PROFESSOR PRINCE’S CO-AUTHORED ARTICLE ACCEPTED FOR PUBLICATION BY SETON HALL LAW REVIEW
September 2023 — “An LLC by Any Other Name is Still Not a Corporation,” written by Professor Samantha Prince and Dean Joshua P. Fershee (Creighton Law School), was accepted for publication by The Seton Hall Law Review. The article is slated for publication in April 2024.
Limited Liability Companies (LLCs) are an oft-used entity structure. Business entities, including LLCs, have their own unique characteristics. Unfortunately, all too often individuals conflate them with corporations. This occurs in myriad ways, one of which is to misname an LLC by calling it a “limited liability corporation” rather than what it truly is, which is a limited liability company.
Sadly, this issue is all too prevalent. Even last month, Justice Alito used the term in an op-ed he wrote defending conflict of interest allegations. And the game show Jeopardy! has allowed as correct the answer “what is a limited liability corporation?” Even shows like Suits and the Wire have misused the term.
The problem is that if someone applies corporate law to an LLC, there will be incorrect outcomes. This can happen in determining jurisdiction, such as diversity jurisdiction, because the residency of LLC members is a factor whereas for corporations the residency of the owners is usually irrelevant. The problem also surfaces with piercing the veil issues.
And everyone is doing it. Lawyers, members of the judiciary, legislators, governmental agencies, media and now Artificial Intelligence. AI relies on information it can find, and therefore AI generators, like ChatGPT, replicate the incorrect term. With a proliferation of users and programs using ChatGPT and other AI, the use of incorrect terminology will balloon and exacerbate the problem. Perhaps one day, AI can be used to correct this problem, but that cannot happen until there is widespread understanding of the distinct nature of LLCs and a commitment to precise language when talking about them.
The article informs of the looming harms of misidentifying and conflating LLCs with corporations. Additionally, it presents a warning together with ideas on how to assist with correcting the use of incorrect terminology in all contexts surrounding LLCs. The article includes proposed solutions and even a checklist for practitioners.
Professor Samantha Prince is an Assistant Professor of Law and Director of Legal Analysis & Writing at Dickinson Law. She has a Master of Laws in Taxation from Georgetown University Law Center and was a partner in a regional law firm where she handled transactional matters that ranged from an initial public offering to regular representation of a publicly-traded company. Most of her clients were small to medium sized businesses and entrepreneurs, including start-ups. A significant part of her practice was in employee benefits including retirement plan design and operation. An expert in entrepreneurship law, she established the Dickinson Law entrepreneurship program, is an advisor for the Entrepreneurship Law Certificate that is available to students, and is the founder and moderator of the Inside Entrepreneurship Law blog. Her research mainly comprises the changing world of work.