The Partnership Agreement for a Washington LLP

A partnership agreement is the private contract among the partners that governs how the limited liability partnership runs. It is the LLP's counterpart to an LLC's operating agreement: the internal rulebook that settles money, management, decision-making, and exits before those questions turn into disputes.

Not filed, but essential

Washington does not require you to file a partnership agreement, and it never becomes part of the public record. But that privacy does not make it optional in any practical sense. The state registration creates the LLP and its liability shield; the partnership agreement governs everything about how the partners actually work together. One without the other leaves a real gap.

What fills the gap if you have no agreement

If the partners never write an agreement, Washington's Revised Uniform Partnership Act (RCW 25.05) supplies default rules for how a partnership operates — how profits are shared, how decisions are made, what a partner is entitled to on departure. Those defaults are one-size-fits-all and frequently do not match what the partners assumed. Relying on them is how partners discover, at the worst possible moment, that the law splits things differently than they expected.

The single most important thing to understand about a Washington LLP is the liability shield, because it is what separates the LLP from an ordinary general partnership and shapes why the partnership agreement is written the way it is.

The general-partnership baseline

In a plain general partnership, every partner is personally liable for the partnership's debts and, critically, for the wrongful acts of the other partners. One partner's malpractice or one partner's bad debt can reach into every other partner's personal assets. There is no wall between the business's liabilities and the partners' personal wealth.

What registering as an LLP changes

By registering as an LLP under Washington's partnership act, the partnership adds a shield. A partner in a registered LLP is not personally liable for the partnership's obligations that arise while the registration is in effect — whether those obligations come from a contract or from another partner's negligence. This is the whole point of the LLP: it lets partners share a practice without each one guaranteeing the others' mistakes with their own savings.

The limit of the shield

The shield protects a partner from other partners' conduct; it does not erase a partner's responsibility for their own acts. If you personally commit malpractice, you remain accountable for it. A well-drafted partnership agreement acknowledges this — it can address how the partners handle professional liability, insurance, and indemnification among themselves, on top of the statutory shield the registration provides.

A thorough partnership agreement anticipates the questions that partnerships fight over. The more of these it settles in writing, the fewer disputes reach a courtroom.

Money

• Capital contributions: what each partner contributed at the outset and what future contributions may be required
• Profit and loss allocation: how profits and losses are divided among the partners, which need not be equal and need not match contributions
• Draws and distributions: when and how partners take money out, and in what priority

Management and decisions

• Management structure: who runs day-to-day operations and what authority each partner holds
• Voting: which decisions require unanimity, which require a majority, and how votes are weighted
• Deadlock: how the partners break an impasse when they cannot agree

Partners coming and going

• Admitting new partners: the process and vote required to bring someone in
• Dissociation: what happens when a partner dies, retires, becomes disabled, or simply wants out
• Buyout terms: how a departing partner's interest is valued and paid, which is one of the most contested issues in any partnership
• Transfer restrictions: whether and how a partner can transfer their interest

Winding down

• Dissolution: the circumstances under which the LLP is dissolved and how its affairs are wound up
• Asset distribution: the order in which creditors and partners are paid when the partnership closes

Even partners who trust each other completely benefit from a written agreement, and the reasons are practical rather than pessimistic.

It replaces the state's defaults with your intentions

Without an agreement, RCW 25.05's defaults govern, and they may not reflect how you and your partners actually want to split profits, make decisions, or handle a departure. A written agreement lets the partners set their own terms instead of inheriting the state's.

It prevents the disputes that break up partnerships

The classic partnership fights — how to value a departing partner's share, whether one partner can veto a major decision, how profits get split in a down year — are exactly what the agreement resolves in advance, while everyone is still on good terms. Settling them under pressure, after a disagreement has already formed, is far harder.

Banks and third parties expect it

Banks frequently ask to see the partnership agreement when opening a business account, and lenders, investors, and prospective partners may want to review it. Having a clean, current agreement signals that the LLP is run seriously.

It reinforces the LLP's legitimacy

A written agreement, consistently followed, underscores that the LLP is a real, separately run entity rather than a loose arrangement. That discipline supports the seriousness of the structure the partners registered to obtain.

A partnership agreement is not a document you sign once and forget. It should evolve with the partnership.

Update it when things change

When a partner joins or leaves, when the profit split changes, when the management structure shifts, or when the business takes a new direction, revisit the agreement so it still reflects reality. An outdated agreement that no longer matches how the partnership actually operates can be worse than none, because it invites arguments about which terms still apply.

Get professional help for the substance

The economic and governance terms — valuations, buyout formulas, allocations, professional-liability arrangements — are where partnerships most often fracture and where the drafting most needs to be precise. This is the part to have an attorney draft or review. For a professional practice, a lawyer who understands both partnership law and your profession's licensing rules is worth the investment.

What Mainstay Filing does and does not do

Mainstay Filing handles the state-facing paperwork — registering your LLP with the Washington Secretary of State and serving as your registered agent — which is what creates the liability shield in the first place. We are a filing service, not a law firm, so we do not draft the economic terms of your partnership agreement. For the agreement itself, work with an attorney, and let us take care of the filings that put the LLP on the record.