Rule 10 - Professional Service Corporations, Limited Liability Partnerships and Limited Liability Companies (Limited Liability Entities)(a) Attorneys admitted to practice before this Court may engage in the practice of law in the form of professional service corporations as provided by the Professional Service Corporation Law, G.L. 1956 §§ 7-5.1-1 to 7-5.1-12, as amended, professional service benefit corporations as provided by G.L. 1956 §§ 7-5.3-1 to 7-5.3-13, as amended, registered limited liability partnerships as provided by the Uniform Partnership Act, G.L. 1956 §§ 7-12-31.1,, 7-12.1-101 to 7-12.11204 as amended, or as limited liability companies as provided by the Rhode Island Limited Liability Company Act, G.L. 1956 §§ 7-16-1 to 7-16-75, as amended.(b) As used in this rule, the term "limited liability entity" shall include a professional service corporation, a professional service benefit corporation, a registered limited liability partnership, and a limited liability company organized to practice law pursuant to the laws of any state or other jurisdiction of the United States and which practices law in the State of Rhode Island. In order to practice law, a foreign limited liability entity must have one (1) or more attorneys who are licensed and in good standing to practice law in this state.(c) A limited liability entity may not engage in the practice of law unless and until it registers with the Secretary of State to operate as a limited liability entity and only so long as such registration remains in good standing. Limited liability entities shall indicate in the records of the Rhode Island Secretary of State that the purpose of the entity is to engage in the practice of law.(d) All shareholders, directors, and officers if the applicant is a professional service corporation or a professional service benefit corporation;
A all partners if the applicant is a registered limited liability partnership; and A all managers and members if the applicant is a limited liability company, must be an attorney authorized to practice law and each attorney in the organization shall at all times be in good standing in this state or, if licensed to practice elsewhere, in every state or jurisdiction in which the attorney is licensed.
(e) In lieu of the limited liability entity licensure and annual registration requirement, all attorneys practicing law in the corporate form will be required to notify the Court of their corporate practice as part of the annual attorney registration process . all limited liability entities practicing law in the state shall follow the standards of admission imposed upon individual attorneys. The limited liability entity shall comply with and be subject to all rules governing the practice of law by attorneys and it shall do nothing which, if done by an individual attorney, would violate the standard of professional conduct applicable to attorneys licensed to practice law in this state. Any violation of this rule by the limited liability entity shall be grounds for the Court to discipline it, including termination or suspension of its right to practice law. An attorney who, while acting as a shareholder, member, officer, director, manager, partner, agent, or employee of a limited liability entity engaged in the practice of law, violates or sanctions the violation of the provisions of the Professional Service Corporation Law, the provisions of G.L. 1956 §§ 7-5.3-1 to 7-5.3-13, as amended applicable to professional service benefit corporations, the provisions of the Uniform Partnership Act applicable to registered limited liability partnerships practicing law in Rhode Island, the provisions of the Rhode Island Limited Liability Company Act applicable to limited liability companies practicing law in Rhode Island or the rules of the Supreme Court of the State of Rhode Island relating to the practice of law, shall be subject to disciplinary action. (f) All limited liability entities practicing law in the state shall maintain professional liability insurance in the aggregate amount of fifty thousand dollars ($50,000) multiplied by the number of attorneys practicing law on behalf of the entity in the state as of the policy anniversary date; provided, however, that in no case shall the coverage be less than one hundred thousand dollars ($100,000) but in no event shall the necessary coverage exceed a maximum of five hundred thousand dollars ($500,000). Any policy for insurance coverage may include a deductible provision in any amount not to exceed twenty-five thousand dollars ($25,000) for each claim multiplied by the number of attorneys practicing law on behalf of the entity in the state as of the date of the issuance of the policy.(g) No attorney may be a shareholder, member, officer, director, manager, partner, or employee of any other limited liability entity engaged in the practice of law in this state without the prior written approval of this Court.(h) No shareholder, member, or partner of a limited liability entity practicing law shall enter into a voting trust, proxy, or any other agreement which will give an unlicensed person the authority to exercise the voting power of an ownership interest in said limited liability entity; provided, however, that a limited liability entity may be a shareholder of a professional service corporation or a professional service benefit corporation, a member of a limited liability company or a partner of a registered limited liability partnership so long as all of the owners of such limited liability entity are otherwise licensed hereunder. Any such agreement shall be void.(i) If a shareholder, member, or partner dies or becomes ineligible, the entity shall: (1) Redeem the interest of the shareholder, member, or partner unless prohibited by law from accomplishing such redemption, or(2) Cause the interest of the shareholder, member, or partner to be purchased by an eligible person or persons, or(3) If neither of the foregoing is accomplished within nine (9) months from that date that the ineligibility occurred, then the corporation's authority to practice shall terminate and the shareholders, members, or partners shall promptly take all steps necessary to cause the dissolution and liquidation of the entity. Nothing in this rule is intended to prevent the payment for interests in the entity redeemed or purchased over any period of time that is agreed upon by the parties.(4) The entity and the ineligible shareholder, member, or partner shall have three (3) months from the date that the ineligibility occurs to agree on the fair market value of such interest. If no agreement is reached within such three (3) month period, the entity shall apply to the Court for appointment of three (3) qualified persons, as provided by G.L. 1956 § 7-5.1-5, to determine the fair market value; they shall report their decision within six (6) months of the date that the ineligibility occurred.(5) The Court may, upon a showing of good cause, extend any of the time periods provided by this rule.(6) The shares of an ineligible shareholder, member, or partner shall not be voted for any purpose, nor shall they be counted in determining a quorum or the number of votes required for action by the entity.(j) Any partner of a registered limited liability partnership or member of a limited liability company who dies or becomes ineligible to be a partner or member and the executor, administrator, or other legal representative of a deceased partner or member shall be required to dispose of the partnership or membership interest as soon as reasonably possible either to the entity or to an individual or entity duly qualified to be a partner or member of the entity; provided, however, that nothing in this rule shall affect the terms and timing of payments as may be set forth in a partnership agreement, operating, or similar agreement to which such partner or member is a party.(k) The name of every limited liability entity engaged in the practice of law shall comply with Article V, Rule 7.5. The name shall end with the words "corporation," "incorporated," "limited," or "professional corporation," or the abbreviations "Corp.," "Inc.," "Ltd.," or "P.C." (in the case of a professional corporation or a professional service benefit corporation), the words "limited liability company" or "professional limited liability company" or the abbreviations "l.l.c" or "p.l.l.c." in upper or lower case and with or without punctuation (in the case of a limited liability company) or "limited liability partnership" or the abbreviations "LLP" or "L.L.P.," (in the case of a partnership) or such other similar words or abbreviations as may be required or authorized by the laws of the jurisdiction where the limited liability company is formed or the partnership is registered." Last amended effective 9/13/2016; amended effective 9/7/2018; amended effective 2/23/2023; amended effective 10/23/2023.