The Partnership Agreement for a Michigan LLP

A limited liability partnership does not have an "operating agreement" the way an LLC does — its governing document is the partnership agreement. It is the private contract among the partners that sets out how the business is owned, managed, and divided. Michigan does not require you to file it with the state, and it never becomes public, but it is the single most important internal document your LLP will have.

Here is why it matters so much: without a written partnership agreement, Michigan's default partnership rules under the Michigan Uniform Partnership Act (Chapter 449 of the Michigan Compiled Laws) govern your partnership by default. Those defaults were written to cover the generic case, and they frequently do not match what a real set of partners intends.

The default that surprises people

The most cited example is profit sharing. Under the default rule, partners generally share profits equally — regardless of who contributed more capital, brought in more clients, or does more of the work. If one partner put in most of the money and another does most of the labor, an equal split is almost certainly not what either intended. A written agreement lets you set the actual terms instead of inheriting a one-size-fits-all rule that fits nobody.

It is worth being precise about what does what, because partners often blur the two. The liability shield and the partnership agreement are separate mechanisms that work together.

The shield comes from registration, not the agreement

The partner liability shield — the protection that keeps one partner from being personally liable for another partner's misconduct — comes from registering the partnership as an LLP with LARA. That is the state filing described on our landing page and start guide. The partnership agreement does not create the shield; the registration does. This is the defining difference between an LLP and a plain general partnership: the general partnership has no shield, and every partner is personally exposed to the others' conduct.

The agreement governs everything the shield does not

The shield answers one question: who is personally liable for a partner's wrongful acts. The partnership agreement answers everything else — how profits are split, who decides what, how partners join and leave, and what happens when the firm dissolves. Think of the registration as the wall around the partners and the agreement as the blueprint for how they operate inside it. You need both. A registered LLP with no written agreement has the shield but no clear rules; a detailed agreement without registration has rules but no shield.

What the shield does not cover

Even with the shield in place, a partner remains personally responsible for their own negligence or misconduct, and any partner who signs a personal guarantee is bound by it. The agreement can address how partners handle these situations among themselves — indemnification, insurance requirements, and the like — but it cannot rewrite a partner's responsibility for their own actions.

A thorough partnership agreement anticipates the situations that strain a partnership and settles them in advance, while everyone is still on good terms.

Core provisions

• Capital contributions: What each partner contributed at formation, and whether and how future contributions can be required.
• Profit and loss allocation: The actual percentages, which need not be equal and can reflect capital, effort, or seniority.
• Draws and distributions: How and when partners take money out, and any limits on distributions.
• Management and decision-making: Who runs the day-to-day, and which decisions require unanimous consent versus a majority — for example, admitting a partner, taking on debt, or selling major assets.
• Voting: Whether votes are weighted by ownership or one-per-partner.
• Admitting new partners: The process and vote required to bring someone in.
• Withdrawal, death, and disability: What happens to a departing partner's interest, how it is valued, and whether the partnership continues.
• Dispute resolution: How partners resolve deadlocks and disagreements before they reach litigation.
• Dissolution: The circumstances under which the LLP winds down and how assets are distributed — which connects directly to the dissolution process.

Provisions that matter for professional practices

Because LLPs are common among licensed professionals, agreements for those firms often add profession-specific terms: how client relationships are handled when a partner leaves, restrictions consistent with the licensing board's rules, and how the firm name is maintained. These are areas where an attorney familiar with your field earns their fee.

The best time to write the partnership agreement is at the start, before the partnership is doing meaningful business and before any money is at stake. That is when partners are aligned and negotiating in good faith. Waiting until a dispute arises means writing the rules during the argument they were meant to prevent.

Put it in writing and keep it current

An oral understanding among partners is worth very little when memories diverge and money is involved. Get the agreement in writing, have every partner sign it, and revisit it when the partnership changes — a new partner joins, the profit split shifts, or the business model evolves. An agreement that reflects a partnership as it existed three years ago can be as troublesome as no agreement at all.

Where we fit and where we do not

We are a filing service, not a law firm. We handle the state-facing work — registering the LLP with LARA, providing resident agent service, and keeping the registration current — which is what turns on and maintains the liability shield. We do not draft partnership agreements or advise on how partners should divide equity or govern the firm. Those are legal decisions specific to your partners and, for a licensed practice, your board's rules. For the agreement itself, work with an attorney who can tailor it to your situation. What we make sure of is that the state side is done right, so the shield the agreement operates alongside is actually in place.