges, it was around – 75 percent of universities maintain red-light speech codes. But there have been, like, 60 lawsuits (laughter) against speech codes since 1989. So they’re now down to about 40 percent.


LUKIANOFF: We are seeing some actual progress on that.

INSKEEP: They’ve been going down. Would you describe your own politics?

LUKIANOFF: Liberal atheist, as I sometimes get picked on for (laughter).

INSKEEP: OK. So you’re being literal – liberal atheist. As a liberal atheist, do your fellow liberals get a little upset when you criticize people who are criticizing conservatives or trying to stop conservatives from speaking on campus?

LUKIANOFF: It depends on who. You know, like, my oldest friends totally get it. But I will say it can be pretty exhausting to be in the middle of the culture war all the time because it is a situation where nobody assumes good intentions on the other side. They’re totally with you if it’s a speaker they like. But they totally hate you if it’s a speaker they don’t.

INSKEEP: So you’re OK even with Charles Murray, very controversial academic speaking on a campus.

LUKIANOFF: Yeah. I think that we need better practice in how to listen to people – even opinions that we despise.

INSKEEP: Greg Lukianoff, thanks very much.

LUKIANOFF: Thank you.

INSKEEP: He’s head of the Foundation for Individual Rights in Education.

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BREAKING: Howard University professor reports settlement in Brazilian wax case


By  July 14, 2017

Howard University has reached a tentative agreement with the law professor it found responsible for sexual harassment over a test question about a hypothetical Brazilian wax.

This afternoon, professor Reginald Robinson’s attorney, Gaillard T. Hunt, released the following statement:

We have discussed the case with the University and we believe we have reached a mutually satisfactory solution. Professor Robinson regrets if anyone was offended by the test question.

FIRE reported on the case last week, which we noted at the time was part of a larger pattern of colleges and universities punishing constitutionally protected expression under the guise of addressing sexual harassment.

You can read more about the case in our press release.

Check back to Newsdesk next week for more on this development.

Schools: Howard University Cases: Howard University: Professor Subjected to 504-Day Investigation and Sanctions for Hypothetical Test Question Involving Waxing


Case given by the professor translated in spanish:

Pregunta 5.

P es dueño y manager de “Day Spa & Massage Therapy Company, LLC.” P atiende tanto a hombres y mujeres. Entre otros servicios, P ofrece “Brazilian wax” y “bikini wax” – también llamados “Sphynx”, depilada total, o depilación estilo Hollywood.

Para prestar estos servicios, P contrató a A, un esteticista, certificado y licenciado por la escuela ubicada en el Estado en que P realiza sus actividades.

Un día, T visitó la compañía de P. T nunca había buscado tales servicios, pero sus amigos habían elogiado el trabajo de P. A se encontró con T en la mesa de atención. T pidió un Brazilian wax. -¿Un brasileño completo o modificado? -preguntó A a T. T parecía confundido, entonces A procedió a explicarle que un Full Brazilian (“FB”) implicaba depilar totalmente a T desde el ombligo hasta las nalgas,  por lo que un FB requería que T esté desnudo de la cintura para abajo. Un FB además requiere que A toque el cuerpo de T y realice los ajustes necesarios para que este pueda acceder a todos los folículos del vello púbico de T. Asimismo, A le explicó a T cómo sería un “Modified Brazilian” (“MB”). Un MB le dejaría una fina franja de pelo en la parte superior de sus genitales, es decir, un “landing strip” (pista de aterrizaje). Así, T optó por un Full Brazilian.

Una vez más, A le explicó a T que tendría que tocar sus genitales para completar la depilación. T estuvo de acuerdo y firmó en el Contrato de Servicio el espacio donde reconoce la información brindada por A. T se desvistió en un salón privado, donde también bebió un té de hierbas caliente. Por pedido de A, T, quien estaba desnudo de la parte de abajo, se acostó en la mesa de depilación. Una vez sobre ella y con los tonos instrumentales como fondo, T cayó en un sueño ligero. Finalmente A completó el FB. Al despertar, T se sintió físicamente incómodo, preguntándole a A si lo había tocado incorrectamente. A, le dijo que no, y sintiéndose ofendido, se fue.

Semanas después, P recibió una carta del abogado de T, en la que T alegaba que A lo había tocado inapropiadamente, generando que T buscara consejería y medicación para tratar un Trastorno de Estrés Post-traumático. Habiendo trabajado con A durante 10 años, P respondió que A era un esteticista certificado y licenciado, que nunca había tenido quejas presentadas por sus clientes. T demandó a P, y por testimonio de A, Los abogados de P y T descubrieron que A había tocado a T correctamente durante el FB. Sin embargo, T todavía siente que los tocamientos de A fueron impropios. En la demanda, T alegó que A, envuelto en una aparente posición de autoridad, lo había inducido a través de representaciones falsas a confiar razonablemente en él, de modo que A podría causar daño a T mientras actuaba en el marco de su labor. Si P se hubiera opuesto, en efecto diciendo “Sí, ¿Y qué?” a los pedidos de T, ¿la corte se encontraría a favor de T?

(A) Sí, porque T había establecido que A era un empleado que fue colocado como esteticista, lo que permitió a A hacerle daño a T.

(B) No, porque T expresa e implícitamente consintió  los tocamientos de A en cualquier manera razonable para que este le proporcione el servicio FB que aquél solicitó.

(C) Sí, porque P se benefició de los ingresos pagados por T en razón del servicio realizado por A.

(D) No.

Law prof’s exam question on Brazilian wax is deemed harassment; is academic freedom threatened?


A Howard University law professor says academics everywhere should be concerned by his school’s response to a 2015 exam question about a Brazilian bikini wax.

The school determined in May that the question by Professor Reginald Robinson constituted sexual harassment under school policy, report (sub. req.) and Inside Higher Ed in a story noted by TaxProf Blog.

The school placed a letter of reprimand in Robinson’s file, ordered him to attend sensitivity training and required him to submit future exam questions for advance review, according to a letter written on Robinson’s behalf by the Foundation for Individual Rights in Education.

The exam question, part of Robinson’s agency law course, asked whether the owner of a day spa would win a demurrer motion in a suit filed by a customer who claimed improper touching by the licensed aesthetician who performed the procedure. The exam question asserted that the customer had slept through the wax, but thought something improper had occurred upon awakening.

The aesthetician had warned the customer about touching that would take place during the procedure, and the customer acknowledged in writing having received the aesthetician’s information, according to the exam hypothetical. (The correct answer was that a court would not find in favor of the customer.)

After the exam, Robinson asked volunteers to discuss the test questions. One volunteer said the customer would not sleep through a Brazilian wax. Robinson switched focus, and when the volunteer declined to explain her answer choice, Robinson sought answers from another volunteer, according to FIRE’s letter.

Two students filed a complaint. An administrator who found the question constituted sexual harassment cited use of the word “genital,” the students’ suspicion that the question was crafted to reveal personal details about themselves, their belief the revelations had a negative impact on them, and the administrator’s belief that the exam scenario wasn’t necessary to teach the subject.

In its June 16 letter, FIRE asked Howard University to rescind the sanctions and to respond to its request by June 30. Howard did not respond by the deadline, according to a FIRE press release.

Howard’s punishment “does not comport with its own definition of sexual harassment or its promises of academic freedom,” FIRE wrote in its letter. “It poses a severe threat not only to professors’ rights but also to students’ ability to learn all areas of the law, including learning how to analyze situations that may make some students uncomfortable.”

Robinson released a statement about his case through FIRE.

“My case should worry every faculty member at Howard University, and perhaps elsewhere, who teaches in substantive areas like law, medicine, history, and literature,” Robinson stated. “Why? None of these academic areas can be taught without evaluating and discussing contextual facts, especially unsavory and emotionally charged ones.”

In: abajournal