Most LLC operating agreements that we review for clients in disputes were generated by an online formation service or copied from a template. They're typically fine for tax purposes and for routine bank work — but they fail at the one job that matters: governing what happens when the partners stop agreeing.
The five clauses that decide outcomes
1. Voting and deadlock
Default is a 50/50 vote. That's a recipe for stalemate. A well-drafted agreement specifies how deadlocks are broken — typically with a mandatory mediation step followed by either buyout or dissolution.
2. Buy-sell mechanics
If a partner wants out, what's the process? Who values the company? Is there a discount for minority interest? Is there a shotgun clause? These are answerable questions in the operating agreement — or fights in a courtroom later.
3. Capital calls
If the company needs more money and one partner can fund it but the other can't, what happens to ownership percentages? Without dilution mechanics in the agreement, you litigate.
4. Non-compete and non-solicit
What happens when a partner leaves and starts a competing business with your customer list? Without enforceable non-compete and non-solicit clauses, very little.
5. Exit triggers
Death, disability, divorce, bankruptcy, conviction. The agreement should specify what triggers buyouts, how valuation works in each case, and over what timeline payments occur.
We draft, review, and (when necessary) litigate operating agreements across DE, NJ, and PA. Most matters are resolved on a flat-fee basis.
— DiLeonardo & Shaw · Business Law