The Partnership Agreement for a New York LLP

If you have formed LLCs before, you know the "operating agreement" as the internal rulebook. An LLP does not have one of those. Its governing document is a partnership agreement — the contract among the partners. The two do similar work, but the terminology matters because an LLP is governed by partnership law, not the LLC statute, and the partnership agreement operates against the backdrop of New York's Partnership Law rather than the Limited Liability Company Law.

New York does not require you to file the partnership agreement, and it is not part of the public record. But where the agreement is silent, the default rules of the Partnership Law fill the gaps — and those defaults were written for the average partnership, not for your specific firm. A well-drafted agreement replaces defaults you may not want with terms the partners actually chose.

This is the heart of what makes an LLP different from a general partnership, and it is worth being precise about.

Registering as an LLP by filing the Certificate of Registration is what creates the liability shield — under Partnership Law §121-1500, a partner is not personally liable for the partnership's debts and obligations, or for the negligence and misconduct of the other partners, that arise while the LLP status is in effect. The partnership agreement does not create that shield; the state registration does. What the partnership agreement does is govern everything the shield does not touch: the internal relationships among the partners.

Why both are necessary

• The registration protects a partner from liability for a colleague's malpractice. Without it, you would have a plain general partnership with unlimited, joint personal exposure.
• The partnership agreement decides how profits are split, who manages what, how partners come and go, and what happens on dissolution. Without it, the Partnership Law's defaults decide those things for you.

A firm with registration but no agreement has the shield but no clear internal rules — a recipe for disputes. A firm with an agreement but no registration has rules but no shield. You want both.

A complete partnership agreement addresses the questions that cause the most conflict when they are left unanswered:

• Capital contributions. What each partner contributed at formation, and whether future contributions or capital calls can be required.
• Profit and loss allocation. How income and losses are shared — which need not track headcount or capital, and often reflects seniority, origination, or a formula the partners negotiate.
• Draws and distributions. The timing, amount, and priority of partner payments during the year and at year-end.
• Management and decision-making. Who runs the firm day to day, which decisions require a partner vote, and which require a supermajority or unanimity — admitting a partner, taking on major debt, or dissolving, for instance.
• Admitting new partners. Buy-in terms, vesting, and the vote required to bring someone in.
• Withdrawal, retirement, and expulsion. Notice requirements, buy-out formulas, and how a departing partner's interest is valued and paid out.
• Death and disability. What happens to a partner's interest, and whether the firm or the remaining partners buy it back.
• Dispute resolution. How partner disagreements are resolved — mediation, arbitration, or the courts.
• Dissolution and wind-up. The vote to dissolve and the order in which assets are distributed.

Because a New York LLP is a firm of licensed professionals, the partnership agreement should go beyond the generic terms and address the realities of professional practice:

• Professional liability insurance. The agreement should require each partner to carry appropriate malpractice coverage and may set a minimum. The LLP shield protects innocent partners from a colleague's liability, but it does not pay claims — insurance does, and some licensing boards condition the shield on maintaining coverage.
• Client matters and files. How client relationships and files are handled when a partner leaves, consistent with your profession's recordkeeping and client-notice rules.
• Licensure requirements. A mechanism for what happens if a partner loses or fails to maintain the license the LLP depends on — since every partner in a domestic New York LLP must be a licensed professional.
• Non-competition and departures. What a departing partner may and may not do, drafted within the limits your profession's ethics rules allow (some professions sharply restrict restrictive covenants).
• Origination and compensation credit. How the firm credits business generation and allocates compensation, which is frequently the most contentious topic in professional partnerships.

It is tempting to defer the partnership agreement — everyone is getting along, the firm is new, and the document feels like paperwork. That is exactly when it is easiest to write and hardest to need. The value shows up later, when partners disagree.

Without a written agreement, New York's Partnership Law defaults control. Those defaults may, for example, split profits equally regardless of contribution, give every partner an equal management vote regardless of seniority, or make it difficult to remove a partner who is no longer contributing. When a real dispute arrives — a partner wants out, a partner dies, two partners disagree about direction — the absence of an agreement turns a negotiation into a fight, often an expensive one. A partnership agreement negotiated while everyone is aligned is far cheaper than litigation after the alignment breaks.

Because the agreement carries so much weight and interacts with your profession's ethics rules, it is worth having an attorney draft or review it. This is not a form to copy from another firm; the terms should reflect how your partners actually intend to run and eventually leave the business.

Mainstay Filing handles the state-facing formation — the Certificate of Registration, the registered agent role, the publication tracking, and the five-year renewal. The partnership agreement itself is a legal document that should be tailored to your firm and reviewed by counsel, so it sits outside what a filing service prepares. We are not a law firm and do not draft or give advice on partnership agreements.

What we can do is make sure the foundation the agreement rests on is solid: a properly registered LLP, in good standing, with the liability shield in place. With the registration handled, you and your attorney can focus the partnership agreement on the terms that matter to your partners rather than on state mechanics.