Limited liability company (“LLC”) formation is a popular entity choice for many Montana businesses. LLCs provide flexibility and less stringent corporate formalities than corporations. Yet, the liability of members and managers of LLCs is often misunderstood which can have severe personal consequences.

The misconception among managers or members of LLCs is that the liability shield is absolute meaning so long as they have an active LLC, they are shielded from personal liability if sued for wrongdoing. However, the LLC liability shield does not provide immunity to a member for his or her own wrongful conduct. Put another way, if a member or manager were acting in an individual capacity (acting individually) and their acts or omissions would be actionable in contract or tort against them, then a member or manager is individually responsible for those acts or omissions.

An example provided by the Montana Supreme Court in White v. Longley helps clarify when a member or manager is liable. “[A]ssume a construction company has become a limited liability company. Assume that the LLC was negligent in its design and erection of a building. The LLC, itself, and those who participated in the design or construction are responsible for the negligence. But just as corporate shareholders or officers who don't participate in the design or construction are not responsible, similarly situated members of an LLC are not responsible.”

Holding the correct parties in an action against an LLC accountable can make a huge difference in a potential recovery.

Our experienced team can help determine who is responsible for harming you and can make it right. Call us today for a free consultation.

All information displayed on the Kris A. McLean Law Firm, PLLC website is informational and shall not be deemed as legal advice.