Establishing an attorneys’ association is not merely a registration formality, but the creation of a special professional structure for providing legal assistance
For this reason, a transition from operating through a limited liability company to operating through an attorneys’ association should not be treated as a simple change of name or corporate form. A limited liability company is a general corporate vehicle for business activity, whereas an attorneys’ association is a special form of legal practice. Its participants must be attorneys, and its activities must comply with the Law of Ukraine “On
the Bar and Practice of Law”, professional ethics rules, state registration requirements and tax legislation.
Legal Framework for Establishing an Attorneys’ Association
The legal regulation of an attorneys’ association is based on several key areas of Ukrainian legislation.
The core legal act is the Law of Ukraine “On the Bar and Practice of Law”, which defines the forms of legal practice, the status of an attorney, the procedure for carrying out legal practice, professional guarantees and the requirements applicable to attorneys’ entities.
The state registration of an attorneys’ association as a legal entity is carried out under the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Formations”. This law determines the documents required for the creation of a legal entity, amendments to its registered information, termination, liquidation or reorganization.
The tax consequences of establishing an attorneys’ association are governed by the Tax Code of Ukraine. In practice, an attorneys’ association may operate under the general taxation system or, provided that it meets the applicable statutory criteria, elect the simplified taxation system. The tax model should be selected before the association begins active operations, as it affects pricing, accounting, value added tax, client agreements and the
overall financial model of the legal practice.
Materials of the Ukrainian National Bar Association are also of practical importance, including the model charter of an attorneys’ association. Such a model does not replace an individually drafted charter, but it may serve as a reference point for structuring governance, defining the rights and obligations of participants, admission and withdrawal procedures, income distribution, management of property and internal organization
of the association.
Attorneys’ Association as a Special Legal Entity
An attorneys’ association is a legal entity established by two or more attorneys. It operates on the basis of its charter, has its own name, registered address, management bodies, separate balance sheet and bank accounts, and may have a seal, stamps, letterheads and other attributes of a legal entity.
At the same time, the legal nature of an attorneys’ association differs from that of an ordinary company. Its activities are directly connected with the professional status of attorneys, attorney-client privilege, conflicts of interest, professional ethics, attorney independence and guarantees of legal practice.
Limited Liability Company
of the association.
distributed, and how attorneys, assistant attorneys, lawyers, consultants and administrative personnel are engaged.
Transition from a Limited Liability Company to an Attorneys’
Association
If a legal practice or legal consulting business was previously operated through a limited liability company, several transition models may be considered.
The most practical and legally predictable model is to establish a new attorneys’ association as a separate legal entity, while the limited liability company gradually winds down its activities, completes existing obligations, transfers or renegotiates contracts, resolves employment matters, deals with assets, tax reporting, bank accounts and creditors.
Alternatively, a reorganization model may be considered, where the limited liability company is reorganized and its rights and obligations pass to the newly created legal entity. However, this model is significantly more complex and is not always optimal for creating an attorneys’ association, because an attorneys’ association has a special professional status and its participants must be attorneys. Therefore, before choosing reorganization, it
is necessary to separately verify the admissibility of the specific structure, the composition of participants, tax consequences, the position of the state registrar, the status of contracts and assets, outstanding obligations and possible succession risks.
Model One: Establishing a New Attorneys’ Association and Winding
Down the Limited Liability Company
The clearest route is to establish a new attorneys’ association as a separate legal entity. After state registration, such entity may enter into legal services agreements, open bank accounts, choose a taxation system, use its own brand, letterheads, seal and electronic signatures, and carry out legal practice within the limits of the law.
At the same time, the limited liability company may be liquidated or retained for other types of activity, provided that this does not create a conflict with legal practice, tax rules, professional ethics or the positioning of the legal practice.
If a decision is made to liquidate the limited liability company, the participants must adopt a decision on termination of the legal entity. Such decision is usually documented in the minutes of the general meeting of participants. It should determine the liquidator or liquidation commission, their powers, the procedure for liquidation, the period for creditors to submit claims, the address of the liquidator or liquidation commission,
and other necessary matters.
The relevant documents are then submitted to the state registrar, and information on the commencement of the termination procedure is entered into the Unified State Register. The information is transmitted to tax authorities, statistics authorities and other state bodies through the statutory information exchange process.
During liquidation, the company conducts an inventory, settles with creditors, resolves employment relations, closes bank accounts, submits tax and financial reporting, and transfers documents subject to long-term storage to an archival institution.
After the liquidation procedure is completed and the period for creditors’ claims has expired, an application for state registration of termination by liquidation and a certificate from the archival institution confirming acceptance of documents are submitted. The legal entity is considered terminated once the relevant entry is made in the Unified State Register.
Registration of the New Attorneys’ Association
Limited Liability Company
of the association.
engaged.
Association
and creditors.
possible succession risks.
of the legal practice.
and other necessary matters.
to an archival institution.
The creation of an attorneys’ association may begin simultaneously with the liquidation of the limited liability company. This allows the legal practice to continue operating, gradually transfer client relationships to the appropriate professional form and avoid an operational gap.
To establish an attorneys’ association, the founders must prepare a decision on the creation of the legal entity, the charter of the attorneys’ association, determine the full and short name in Ukrainian, registered address, composition of participants, managing partner or head, governing bodies, decision-making procedure, admission and withdrawal of participants, property matters, income distribution, use of assets, signing of
agreements and representation of the association.
For state registration of a legal entity, an application for state registration, the founders’ decision, the constitutional document and other documents are submitted if required due to the specific structure, participants, ultimate beneficial owners, chosen tax regime or the nature of the registration action.
After information on the creation of the attorneys’ association is entered into the Unified State Register, the relevant regional bar council must be notified in writing within the statutory period. This is an important professional step because the organizational form of legal practice must be properly reflected within the bar self-governance system and in the information concerning attorneys.
The next stage is to open a bank account, issue electronic signatures, organize accounting, select or confirm the tax system, approve internal documents, prepare standard legal services agreements, confidentiality policies, rules for handling client documents and internal procedures for protecting attorney-client privilege.
Model Two: Reorganization of the Limited Liability Company and
Creation of an Attorneys’ Association with Legal Succession
Reorganization may be appropriate where it is necessary to preserve legal succession in relation to assets, contracts, claims, obligations or the operating history of the legal entity. In theory, such a model may be considered in the form of transformation or another type of reorganization, but in the case of transition from a limited liability company to an attorneys’ association it requires particular caution.
The reason is that an attorneys’ association is not a universal commercial form for any business. Its legal capacity is connected with attorneys and the practice of law. Before commencing a reorganization, it is therefore necessary to assess whether the future structure complies with legislation on the bar, whether all participants are entitled to be participants of an attorneys’ association, whether there is any conflict with
professional ethics, whether contracts may be transferred, whether client or counterparty consent is required, and what tax consequences may arise from the transfer of assets and obligations.
If a decision on reorganization is adopted, the participants of the limited liability company approve the termination of the legal entity by reorganization, appoint a termination commission or person responsible for the procedure, establish the period for creditors’ claims and determine the reorganization procedure. A transfer act or another document required for the relevant type of reorganization is then prepared, reflecting the rights,
obligations, assets and liabilities transferred to the successor.
After the procedure is completed, but not before the expiry of the period for creditors’ claims, documents for state registration of termination of the legal entity by reorganization are submitted to the state registrar. In the case of transformation, documents for state registration of the newly created legal entity are also submitted.
In practice, this model requires more preparation than simply establishing a new attorneys’ association. It may be justified only where legal succession has genuine legal or commercial value. If the main objective is to create a professional attorneys’ structure, the safer route is usually to establish a new attorneys’ association and separately resolve the future of the limited liability company.
Tax Considerations
Limited Liability Company
of the association.
engaged.
Association
and creditors.
possible succession risks.
of the legal practice.
and other necessary matters.
to an archival institution.
Tax Considerations
At the stage of establishing an attorneys’ association, the tax model must be determined. An attorneys’ association as a legal entity may operate under the general taxation system or elect the simplified taxation system if it meets the requirements of the Tax Code of Ukraine.
Legal practices often consider the third group of single tax. However, this choice must take into account expected revenue, the client base, whether value added tax registration is necessary or unnecessary, the nature of services, the planned number of employees, work with foreign clients and the financial model of the association.
It is also important to properly distinguish the income of the attorneys’ association, the income of individual attorneys, personnel expenses, payments to participants, remuneration of engaged attorneys and consultants.
These matters should be addressed not only in accounting, but also in the charter, internal policies and contracts.
Practical Steps After Registration
After state registration of the attorneys’ association, the full operational launch must be ensured. This includes opening a bank account, obtaining access to the taxpayer’s electronic cabinet, issuing electronic signatures, filing the necessary applications regarding the tax system, preparing client agreements, creating firm letterheads, setting up accounting, and documenting employment or civil law relationships with staff and
engaged specialists.
Special attention should be paid to attorney-client privilege, personal data protection, storage of client documents, internal conflict checks, communication rules with clients and formalization of attorneys’ powers in specific matters.
If the activity was previously carried out through a limited liability company, a separate audit of existing contracts is necessary. In relation to client agreements, it is advisable not merely to “transfer” them to the new structure, but to properly re-execute them or change the party to the contract with the client’s consent. This is particularly important for legal services agreements, since such relationships are based on trust, attorney-client
privilege and the personal authority of the attorney.
Conclusion
An attorneys’ association is an optimal structure for attorneys who seek to build a professional legal practice with clear governance, a common brand, internal allocation of roles and the ability to scale.
If the activity was previously conducted through a limited liability company, the most predictable path is usually to establish a new attorneys’ association while simultaneously or subsequently winding down the limited liability company, transferring operational processes, renegotiating contracts and resolving tax and employment matters.
Reorganization of a limited liability company into an attorneys’ association may be considered only after a separate legal assessment, as this model involves legal succession, the special status of the attorneys’ association, requirements regarding the composition of participants, tax consequences and possible registration risks.
A properly structured attorneys’ association allows not only to register a legal entity, but also to build a professional platform for providing legal assistance, developing a legal brand and protecting clients’ interests in accordance with the highest standards of the legal profession.