Forbes: Statutory Authority for Charging Order Against Professional Association Addressed in Berns Custom Homes (September 20, 2021)

Forbes has published an article, “Statutory Authority for Charging Order Against Professional Association Addressed in Berns Custom Homes”, which discusses charging orders with regards to professional organizations. The article begins as follows:

Attorney Richard G. Johnson got into a squabble with Berns Custom Homes, Inc., over some renovations to Johnson’s home. The matter went to arbitration, and Berns won an award (subsequently reduced to a judgment) against Johnson for a little short of $170,000. To collect on its judgment, Berns filed a motion for a charging order against Johnson’s interest in Richard G. Johnson Co., L.P.A., being Johnson’s law firm and with “L.P.A.” standing for “Limited Partnership Association” as the entity was registered with the Ohio Secretary of State’s office. Although it sounds like a partnership, or at least a pseudo partnership-ish sort of entity, an LPA in Ohio is actually a type of corporation which exists in the Buckeye state. Berns also asked the court for the appointment of a receiver to carry out the charging order.

For his part, Johnson’s argument was that, being a professional association, Berns was not entitled to a charging order against Johnson’s interests in his LPA, nor was Berns entitled to a receiver to effectuate the charging order. While admitting that a “professional organization … has the same general liability feature as a general corporation” under Ohio law, the trial court nonetheless held that:

“Accordingly, there is no statutory prohibition on charging orders against shareholder interests in a legal professional association. Nor is there a prohibition on a receiver exercising control over the ownership interests in the legal professional association if the receiver is an attorney licensed to practice law.”

Click here to see the full article: “Statutory Authority for Charging Order Against Professional Association Addressed in Berns Custom Homes”

Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.

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