Licensed professions and the PLLC: what the professional LLC protects, and what it never did

A professional LLC does not protect you from your own malpractice. In New York, every member of a PLLC is “personally and fully liable” for their own negligence and for the negligence of anyone under their direct supervision and control while rendering professional services (N.Y. Ltd. Liab. Co. Law § 1205(a)). A physician who supervises nurse practitioners carries their mistakes personally, PLLC or not.

What the PLLC does protect against is real: a partner’s malpractice judgment, the firm’s lease, the firm’s debts. But owners who formed one believing it shields their own work have bought less than they think, and the supervision clause is the part almost nobody reads.

A PLLC protects you from your partner’s malpractice and the firm’s debts, not from your own work or the people you supervise.

What a professional LLC is, and why it exists

A professional LLC is an LLC formed under a state’s professional-entity statute. Those statutes reconcile two systems. Ordinary LLC law lets anyone own anything and shields every member from the company’s obligations. Licensing law assumes a licensed person answers for the work. The professional statute splits the difference: members get the shield against business debts and each other’s negligence, ownership is limited to licensees, and personal liability for one’s own professional acts survives.

Some states push licensed professionals into the professional form. New York’s LLC law says an ordinary LLC may not be used for a business that another statute requires to be organized differently, and its professional LLC article sets the rules for licensed professions, including that every member of a medical, dental, engineering or architecture PLLC hold that license (§§ 201, 1203). California goes further: an LLC generally may not render services that require a state license unless the licensing statute for that profession specifically allows it, so most California professionals use a professional corporation instead. The California Senate Judiciary Committee’s 2015 analysis states that an LLC “is prohibited from rendering professional services in this state.”

In California, most licensed professionals cannot use an LLC at all, and the professional corporation is the vehicle.

How every state and DC answers the same five questions, from whether a PLLC exists to whose malpractice the owners still carry, is on PLLC rules by state.

Law firms: the strictest rule, and the two states testing it

The American Bar Association’s Model Rule 5.4, which states adopt in their own versions, bars a lawyer from sharing legal fees with a nonlawyer, from forming a partnership with a nonlawyer to practice law, and from practicing in a for-profit firm in which a nonlawyer owns any interest. Outside investment in a law firm is, in most of the country, simply prohibited.

Arizona and Utah broke from that rule, and both are now narrowing what they opened. Arizona licenses Alternative Business Structures, firms in which nonlawyers may own an interest, under its Code of Judicial Administration § 7-209, and each one must have a compliance lawyer. About 150 applications had been approved by March 2026, according to the Arizona courts. Orders in 2025 and March 2026 tightened the program, requiring that licensure further the program’s objectives at least in part for people in Arizona. Utah’s regulatory sandbox, which lets authorized entities with nonlawyer ownership deliver legal services, is set to run through the end of August 2027.

The full rule, the three places that opened a door, and what happens to a firm with offices on both sides of the line are on law firms.

Accounting firms: a licensed majority, and the split built to get around it

Accounting allows outside owners, but only as a minority. The Uniform Accountancy Act, the model most state boards follow, requires that a simple majority of a CPA firm’s equity and voting rights be held by CPAs, according to the national association of state boards of accountancy. Florida puts the number in statute at 51%, and requires every non-CPA owner to work in the firm as a principal occupation (Fla. Stat. § 473.309).

The market answer has been the alternative practice structure. The firm splits in two: a CPA-owned attest firm that performs audits, and an investor-owned company that provides tax and advisory services and supplies staff and infrastructure to the attest firm under a services agreement. Private equity has used the structure to buy into large accounting firms since 2024. Regulators are still deciding how to police the independence questions it raises; the state boards’ association urged a bright-line test in an April 2026 comment letter on proposed rules that had not been finalized. The full structure, and where it leaks, is on accounting firms.

The private equity accounting deal works by putting the licensed work in one company and the money in another.

Architecture and engineering: ownership in some states, a qualifier in others

Design professions show both ways a state can protect the license. Michigan regulates ownership: a firm may offer architecture, engineering or surveying only if at least two-thirds of its principals are licensees (Mich. Comp. Laws § 339.2010). Virginia requires two-thirds of a design-profession PLLC’s membership interests to be held by licensees (Va. Code § 13.1-1111).

Florida regulates control instead. It sets no ownership percentage, but a business may practice engineering only if it is qualified by a Florida-licensed engineer, and if that qualifier leaves, the firm must requalify within 60 days and generally may not practice until it does (Fla. Stat. § 471.023). The firm’s license rests on one employee. The structuring consequence: in a qualifier state, the employment agreement, the buy-sell provisions and a named successor qualifier are licensing documents, not just human resources ones. Ownership tests by state, the New York sale that is void, and the deadline that starts when the licensed engineer leaves are on engineering and architecture firms.

The bottom line

A PLLC shields members from each other’s malpractice and the firm’s debts, and leaves each member liable for their own work and the people they directly supervise.

California generally bars LLCs from licensed professional services, so most California professionals use a professional corporation.

Law firms are closed to outside owners nearly everywhere; Arizona’s program is narrowing and Utah’s sandbox has an end date with nothing yet decided after it.

Accounting firms must stay majority CPA-owned, and private equity enters by splitting the attest work from everything else.

Design firms face an ownership test in some states and a single-qualifier rule in others, where one departure starts a 60-day clock.

What this page does not cover

The four ownership models and what a sale does to a license are on who is allowed to own a licensed business. Healthcare practices, including the corporate practice of medicine, are on healthcare licensing. How a professional practice is structured as a business, apart from licensing, is on the professional practice playbook.

Last verified October 2026.