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A single theory of limited liability companies: an evolutionary analysis.

"Evolution on a large scale unfolds, like much of human history, as a succession of dynasties. Organisms possessing common ancestry rise to dominance, expand their geographic ranges, and split into multiple species.... The groups they replace retreat to relic status, being diminished in scattershot fashion by competition, disease, shifts in climate, or any other environmental change that serves to clear the way for the newcomers.... Once in a while, in a minority of groups, a lucky species hits upon a new biological trait that allows it to expand and radiate again, reanimating the cycle of dominance on behalf of its ... kin." (2)

A. Purpose
B. The "Selfish" Perspective

A. Taxonomy: The Analytical Baseline
B. Selecting the Selector and the Composition of the "Stuff" Selected

A. The LLC Phenotype & Selection
B. Of Entities, Individuals, Groups, and Genes:
"Groups All the Way Down" and Back Up Again




A. Purpose

The purpose of this essay is to analyze the question of whether there is, or should be, a single theory for interpreting and understanding the limited liability company (LLC). Should is the epitome of a normative question and could quickly devolve into an ideological morass without hope of resolution. Fortuitously, the recent thirtieth anniversary of Richard Dawkins's The Selfish Gene (3) suggests an analytical perspective on the question that may offer observational insight beyond ideological argument.

The perspective suggested by Dawkins's landmark book is at two levels: (1) the entity level and (2) the law codification level. It is an evolutionary view that the LLC "seeks" success by the proliferation (reproduction and use) of the LLC form by individual firms--that is, from the perspective of the LLC as an artificial organism. This metaphoric perspective is certainly fanciful but is illuminating. First, the change in perspective is consistent with Dawkins's hope for The Selfish Gene. The preface to the book's second edition (of three) states:
   Rather than propose a new theory or unearth a new fact, often the
   most important contribution a scientist can make is to discover a
   new way of seeing old theories or facts.... [A] change of vision
   can, at its best, achieve something loftier than a theory. It can
   usher in a whole climate of thinking, in which many exciting and
   testable theories are born, and unimaginable facts laid bare. (4)

Second, metaphors are the language of "scientific" explanation because science (like law) "is an attempt to explain phenomena that cannot be experienced directly by human beings, by reference to forces and processes that we cannot perceive directly." (5)

In deference to Dawkins, this essay analyzes the question of whether there is and should be a single theory of the LLC through an evolutionary lens from the genetic perspective of individual statutory provisions that manifest as specific traits of a firm organized as an LLC. The essay provides necessary evolutionary and genetic background and context before tentatively matching concepts from biology to law. (6) The balance of the first part of the essay describes the idea of the selfish gene in order to use it as an analytical aid to determine if there is or should be a single theory of the LLC and, if so, identify that theory. Part II defends the choice of biological evolution as an analytical metaphor and provides an introduction to other fundamental concepts and ideas in biological evolution. Part III frames and focuses the metaphor to specific features of the limited liability company and its "genetic code," exploits selected metaphors from biological evolution as applied to LLC law, and mines the metaphor for suggestions and observations about alternative futures for the LLC. (7) Finally, but before concluding, Part IV posits there both is and should be a single theory of LLCs.

B. The "Selfish" Perspective

The heart of understanding the "selfish gene" is to recognize the difference between genes and individual organisms and the definition of success:
   If selection tried to choose DNA molecules directly it would hardly
   find any criterion by which to do so. All genes look alike, just as
   all recording tapes look alike. The important difference between
   genes emerges only in their effects. This usually means effects on
   the processes of embryonic development and hence on bodily form and
   behavior. Successful genes are genes that, in the environment
   influenced by all the other genes in a shared embryo, have
   beneficial effects on that embryo. Beneficial means that they make
   the embryo likely to develop into a successful adult, an adult
   likely to reproduce and pass those very same genes on to future
   generations. (8)

The technical term for the manifestation of the gene as a body is phenotype. (9) Thus, "the phenotypic effects of a gene are the tools by which [the gene] levers itself into the next generation." (10)

Whether a gene is "beneficial" is seen marginally at the level of the individual organism as an expression of its genotype (gene recipe).11 The whole body of the organism can be seen as a resultant manifestation of the sum of its gene expression, and generally what is good for the organism is good for the gene. (12) There are exceptions to the general rule. "[G]enes that beat the system" exist. (13) These genes exert an effect that is detrimental or neutral at the phenotypic level, but "good" for the replication of the gene itself. They "cheat" the "other genes with which they share the same body." (14) Their mutation, which results in their adaptation to the genetic environment in which they are embedded, is beneficial to the replication of the genes, but bad for the organism:
   Every time genes replicate within cells and cells divide within a
   multicellular organism, there is potential for some to gain at the
   expense of others and the welfare of the group as a whole. When
   this happens, the whole becomes less of an organism and more like a
   mere group. The subelements become less like organs and more like
   quarreling organisms with their own separate agendas. The harmony
   of an organism cannot be taken for granted. It requires the
   evolution of mechanisms that prevent subversion from within. (15)


A. Taxonomy: The Analytical Baseline

Taxonomy is the science of classification. (16) The late evolutionary biologist Stephen Jay Gould observed that it
   is often undervalued as a glorified form of filing--with each
   species in its folder, like a stamp in its prescribed place in an
   album; but taxonomy is a fundamental and dynamic science, dedicated
   to exploring the cause of relationships and similarities among
   organisms. Classifications are theories about the basis of natural
   order, not dull catalogues compiled only to avoid chaos. (17)

One feature of taxonomy for purposes of this essay is that it, in one sense, is a record of lineage. That is, the "pattern of descent with modification defines our family lineage." (18) Taxonomy, therefore, is a guide that "test[s] the accuracy of our hypothesized family tree." (19) In other words, "Knowing how descent with modification works is key to unlocking biological history, because descent with modification can leave a signature, which we can detect." (20) One non-gene based way to ascertain descent and lineage, and thereby inform taxonomy, is comparative anatomy. Comparative anatomy leaves signatures of origins and lineage. Illustratively,
   Our middle ear contains a record of two of the great
   transformations in the history of life. The origin of our stapes,
   and its transformation from a jaw support bone [to part of the
   inner ear], began when fish started to walk on land. The other big
   event took place during the origin of mammals, when bones at the
   back of a reptile jaw became our malleus and incus [other small
   bones in the middle ear]. (21)

Law also relies on taxonomy to classify cases and statutes based on selected features. The resulting structural pattern discloses the doctrinal relatedness and lineage of the law. A recent article suggested alternative taxonomic criteria and described legal taxonomies: "Lawyers inevitably classify cases according to specified factual attributes. Did someone make a promise? Did one person touch another person? Whether in Roman law, in the English common law, or in the modern American legal system, legal taxonomies are structured around the underlying factual attributes of transactions." (22)

The quoted article follows in the long tradition of questioning the salience of the selected characteristics used to create a legal taxonomy and the manner of classifying cases into underlying doctrine. Grant Gilmore, too, questioned contract taxonomy. For example in The Death of Contract:
   The first point to be made is that the general theory of contract
   was never as neat and tidy and all-of-a-piece in the real world as
   it was made to appear in casebook and treatise and Restatement....
   The apparent unity of doctrine was achieved through what might be
   called an extremely selective handling of the case material. (23)

Gilmore's observation echoes criticism of biological taxonomies based on species categories. Dawkins observed that species and speciation are definitional in biological taxonomy and account for the absence of some (but not all) missing link species. There is no room for ambiguity: "[Z]oologists always insist on classifying a specimen as in one species or another. If a specimen is intermediate in actual form (as many are) zoologists' legalistic conventions still force them to jump one way or the other when naming it." (24)

B. Selecting the Selector and the Composition of the "Stuff" Selected

Creating a legal taxonomy is a human endeavor based on judgment rather than natural selection by survival in the rough-and-tumble-world of biological evolution. Further, the currency in the trade of legal taxonomy is law, which itself can be characterized as a mere artifact of sentient life and, perhaps, as no more than a fleeting abstract idea devoid of the stuff on which evolution works. These distinctions between law and flesh seem lethal to the usefulness of biological evolution as a metaphor for law and fatal to the analytical perspective central to this essay. The distinctions are, however, neither lethal nor fatal. This subpart of the essay briefly discusses why the metaphor remains appropriate in the face of these distinctions.

The first distinction can be restated as one between natural selection by the physical environment and artificial selection by human judgment. As a starting point, the mechanism of selection does not undercut the doctrine of evolution because variation, replication (heredity), and variable "success" are present regardless of the mechanism that determines success or its basis of selection. (25) "The details [of "success"] depend upon our particular traits and the environments we inhabit." (26) Indeed, "the opening chapter of Origin of Species" (27) was artificial selection by breeders of fancy pigeons. The standards for traits used for the breeding of pigeon varieties might seem arbitrary and a matter of taste or whim. From a genes-eye perspective, however, it is a matter of replicative consequence. That is, if the pigeon that was "your" (the gene's) phenotypic expression (your vehicle) manifested the desired characteristic, "you" would enjoy greater replicative success than competing genes that manifest as other phenotypic traits. The selected pigeons could be said, "In evolutionary parlance ... [to] have increased their fitness and become well adapted" even if only to the whims of their breeders. (28)

Artificial selection does place a premium on the selector's choice of trait. Mistaken judgment about the desired trait may thwart the purpose for which selection is made. A real story recounted by David Sloan Wilson provides a striking example. (29) Bill Muir, a poultry scientist, sought to increase egg production in caged chickens through selected breeding (artificial selection). (30) He postulated two hypotheses and tested them. (31) The first test was to take the highest producing individuals from each cage and breed them. (32) The second test was to take the individuals from the highest producing cages (teams) and breed them. (33) He followed each experiment for six generations:
   [H]e showed a slide of hens selected by the first method.... The
   audience gasped. Inside the cage were only three hens, not nine,
   because the other six hens had been murdered. The three survivors
   had plucked each other during their incessant attacks and were now
   nearly featherless. Egg production plummeted.... What happened? The
   most productive individuals had achieved their success by
   suppressing the productivity of their cagemates. Bill had selected
   the meanest hens in each cage and after six generations had
   produced a nation of psychopaths. (34)

The slide shown of hens selected using the team (cage) production method, on the other hand, "contained all nine hens, plump and fully feathered.... Egg production had increased dramatically...." (35) This, rather obviously, illustrates the importance of matching the desired trait to the desired outcome. It also suggests that cooperation, as a trait, is desirable in some circumstances. (36)

The second possible foil to the evolutionary metaphor is the substance on which choice is made. (37) Biological evolution operates on the level of critters (phenotypes), which are but the biological manifestations of the expression of genes (aggregated as genotypes). (38) Law and organizations, conversely, are but abstract artifacts, though perhaps an extended phenotype, (39) of the selfish gene. Arguably, artifacts are simply too far removed from biological evolution for the metaphor to hold.

There exist two mitigating defenses to the suggestion that the distinction between flesh and artifact is fatal to the metaphor. One defense is that artifacts are proximate extensions of the phenotype and are, therefore, not so remote as they might first appear. Another defense is that from a different perspective artifacts may be an independent subject of evolution as a separate phenotype. In the latter defense, the organisms creating the artifacts would serve in a capacity similar to that of a genotype in biological evolution.

The first argument that biological evolution is an acceptable metaphor for "artifacts" is that artifacts are so associated with their maker as to be an extension of the flesh and blood. In the biological world some objects are so closely associated with an organism that they may be used for species identification and taxonomic-classification purposes. An example is the spider web. Different spider species make different web designs. Dawkins suggests a mudpot made by a wasp "gets its elegance and fitness ... from exactly the same process ... as gave elegance and fitness to the wasp's own body." (40) The distinction between flesh and blood and artifact, therefore, may not be as great a divide as it first appears.

Of course, wasps are not sentient and humans are. A wasp's mudpot or a spider's web, therefore, may still be "different." Certainly the manner of "decision making" between wasps, spiders, and humans is different in degree, if not kind. Nonetheless, Dawkins observes, "Engineers are often the people best qualified to analyse how animal and plant bodies work, because efficient mechanisms have to obey the same principles whether they are designed [selected] [by humans] or [by natural selection]." (41) In effect, both processes discover underlying principles independent of whether the maker is consciously aware of the discovery.

The second defense for using biological evolution as a metaphor for purposes of this essay follows logically from Dawkins's observation about the helpful role of engineers in understanding naturally evolved mechanisms. The defense is that artifacts (like LLCs and LLC laws) are themselves phenotypes (bodies) that evolve on their own terms in the context of a human environment.

Professor Henry Petroski, Professor of Engineering and History, uses clear evolutionary overtones in two of his books detailing the history of artifact design. (42) He suggests that understanding the design history "of silverware makes it easier to understand the diversity of everything from bottles, hammers, (43) and paper clips to bridges, automobiles, and nuclear-power plants." (44) Consider the number of tines on a fork as an illustrative microcosm of design history: "Putting aside acceptance and custom [fashion?], what makes the fork work, of course, are its tines. But how many tines make the best fork and why?" (45)

Petroski suggests, based on historical evidence, that the two-pronged carving fork keeps a roast from "rotating" and allows the fork to slide "in and out of the meat relatively easily"; thus, it "has remained essentially unchanged since antiquity." (46) The table fork, on the other hand, added a third tine. (47) The third tine holds "pierced" food more securely as it travels from table to teeth and also allows it to "function more efficiently as ... a scoop." (48) His historical abstract of the fork observes that five- and six-tined forks have been produced and used, "but four appears to be the optimum." (49) To me, at least, the design history of the fork appears similar in process to a computer-aided evolutionary trajectory of simulated spider webs developed by Dawkins to test his extended phenotype hypothesis in biological evolution. (50)

Still, forks, spider webs, and wasps' mudpots are tangible things as opposed to pure abstraction like either law or an operating LLC firm. For present purposes, it might be sufficient to observe simply that these tangible things are but physical manifestations of something controlling or guiding their production and "design." (51) Nevertheless, Petroski, for his part, sees no distinction between design of tangible and intangible things. Indeed, he devotes a chapter in one of his books to the design of intangible artifacts. (52) He specifically identifies things like national constitutions as matters of design where "failure to anticipate ... can be disastrous." (53) Moreover, he recognizes the coevolution of things and their human environment. Concerning silver tableware, he even observed an example of the regulatory role of government in limiting the proliferation of utensils:
   As late as 1926, some patterns were still being made with as many
   as 146 distinct kinds of utensils. To help simplify the situation
   for American industry, Herbert Hoover, then secretary of commerce,
   recommended--and members of the Sterling Silverware Manufacturers
   Association adopted--a list of fifty-five items as the greatest
   number of separate pieces that would be in any pattern thereafter
   introduced. (54)

Even things yet closer to pure ideas like lectures and books are designed, according to Petroski, and he further states that "[c]ritics are nothing if not failure analysts." (55) His thoughtful observations, while not authoritative, certainly give evidence that intangible artifacts are subject to design, and as such they evolve to the same extent that tangible artifacts may evolve.

Petroski stresses the importance of integrating the knowledge gained from the success and failure of previous design attempts in future iterations (generations). In biological evolutionary terms, recall, success is fitness for a specific environment that increases reproductive success rates. Petroski emphasizes the importance of heeding past failures this way:
   Success and failure in design are intertwined. Though a focus on
   failure can lead to success, too great a reliance on successful
   precedents can lead to failure. [I]t also masks potential modes of
   failure. Emulating success may be efficacious in the short term,
   but such behavior invariably and surprisingly leads to failure
   itself.... Past successes, no matter how numerous and universal,
   are no guarantee of future performance in a new context. (56)

His warning about the dangers of mimicking past success too aggressively echoes the iconic evolutionary narrative of the male peacock's tail in biology. The length of a male peacock's tail is a signal, a positive attribute, for sexual selection by the female. That is, female peacocks prefer to mate with males possessing long tails. Thus, the genes for males with long tails are more successful replicators than those of male peacocks without them (remember the phenotype is the vehicle of the genes).

The hypothetical reason for the female peacocks' preference (not conscious, so far as we know) is because only strong, healthy, non-parasitic males have long tails. This is, the narrative goes, simple natural selection. In fact, long tails make the male more vulnerable to predators because long tails impede efficient flight. The males with long tails, therefore, are healthy and strong, because the weak or sick long-tailed males get eaten, genes and all.

Law Professor William Rodgers discussed peacocks' tails and other evolutionary maladaptations to illustrate more general principles. (57) Rodgers suggests the peacock's tail, for example, illustrates the danger of the simultaneous pursuit of two things because divergent goals make it difficult to fully achieve either one. (58) Simply, the longer tail makes the design of phenotypic vehicle suboptimal but makes it more successful in mate selection by females. It also illustrates another evolutionary idea. Successful genetic traits can runaway because there is a positive genetic feedback loop. Petroski uses the designing of bridges for ever-increasing spans and the catastrophic failure of the Tacoma Narrows Bridge to make the same point about mimicking past design "success" in the world of artifacts:
   Conquering failure and overcoming limitations are what invention,
   engineering, and design are all about. Unfortunately, victory can
   be an intoxicant. Pride in the new successful thing typically turns
   in time to nonchalance, as the once-revolutionary thing becomes a
   common thing. Common things gradually become virtually invisible
   things, and the multiplication and extension of common things come
   to be done with little memory of the failures of which they were
   born. When failure is left behind, success leads with a confidence
   that the uncharted future does not warrant. In bridge building,
   following success means taking a path that demands that ever-longer
   spans be based on shorter versions. The path is fraught with danger
   and is epicyclic. In time, success encounters failure again, and
   the pattern repeats. (59)

So we have now come full circle in defending biological evolution as close enough to the design of artifacts to hold promise as an analytical tool for determining whether an LLC does, or should, have a single ideal theory. Along the way, we have established a baseline of evolutionary concepts and their operation. Some of these concepts are important for later analytical use.

The next part of the essay contains its core analysis. It will first metaphorically analyze the LLC as a biological phenotype (a vehicle for genes). It then turns to a deeper analysis of what might be called the LLC genotype where it will be necessary to add a bit more description of biological evolution. Finally, it speculates on possible futures for the LLC species.


A. The LLC Phenotype & Selection

This section applies evolutionary analysis and adopts the perspective of the firm organized as an LLC as phenotype (the vehicle for "legal" genes) for analytical purposes. It is the level of the phenotype that the individual "organism" interacts with its environment and is subjected to natural or artificial selection. (60) This is the level of expressed (manifested) traits and characteristics.

The environment in which the biological phenotype lives includes both the ecology of other plants and animals, and inorganic physical features like climate, chemistry, and geology. The ecology of plants and animals provides an evolutionary interdependent space:
   Species live in the niches afforded by other species. They always
   have and presumably always will. Once initial life arose and began
   to diversify, exchanging molecules that might poison or feed one
   another, organisms joined into a coevolutionary dance, jockeying
   for places next to one another as mutualists, competitors,
   predators and prey, or hosts and parasites. (61)

The physical environment, too, shapes the path of evolution. For example, dinosaurs likely became extinct as the result of a meteor strike, which radically changed the environment, and the demise of the dinosaurs gave rise to the proliferation of mammals. (62) For current purposes, I posit the LLC analogues of biological ecology are the other types of organizational entities and other business arrangements; for physical environment, things like business climate including taxation, other regulatory laws, and the economy. Extending the comparison between biological and LLC evolution by near syllogism therefore yields something like the following: The LLC "exploited" economic niches by "evolving" a unique combination of organizational characteristics that take advantage of the efficiency afforded by a single level of income tax.

The LLC first appeared in Wyoming in 1977 but did not gain widespread use until a change in its environment occurred, especially a change in the tax environment. (63) This evolution was recorded in real time as follows: (64)

Three years ago, The Business Lawyer published the first comprehensive survey of the law relating to limited liability companies (LLCs), The Limited Liability Company: A Study of the Emerging Entity. When that article was written, only eight states had passed LLC statutes. There was no settled model for the LLC, no settled tax treatment beyond the rudimentary partnership tax classification of some Wyoming LLCs, and no clear recognition of LLCs outside of their formation states. "Emerging" aptly described the LLC form.

As this Article was being written, all U.S. jurisdictions except Hawaii and Vermont had passed LLC statutes. There are Uniform and Prototype LLC laws, a comprehensive Internal Revenue Service (IRS) Revenue Procedure dealing with LLCs, and explicit statutory recognition of foreign LLCs in forty-eight (now fifty) states. Thousands of LLCs have been formed across the country, often at a greater rate than limited partnerships. The LLC has emerged. (65)

Another entity evolved to compete in the same or similar economic niches as the LLC. It was the limited liability partnership (LLP). An article entitled, Limited Liability Partnerships: The Next Step in the Evolution of Unincorporated Business Organizations, contemporaneously chronicled its emergence. (66) The emergence of LLPs is consistent with notions from biological evolution, because even a "super-hero" phenotype cannot continue domination with a static strategy. (67) That is, LLPs (as an organism, phenotype) "evolved" features similar to the LLC "in order to" exploit the same or similar economic niches in the ecosystem.

The evolution of the LLP illustrates another feature of biological evolution on the phenotypic level: path dependency. Simply, path dependency is both cause and result of accumulation changes over generations. While a genetic mutation that causes a change in the phenotype may be based on chance mutations, the process of evolution is not completely left to chance because Darwinian evolution builds step by step on an existing product. It solves the improbability of, for example, an eye springing fully formed in a single generation, by "breaking the improbability up into small, manageable parts." (68) Rather than leaping up the face of the mountain to complexity, evolution goes "round the back of Mount Improbable and crawl[s] up the gentle slopes, inch by ... inch." (69)

Another iconoclastic evolutionary narrative illustrates the idea of path dependency. It is the panda's thumb. The panda's thumb is used to strip leaves and shoots from bamboo. The thumb is remarkably efficient. Anatomically, however, the panda's "thumb" is not a thumb at all but the modification of a different structural component of the wrist. According to Stephen Jay Gould:
   An engineer's best solution is debarred by history. The panda's
   true thumb is committed to another role [as a running and clawing
   digit], too specialized for a different function to become an
   opposable, manipulating digit. So the panda must use parts on hand
   and settle for an enlarged wrist bone [, the radial sesamoid,] and
   a somewhat clumsy, but quite workable, solution. [This adaptation]
   wins no prize in an engineer's derby. It is, to use Michael
   Ghiselin's phrase, a contraption, not a lively contrivance. But it
   does its job and excites our imagination all the more because it
   builds on such improbable foundations. (70)

The "evolution" of the LLP from general partnership law is path dependant, like the panda's thumb, because it adds a feature to an existing body type (the general partnership). (71) The "new" idea may be revolutionary, but the basic structure of the phenotype remains the general partnership. The added feature is useful in certain economic ecosystem niches, in this case, in competition with the LLC. Stated another way, the evolution of limited liability within the general partnership phenotype increases the fitness of that phenotype for particular purposes.

The LLC, itself, has undergone phenotypic change through gradual adaptations, too. An illustration of such a change is the refinement of the charging order. For example, the Revised Uniform Limited Liability Company Act (RULLCA) charging order provision is clearer and less susceptible to misinterpretation than the charging order provision in the Uniform Limited Liability Company Act (ULLCA). (72) The charging order is also an example of the panda's thumb phenomena because it has been adapted for purposes for which it was not originally designed. The charging order is now sometimes used as an asset-protection tool for a member to protect her "personal" wealth as opposed to as a mechanism for protecting the entity and the other members from a member's personal creditor. (73)

Finally, the charging order represents accumulated adaptation that when combined with the adaptation of other features, increases the LLCs' fitness for the estate-planning niche. One of the other important features, in that regard, is the default rule that dissociation does not require a liquidating distribution to the dissociating member. (74) Under RULPA (1976/1985), for example, a limited partner in an at-will limited partnership could withdraw and receive payment for its interest within six months. (75)

The default rule of no statutory withdrawal right in RULLCA is important for estate-planning purposes (among other purposes) because under federal wealth transfer tax any variation from the state default rules is ignored for purposes of valuing an interest in a "family" LLC. (76) Other default features (or traits) that improve LLC fitness for the estate-planning niche include perpetuity of life, (77) the limited transferability of members' (78) interests coupled with the limited governance rights accorded a transferee, (79) and the broad LLC purpose which is not confined to "for profit" business. (80)

Of course, the LLC is used broadly across a number of industries and not just for estate-planning purposes. (81) The phenotype is itself flexible. Biological evolution suggests at least three possible sources for this flexibility. The first is that like omnivores, the LLC has "evolved" a generalist "strategy." There are costs associated with the generalist strategy. One cost is illustrated by the estate-planning and asset-protection features built into the genotype as default rules. As default rules, they will apply on a latent basis. It is as if immunity against a certain disease is built into the organism even though for some purposes that protection may be maladaptive. An example of this kind of genetic strategy from the biological human phenotype is sickle-cell anemia: "The sickle-cell mutation, which causes blood cells to collapse in the absence of oxygen, is frequently fatal to those with two copies of it [on the genetic level], but only mildly harmful to those with just one copy." (82)

Somewhat consistent with the peacock's tail, however, there is a benefit to those individuals who have the trait and survive:
   [T]hose with one copy are largely resistant to malaria. [T]he blood
   of Africans living in malarial areas [have been tested] and ...
   those with the mutation were far less likely to have the malaria
   parasite as well. The sickle-cell mutation is especially common in
   parts of west Africa where malaria has long been endemic, and is
   common also in African-Americans, some of whose ancestors came from
   west Africa in the slave ships. Sickle-cell disease is a high price
   paid today for malaria resistance in the past. (83)

Thus, the default rules of the LLC, given the disease of wealth transfer taxation and its devastating effect on the reproductive fitness of individual LLCs living in that particular niche, protect against that specific threat even though the trait may be maladaptive for phenotypes competing in other niches. In effect, the default rule extends the kinds of niches that the LLC inhabits, even though it may be maladaptive, however so slightly, for some individual LLCs in other selected niches. (84)

A second source of flexibility in the LLC phenotype might be designed polymorphism. Polymorphism exists when the same genes have the ability to express one or more phenotypes either sequentially (different phenotypic stages for the same individual, think tadpole) or alternatively (different adult phenotypes). Classic examples of this kind of phenotypic plasticity (85) are the social insects where two very different phenotypes--worker and queen--develop alternatively from the same type of egg. (86) The developmental trigger for worker or queen seems to be provided from outside the egg by the kind of food made available to the larva:
   It is during the larval period that the choice is made to develop
   to either the worker or the queen. Strong evidence exists that
   royal jelly and worker jelly differ in controlling the level of a
   hormone needed during the brief time of larval development to the
   queen. Royal jelly raises the level of juvenile hormone during this
   critical period; in fact, topical application of juvenile hormone
   can induce the formation of a queen. Research is just beginning on
   how the larva responds to the royal and worker jellies to generate
   the different morphs. It is known that several genes are
   differently expressed in the worker and the queen. Workers, though
   smaller, are in fact more complex in their anatomy and physiology
   than queens, which are basically egg-producing factories with many
   rudimentary body parts. (87)

On the phenotype level, polymorphism could "explain" the variety of LLC body types that inhabit very different economic ecosystems and different niches within the same ecosystem. That is, the way the genotype is expressed could depend on developmental factors triggered by the environment consistent with the need of the selfish gene to be replicated with the greatest frequency.

The third possible source of phenotypic LLC flexibility is that flexibility is an unintended feature associated with other selected traits. That is, flexibility could be the byproduct of the selected trait. An example of an unintended trait from the physical world is a spandrel:
   In a famous essay that criticized evolutionary biologists for
   relying too heavily on the concept of adaptation, Gould and
   Lewontin ... themselves eminent evolutionary biologists, said that
   many biological structures are like a spandrel, which is the area
   created by two adjoining arches. Arches are clearly functional in
   the design of a building but spandrels are merely the byproducts of
   arches. These spaces are sometimes used for artistic purposes, but
   their "function" is secondary at best. Similarly, noses hold up our
   glasses, but this "function" of noses is clearly secondary to
   breathing and smelling. (88)

This line of reasoning would imply that design flexibility in LLCs is a design constraint (or necessity) based on the fact of its other features. (89) Daniel Dennett makes a spirited argument against "unintended" features. He contrasts architectural necessity to adaptation by arguing smooth spandrels have been selected: "[T]here are in fact indefinitely many ways that those spaces could be filled with masonry, all of them about equal in structural soundness and ease of building." (90)

The divide between Gould, Lewontin, and Dennett can be narrowed by the evolutionary concept of preadaptation. (91) Preadaptation is based on path dependency. It identifies the evolution of existing structures into new unrelated structures. (92) It may be that a spandrel, loosely defined, is a necessary design constraint when using arches, but that once "made," further evolved into a selected feature. As Dennett suggests, "[Churches are] not granar[ies]" and the "primary function of ... domes and vaults was never to keep out the rain--there were less expensive ways of doing that." (93) He gives two reasons why spandrels might have been selected:
   First, it is ... close to the minimal surface area (and hence might
   well be viewed as the optimal solution if, say, the number of
   costly mosaic tiles was to be minimized!). Second, this smooth
   surface is ideal for the mounting of mosaic images.... [Spandrels]
   are adaptations, chosen from a set of equipossible alternatives for
   largely aesthetic reasons. (94)

Thus, if domes are the primary selection criteria, then spandrels are a design constraint (or problem). The design problem, in effect, was an opportunity (a preadaptation) for a mosaic solution to emerge. Conversely, if a space for mosaics was the primary selection criteria, then the architects had to use domes (the design constraint became using dome architecture). Either way, the dome and the spandrel are coupled features that evolved together. From this perspective, LLC flexibility may be a necessary byproduct of other LLC features; perhaps, for example, that some optional features are incompatible. (95) The main point is that it is possible that a given feature or trait has no function and that "[i]t exists because of hidden connections with other traits." (96)

Regardless of its source, the LLC's flexibility is now an important operational feature. It allows the LLC to express a variety of phenotypes, each with its own combination of features, each arguably tuned to a slightly different niche in the economic ecosystem. Phenotype plasticity, whether a selected trait or a design necessity, is conserved generation to generation only if it bestows advantages to the current phenotypes possessing the trait. The environment, after all, selects only those phenotypes fit for the "purpose" they are deployed. Otherwise, the individuals die young without reproducing.

Once an organism "tunes itself" to a particular niche, however, it may no longer be adaptively advantageous to conserve this flexibility. The very flexibility of the phenotype that allowed some individuals to exploit a niche may become disadvantageous from the genes' eye view. It becomes disadvantageous when the very flexibility that produces an advantageous trait causes some individuals in subsequent generations to lose the gains created by the flexibility. Conserving (hardwiring) the specific combination of traits is advantageous because all offspring will then possess those traits and be more successful in the specific niche and thus more successful in replicating their genes. (97) Over time this adaptation to a specific niche may result in different species; one species, perhaps tuned to a narrow specialty and another, perhaps, remaining a generalist species.

Another way different species emerge is known as geographical speciation. As explained by E. O. Wilson,
   A species multiplies into two or more daughter species when its
   populations are isolated from one another long enough by
   geographical barriers. In this example, based on a composite of
   real cases, the parental species is at first widely distributed
   across terrain composed mostly of grassland.... The local climate
   grows wetter, and a river splits the species in two, so that now
   one population lives in grassland and the other in woodland.... In
   time the two populations evolve apart, until they attain the level
   of new species.... When the river barrier disappears, the two forms
   are able to live together without interbreeding.... (98)

Speciation provides an interesting metaphor for LLCs because it suggests that (1) it is possible that LLCs could speciate based on industry, purpose, or function; and (2) it is possible that speciation will occur because laws developed in different states (geography). (99)

So far this essay has discussed vertical evolution; that is, evolution from a common ancestor. Common ancestry is not the only reason why different species exhibit similar features or traits. Similar traits can emerge independently in otherwise dissimilar species because the trait is useful. For example, limited liability seems ubiquitous across a wide variety of entity phenotypes such as corporations, LLCs, LLPs, and even unincorporated nonprofit associations. (100) Under this paradigm, similar features evolve because of common environmental pressures on different organisms. Evolutionary biologists call this convergence. Indeed, critters living in different places but under very similar environmental conditions may come to have many common features. For example, the "Tasmanian wolf of Australia, a marsupial, [and] the 'true' wolf of Eurasia and North America, a placenta mammal ... converged to occupy similar niches" on different continents. (101) As a result of performing the same function within the ecosystem, the two wolves outwardly resemble one another even though they have several distinct differences.

Marsupials are mammals, (102) but they differ from other mammals in significant ways. Marsupials have distinctive reproduction systems that include juveniles' premature birth followed by development in a pouch. They also have different pelvic structures than other mammals. (103) Finally, marsupials markedly differ from other mammals in brain structure, brain size, and skull size in relationship to brain size. As a result of the brain differences, "marsupials are notably less intelligent than placenta [other] mammals.... It is not surprising, therefore, to find a repertory of behavior that differs somewhat from that of the more advanced placentals." (104) As a result of the difference in intelligence, marsupials are far less vocal and there "seems to be little detectible social organization...." (105) In summary then, marsupials, including Tazmanian wolves, differ physiologically and behaviorally from placental wolves even though they have many common traits, their outward appearance is similar, and they fill the same niche in their respective ecosystems.

Some features seem to be common to a wide variety of dissimilar critters. These features are like really helpful ideas. So helpful, in fact, that evolution has found widely different mechanisms to perform roughly the same function in many different lineages. One such really helpful idea is the eye. According to Dawkins,
   It has been authoritatively estimated that eyes have evolved no
   fewer than forty times, and probably more than sixty times,
   independently in various parts of the animal kingdom. In some cases
   these eyes use radically different principles. Nine distinct
   principles have been recognized among the forty to sixty
   independently evolved eyes. (106)

On the margin, while high-resolution image forming eyes provide the best sight, they might not fit other phenotypic parameters or be optimal for the animal. For example, if a snail had eyes the quality of the human eye, the necessary size of the eye "would probably be too costly to make and too heavy and bulky [for the snail] to carry around." (107) The snail with such well developed eyes might have a very good view of its predator as it was being devoured! Conversely, even very small primitive eye spots that can do no more than sense bright light might be distinctively advantageous for survival and reproduction compared to "blind" individuals of the same species. (108)

Perhaps limited liability is like the eye: a very good idea that has independently evolved among different species of business organizations. There is, after all, value even in such primitive limited liability mechanisms as the use of independent contractors. Moreover, corporate-style limited liability uses a very different mechanism than, say, limited partnerships under RULPA 1976/1985. (109)

Convergence and really good ideas in evolutionary biology suggest that features shared by different types of phenotypes do not necessarily indicate a close lineal relationship between them. It is critical for a veterinarian or zookeeper, for example, to know whether a critter is a Tazmanian wolf or a real wolf. While they share common features and perform similar functions in an ecosystem, they are different animals. In terms of entity law, the evolutionary metaphor seems to support the following observation about the comparative traits of cooperatives and other organizations by Israel Packel:

Instead of a direct approach as to whether a particular rule, in the light of the reason for the rule, should be applied to cooperatives, courts in the past tended to create the preliminary hurdle of determining whether cooperatives are to be treated as corporations, partnerships, or other joint ventures.... The uselessness of such an analysis becomes even more apparent when it leads to a statement that cooperatives "are somewhat of a hybrid, partaking both of the nature of a corporation and of a partnership. [(citing Philadelphia School Dist. v. Frankford Grocery Co., 103 A.2d 738 (Penn. 1954)]." (110)

At best, therefore, general statements about phenotypic features may be helpful at only the grossest level of description; and as Packel implies, alone, they do not constitute the level of detail required for analytical purposes.

Additionally, the metaphors suggest that features that first appear to be equivalent might be designed and operate in very different ways. This, again, suggests that there is mischief in over-reliance on general labels like limited liability, (111) or perhaps even entity (112) or contract. (113)

B. Of Entities, Individuals, Groups, and Genes: "Groups All the Way Down" and Back Up Again (114)

The term entity is noteworthy in LLC law because it seems to correspond to the individual organisms (phenotypes, bodies) of a species. Recall selective pressures operate in biological evolution on individual organisms. But what is an individual organism or, for that matter, an entity? What is the relationship between and among pieces of a biological "individual" that make it at least seem bounded? Even from a biological perspective,
   Individuals appear much more real to us than groups. Individuals
   are physically discrete, whereas groups seem like fuzzy
   abstractions. We endow individuals with mental properties such as
   intentions and self-interest and regard groups as just a convenient
   word for what individuals do to each other in their pursuit of
   self-interest. (115)

Rather obviously, "Not every clump of cells can be awarded the honor of being called a body [an individual]." (116) For example, "[a] mat of bacteria or a group of skin cells is a very different thing from an array of cells that we would call an individual." (117) In a body, the single cells cooperate in order to perform functions that lead to more surviving offspring carrying the selfish genes that necessarily "made" the body. (118) Typically, this requires a division of labor through cell specialization resulting in, for example, organs. (119)

The importance of multicellular cooperation for purposes of biological evolution is difficult to overstate: "New creatures with whole new capabilities came about: they got big, they moved around, and they developed new organs that helped them sense, eat, and digest their world." (120) When the cooperation and balance between cells breaks down, bad things happen to the individual organism:
   A cancerous tumor, for example, is born when one batch of cells no
   longer cooperates with others. By dividing endlessly, or by failing
   to die properly, these cells can destroy the necessary balance that
   makes a living individual person. Cancers break the rules that
   allow cells to cooperate with one another. (121)

Careful readers will have noted the shift from a focus on individuals, easily perceived, to cells; that is, the necessity of cells to cooperate in order to develop new capabilities. Lynn Margulis, a cell biologist, takes this idea near its logical extreme: "[T]here is no such thing as individuals, only societies." (122) As a result, the previous block quote concerning cancers as noncooperating cells can be transformed into the more general statement by a different biologist:
   Every time genes replicate within cells and cells divide within a
   multicellular organism, there is potential for some to gain at the
   expense of others and the welfare of the group as a whole. When this
   happens the whole becomes less of an organism and more like a mere
   group. The subelements become less like organs and more like
   quarreling organisms with their own separate agendas. The harmony of
   an organism cannot be taken for granted. It requires the
   evolution of mechanisms that prevent subversion from within. (123)

In a wonderfully self-referential way (for purposes of this essay), real biologists use the metaphor of human society to describe how cells cooperate: "These facts about genetics and development are sometimes called laws because they are so widespread, but now they have acquired the other meaning of the word "law"--a social contract designed to promote the common good." (124)

It is the evolution of cooperation, perhaps better styled as control, that may very well have been one of the biggest very good ideas in biological evolution. Professor Margulis claims that it was evolution from groups to individuals, not individuals to groups, that drove this idea:

"Many symbiotic associations exist today, such as bacteria and algae that live within the tissues of protozoa. [Margulis] conjectured that when the members of a symbiotic association become sufficiently dependent upon each other, they make a transition from organisms to organs and the association becomes a new higher-level organism." (125)

I posit the point of transition caused by interdependence described by Margulis is the bifurcation point more generally between individual to entity. Thus, at least for sake of argument and metaphor, entities are not created--they emerge. (126)

Indeed, the notion that entities emerge is recognized by the federal income tax classification regulations. For an organization to choose between partnership and corporate (association) tax status requires the electing organization to be an entity. (127) One of the regulatory tests for determining entity status states that "[a] joint venture or other contractual arrangement may create a separate entity for federal tax purposes if the participants carry on a trade, business, financial operation, or venture and divide the profits therefrom." (128) Those entities, as members of a taxonomic classification that might be labeled unincorporated entities, are distinguished from entities that have deemed to have chosen entity status by organizing under state corporate laws. An entity's choice to form under state law corporate acts renders it ineligible to elect partnership income tax treatment. (129)

Similar classification questions have a long and storied history in state partnership law. They are frequently styled as a debate about whether a partnership is an aggregate or an entity; (130) here, there "is some question whether an LLC should be a corporate-type separate entity or merely an aggregate of individual members." (131) Whether an LLC is aggregate or entity is important for purposes of (1) defining the organization and (2) determining the relationship, covariant control, and relative rights between members (cells) and between the members and the organization.

According to one scientist cells needed to develop the following "tools" for bodies (entities), to emerge: (1) "They needed to be able to communicate with one another"; (2) "They needed to be able to stick together in new ways"; (3) "[T]hey needed to be able to make new things, such as the molecules that make our organs distinct." (132)

The demarcation between aggregate and entity is not a clean one. As previously posited, it is the difference between symbiosis and dependence. (133) A biological illustration of the line of demarcation may be slime mold. During the summer months, slime mold behaves as an aggregate: "[D]isguised as a trail of amoebae, shapeless, or at least continually mutable, growing and dividing as they absorb nutrients from the leafy detritus." (134) As the growing season ends, however, "a strange transformation happens." (135) The slime mold acts as an entity, it "hardens into a definite shape" (136) and "it ceases its animal like wandering to become something like a fungus" (137): "In some species there is a series of inflated balloons, in others a line of little 'spinning tops' borne on short stems, in others again there are delicate spindles supported by a tracery of rods." (138)

In effect, sometimes slime mold acts as an aggregate and sometimes as an entity. Its attributes are cyclical according to season, which is somewhat reminiscent of polymorphism. (139) What would it mean if unincorporated organizations are similar to slime mold?

A casebook on business associations suggests one answer. It observes that in partnership law some provisions of RUPA "are more consistent with the aggregate theory than the entity theory" even though RUPA contains an express provision stating that a partnership is "an entity distinct from its partners." (140) Conversely, the casebook correctly observes that "there are provisions in UPA that are more consistent with the entity theory than the aggregate theory," even though UPA does not contain the entity provision. (141) Finally, the casebook approvingly uses this quote: "Neither practitioners, arbitrators, or courts should place too much reliance on either the aggregate theory or the entity theory." (142)

The answer suggested by the casebook, therefore, is that aggregate and entity-based provisions exist side by side in unincorporated law, that each provision is discrete, and that as a practical matter, to find an answer one needs only to look to the specific provision at issue without the need for an overarching theory of organization. (143)

This may be a good answer for most, even nearly all, issues; but unless the organizational statute is comprehensive and complete in all respects, there will be open issues within a section or gaps between inconsistent provisions (one aggregate based, one entity based) that require interpolation. A good example of this kind of issue is whether a court should imply the existence of an equitable derivative action to LLCs (based on entity theory) or whether a legislature should adopt statutory derivative procedures. (144)

The one-on-one provision inquiry looks a lot like the premise upon which promises were made about the human genome project. That is, identify the gene, discover the trait that matches the gene, and then figure out how to fix the gene if it is the cause of a problem or a source of weakness. Such a process works well for some, but certainly not all, of the interesting human biological issues. The genome project has indeed identified an impressive number of disorder-gene associative pairs, but more recently a cataloguing and matching approach has been taken to try to identify networks of genes that may relate to widely different diseases. (145) The results of initial research have been in graphic form, and in one form, the graphic result looks like a map of the cosmos. As reported in the popular press, (146) "The research is already starting to change nosology, as the field of disease classification is known. Seemingly dissimilar diseases are being lumped together. What were thought to be single diseases are being split into separate ailments." (147)

Just because an "issue" can be traced to a given gene, therefore, does not mean that the gene is used only for that purpose or that other genes are irrelevant to the manifestation of the issue. In fact, separate genes are used in shifting combinations for different kinds of functions and traits. (148) This makes a short excursion into the biology of genomes and genetics necessary.

Genes (or metaphorically, discrete statutory sections) are simply pieces of information, "chunks of software that can run on any system," or paragraphs, words, and letters in a story. (149) The way that these pieces of information, "words," are selected and deployed actually and ultimately tell the story of the phenotype in which they are embedded. Intuitively, at least, this makes sense because humans have only "about one and a half times [the number of genes as] those of a fruit fly" (150) and mice "share at least 80% of their genes" with humans. (151) Most of the words in the mouse and human stories are the same. The trick to understanding how genes work to express such different phenotypes is to figure out how they interact and what controls and limitations are involved in the interaction. Perhaps a caricature of those genetic mechanisms will illuminate how specific sections in LLC statutes should (or at least could) interact and suggest a line of inquiry for such knotty problems, inter alia, as the aggregate-entity paradox.

Previously, I said that genes provided a recipe. (152) And there is a distinction between a recipe and a blueprint. According to Dawkins, genes, "in different aspects of their behaviour, are sometimes like blueprints and sometimes like recipes." (153) The process by which genes replicate themselves is like following a blueprint. There is a "one-to-one mapping between bits of gene and bits of protein...." (154) A blueprint is reversible: "Give an engineer a car and he can reconstruct its blueprint." (155) The next developmental step, however, is more like a recipe. That is, "There is seldom a simple one-to-one mapping between particular genes and 'bits' of body." (156) Instead, "there is a mapping between genes and rates at which processes happen during embryonic development." (157) Dawkins describes the relationship by stating,
   There is no ... one-to-one mapping in the case of a recipe. You
   can't isolate a particular blob of souffle and seek one word of the
   recipe that 'determines' that blob. All the words of the recipe,
   taken together with all the ingredients, combine to form the whole
   souffle. (158)

The genetic perspective emphasizes networks and begs the question of network regulation. The recipe metaphor used by Dawkins introduces sequencing through time as a component of any regulation concerning development of the individual phenotype (body). (159) It is the idea of regulation of development that explains how the mouse and the human can be so radically different (relatively speaking) but still share such a large percentage of genes in their respective gene catalogues. (160) In effect these regulatory genes, which account for less than 10 percent of all genes, (161) act as switches in the network playing an important role in determining the pattern of the network at any given time. (162)

In biology, there is a short DNA sequence called homeobox that appears in eight different genes and the "eight genes that contain homeobox are called Hox genes." (163) All Hox "genes are genes for switching other genes on or off" within the nucleus of every cell. (164) The Hox genes' regulation performance is cued to its immediate environment. (165) In some ways then, the individual cells comprising the biological body are like the members of the LLC, which are its physical component. That is, each member (cell) carries the LLC genome packet (the law and the operating agreement) for reference. (166)

LLC statutes have interpretive provisions that perform a function analogous to that performed by Hox genes. In RULLCA (2006), for example, section 110 is captioned "Operating Agreement; Scope, Function and Limitations." (167) Its baseline feature is that it provides that the operating agreement governs what might be termed the internal affairs of the LLC. (168) Section 110 then establishes the default nature of the Act's provisions followed by a list of specific statutory provisions where modification by the operating agreement is limited. (169) It also contains subsections in a series that provide express authority for the operating agreement's ability to govern specified topics. (170) The last subsection in the list probably best illustrates the regulatory nature of the section as it provides the manner that a court is to interpret (and make manifest) the phrase "manifestly unreasonable" as that phrase is used in a prior subsection. (171)

While section 110 may be a central regulatory gene, it is not the only regulatory gene in the LLC code. Other regulatory genes (sections or provisions) include section 111 (captioned, "Operating Agreement; Effect on Limited Liability Company and Persons Becoming Members' Preformation Agreement") (172) and section 112 (captioned, "Operating Agreement; Effect on Third Parties and Relationship to Records Effective on Behalf of Limited Liability Company"). (173) Of course, the purpose of the LLC (174) and its "powers" section (175) are also regulatory and, together with the operating agreement and the other regulatory provisions, work together to manifest very different LLC phenotypes exhibiting distinct behavioral traits under different "environmental" conditions.

Illustratively, under the default, the phenotype's immune behavior will be very different if a member acts in a disloyal way in a manager-managed LLC than in a member-managed LLC. (176) Even so, immune behavior by the member-managed and manager-managed LLC would be very similar under similar circumstances if the operating agreement expressly adopted a higher duty of loyalty for members in the manager-managed LLC. (177)

Although the embryonic ontology (development) of an LLC has statutorily defined stages, (178) once organized, the LLC may continue developing through the operating agreement. Indeed the plasticity afforded the operating agreement, at least absent self-limitation, is quite remarkable because it has few formal requirements. Under RULLCA:

"Operating agreement" means the agreement, whether or not referred to as an operating agreement and whether oral, in a record, implied, or in any combination thereof, of all the members of a limited liability company, including a sole member.... The term includes the agreement as amended or restated. (179)

Over time, therefore, the LLC could change its shape by changing its genetic code or by modifying how its regulatory genes operate. It has the capacity to be sequentially polymorphic. (180)

The LLC has the further genetic capacity to possess internal symbiots that are not part of its "body." (181) Such symbiots, under RULLCA, might include a person that is not otherwise a party to the operating agreement who has the power to approve (or disapprove) an amendment to the operating agreement. (182) The Delaware Limited Liability Company Act extends its symbiotic reach even further by providing that the limited liability company agreement (operating agreement), "may provide rights to any person, including a person who is not a party to the limited liability company agreement, to the extent set forth therein." (183) Non-manager employees seem like internal symbiots, while creditors and supply contractors rather seem to be outside the body (external symbiots). (184)

Obviously, any change (mutation) in regulatory genes can have a remarkable effect on the phenotype without necessarily changing much else in the genotype as suggested by the similarity of the human and mouse genotypes. Dawkins illustrates the possible effect of merely changing regulation of existing genes in the context of biological evolution as follows:
   The giraffe's neck has the same complicated arrangement of parts as
   the okapi (and presumably as the giraffe's own short-necked
   ancestor). There is the same sequence of seven vertebrae, each with
   its associated blood vessels, nerves, ligaments and blocks of
   muscle. The difference is that each vertebra is a lot longer, and
   all its associated parts are stretched or spaced out in proportion.

   The point is that you may only have to change one thing in the
   developing embryo in order to quadruple the length of the neck. Say
   you just have to change the rate at which the vertebral primordial
   grow, and everything else follows. (185)

This helps visually illustrate how the LLC genotype can exhibit very different LLC phenotypes.

There is one last topic to revisit at the genotype level, and it brings us back full circle to the selfish gene: Cheater genes at a different level. (186) Matt Ridley observes, "The genome is littered, one might almost say clogged, with the equivalent of computer viruses, selfish, parasitic stretches of letters which exist for the pure and simple reason that they are good at getting themselves duplicated." (187)

These parasitic genes have at least two deleterious effects. First, they are somewhat like digital chain letters clogging the mail. (188) At the very least, these parasites make gene replication inefficient. According to Ridley, "Approximately thirty-five percent of human DNA consists of various forms of selfish DNA, which means that replicating our genes takes thirty-five percent more energy than it [would] need [without the cheaters]." (189) Second, they can have a phenotypic effect: "Like more conventional parasites, genetic parasites can harm their host. As they insert themselves at random places in the genome, they can cause diseases." (190) The defense against these parasites are well-organized arrays of genes that "worked together well and could shut out cheating genes," in part, because they can "faithfully replicate themselves." (191)

The existence of genetic parasites is not surprising given Dawkins's notion of genes as selfish replicators and bodies as their vehicles. (192) These genes have simply found for themselves an efficient form of replication without having to build their own bodies: "Nor should it be a surprise to find that genomes, like bodies, are habitats replete with their own version of ecological competition and co-operation." (193)

Extending the idea of parasitic genes to the LLC "code" suggests that the analogue of a parasitic gene would be a rogue provision (statutory section) that is added not for purposes of increasing the fitness of the LLC phenotype but simply for the sake of its own replication. Such provisions catch a ride, so to speak, on the LLC vehicle because it is cheaper than building a new vehicle. Unfortunately, it may be difficult to distinguish standard evolution by mutation from a genetic parasite. Conceivably, almost any novel provision added to the LLC "code" is a candidate for pejorative classification as a parasite (cheater).

At some point, LLC cheater genes could cause phenotypic effects that are maladaptive and that begin genetic feedback loops similar to the peacock's tail in biological evolution. (194) Some mutations of cheater genes could be immediately lethal.

One relatively recent novel statutory addition to the LLC law of a handful of states is the series concept. (195) Another is modification of the charging-order provisions to prohibit foreclosure on transferable interests. (196) Both of these changes, at least in the short term, may improve the replication of the entire LLC genotype in which they are embedded. A given jurisdiction, for example, could well "believe" that its LLC genome will be copied (replicated) in more LLC phenotypes with those provisions then without them; that is, more LLCs will organize and domicile in that jurisdiction. (197) It remains to be seen, however, whether these genes correlate to phenotypic success for individual LLCs. That is, for example, whether these provisions are similar to the genes manifesting sickle cell anemia, which is "good" for the survival of the gene, but which exacts a high cost on a significant number of individuals possessing it. (198)

Given the network nature of how genotypes "work," adding new genes, whether termed beneficial or maladaptive, complicates the design problem and adds complexity to the tasks necessarily performed by the regulatory genes. A gene adding a new trait option increases the number of available genotypic network patterns geometrically, not arithmetically. Assuming these genes have phenotypic effect means they create multiple new ways to form suboptimal phenotypes.

Research considering contractual complexity uses the term cognitive load (199) to express a design problem similar to the one of increasing the number of "genetic choices" in the LLC genotype. Cognitive load "refers to the extent to which parties ... are able to understand [the] contract." (200) The import of the term is that
   in the context of the bounded rationality that contract parties
   face and given the cognitive load of contracts and its implications
   for the information processing ability of contract parties, there
   may very well be an upper limit to the actual level of complexity
   ... that contract parties are able to absorb. (201)

Cumulatively, new social-science research is generally consistent with cognitive-load research in contract; that is, sometimes less choice is more:
   [S]ocial science researchers are discovering that "the fact that
   some choice is good doesn't necessarily mean that more is better."
   Such findings are antithetical to classic economic theory because
   this theory does not admit to limitations in human cognition....
   Behavioral economics and decisionmaking psychology, meanwhile, draw
   attention to precisely these tradeoffs. (202)

The danger of cognitive load to the regulatory genes seems particularly acute when some genes must be default rules in order to express a trait fit for a narrow niche even though those traits might be suboptimal for other ecosystem niches. (203) By way of further explanation, for a phenotype to be optimally fit in niches where the default rule is suboptimal requires the evolution of even more sophisticated regulatory genes to "opt-out" of the default rule (dominant gene in Mendellian genetics). Nonetheless, from the selfish genotype perspective additional alternatives may increase the number of its replications in the short term even though suboptimal for many individual phenotypic manifestations. At the very least, more genes also would imply the necessity of the evolution of better regulatory gene arrays to help coordinate the gene arrays that may be simultaneously expressed at any given time.

Similar concerns based on a limited empirical sampling of LLCs formed in one state has led one commenter to publicly suggest rewriting his state's LLC Act to tune its genotype to "primarily ... provide an 'off-the-shelf' statutory LLC agreement for unrepresented members." (204) If the revision were made, it might begin a process of geographical speciation of LLCs. (205)

Instead of geographical speciation, the cost in efficiency caused by cognitive load could also lead to environmental pressure for vertical speciation. Under vertical speciation, a single LLC genotype would branch into several separate specialized species of LLCs, each branch more efficiently tuned to a narrower range of uses (ecosystem niches). (206)

Perhaps the first step toward LLC speciation has been accomplished through the generation of practice forms for specific LLC phenotypes. Eventually, it is conceivable that those "forms" could be recognized statutorily and imbued by the legislative process with special features adopted to that use for a conserved pattern of default traits. Speciation could also occur through mimicry of other organizations that for other legal purposes or policy reasons, might require the genetic engineering (or, less intrusively, artificial selection) of a specific LLC default pattern. An example of the latter might be the newest uniform "unincorporated act": The Uniform Limited Cooperative Association Act. (207)

Projected speciation of the LLC is, of course, wildly speculative and any projection presents only one of many possible futures for the LLC. The take-home lesson is that biological evolution suggests that LLC evolution cannot extend forever by the simple addition of more and more genetic choices because (1) the possibility of the emergence of maladaptive or lethal cheater genes and (2) because the resultant cognitive load will swamp the current regulatory genes and lead to material inefficiencies for the LLC entity. (208)

Speculation about speciation accomplishes another salutary thing for this essay, and that is to extend the metaphor of biological evolution to a logical end. The essay started with taxonomy and the evolution of phenotypes. It extended phenotypic analysis to artifacts designed by phenotypes in defense of the use of the evolutionary metaphor and presented a brief overview of biological evolution. It then compared an organism's selfish genotype to statutory LLC law therein emphasizing the role of homeotic (regulatory) genes. Finally, it projected one of many possible futures for the further evolution of the limited liability company. We can now use the observations of the LLC generated by the use of biological evolution as a metaphor in an effort to identify a single theory of the LLC.


This essay has used biological evolution as a metaphor to help understand the LLC and has now introduced enough background to extend the metaphor in an attempt to identify the "single" theory of the LLC. Translated into evolutionary terms the task can be restated as identifying the LLC's evolutionary strategy.

A central principle of biological evolution is that evolution takes place because of selection advantage at the level of the individual phenotype. It is the fitness of the individual phenotype in its ecosystem that determines both its success and, ultimately, the success of the species.

Surveying the LLC as a species requires a rough awareness of the ecosystems that the LLC phenotype inhabits and the role it plays within those ecosystems. A comparison of phenotypes across ecosystems is necessary, and might be sufficient, to tease out the evolutionary strategy of LLCs.

LLCs inhabit a breathtaking spectrum of ecosystems. Even the most passing awareness of how LLCs are used identifies the following overlapping ecosystems: investment funds, real estate development, "family" business planning, low profit social organizations, (209) not-for-profit ventures, asset protection, estate and wealth transfer planning, operating businesses across a variety of sizes measured by number of members or amount of investment, professional service firms, multiple entity management structures, research and intellectual property joint ventures, and natural resource ventures, among others.

LLC phenotypes compete in these niches with business corporations, limited partnerships, business trusts, trusts, cooperatives, general partnerships, limited liability partnerships, nonprofit corporations, and unincorporated nonprofit associations, among others. Moreover, the sophistication of the members range from unsophisticated to highly sophisticated. (210)

The variety of ecosystems inhabited by the LLC and the range of its role within those ecosystems indicate that flexibility is a hallmark phenotypic trait of the LLC. The previous discussion of the LLC genotype explains that this flexibility is achieved at the genetic level through flexible "optional" provisions coupled with a suite of regulatory genes (Hox). (211) It is this array of regulatory genes that control if and when the other statutory provisions (the nonregulatory genes) will be expressed. (212)

The regulatory genes guard against maladaptations caused by cheater genes and coordinate the activity of the cells into a group (an aggregate), which may emerge at a higher level as an organism, an entity. (213) Slime mold is an illustration of an organization of cells from the biological world that sometimes behaves as an aggregate and sometimes as an entity. (214) In addition, there are examples of biological phenotypes that exhibit plasticity similar to the flexibility of the LLC phenotype. This plasticity expressed itself either as serial or alternative polymorphism. (215)

Biological evolution informs this analysis that any single theory of the polymorphic LLC must focus on the genetic level and center on the suite of regulatory genes. Thus, it suggests the single theory of LLCs must involve interpretive protocol; it must include the way in which the regulatory genes deploy the rest of the genotypic catalogue to manifest a phenotype fit for its ecosystem. Any theory of the LLC must account for how the environment interacts with the LLC phenotype as it develops and matures because the environment heavily influences the expression of genes through the regulatory suite. Nonetheless, there are limits to flexibility in biology and, ultimately, the phenotype. In biology, lethal mutations cause abortion or stillbirth without reproductive capacity.

The basic genotype of any LLC is the operating agreement as constrained by the particular LLC statute under which it is organized. (216) Of course, much genotypic variation occurs from the portion of the LLC genome supplied by the operating agreement. The statute under which the LLC is organized also supplies a great deal of variety. For example, some statutes specifically state that "maximum effect [be given] to the principle of freedom of contract" (217) and, further, fiduciary duties vary. (218) Additionally, some state statutes underscore that the operating agreement has statutory authority to provide for certain features like series and the governance of specified nonmembers. (219) As previously suggested, while not necessarily determinative of the particular phenotype, the existence of several genetypic features and the tension created by their interrelationship provide clues about the phenotype and the range of its expected behavior. (220)

The regulatory protocol for the interpretation that the metaphor of biological evolution suggests is consistent with part of an interpretive protocol outlined in an article about fiduciary duties in unincorporated limited liability entities. In it, Chief Justice Steele of the Delaware Supreme Court stated,
   The court's approach should be, first, to examine the agreement to
   determine if the act complained of is legally authorized by statute
   or by the terms of the agreement itself. If so, a court should then
   proceed to inquire whether the implementation of the lawful act
   requires equity [fiduciary duties are almost exclusively matters of
   equity in Delaware; in other states this would require recourse to
   the fiduciary duties contemplated by the statute] to intervene and
   craft a remedy? At this point, the court should look to the
   agreement to determine the extent to which it establishes the
   duties and liabilities of the parties, i.e., their bargained for,
   negotiated, contractual relationship. Is the agreement silent about
   traditional fiduciary duties, but creates a fiduciary relationship
   consistent with those duties thus allowing the court to imply them
   by default?.... Finally without regard to traditional overlays of
   scrutiny under the ... law of corporate governance, has a party
   breached its implied covenant of good faith and fair dealing? (221)

Variance in the underlying law of the jurisdiction of LLC organization, of course, will vary the substance of the inquiry suggested by Chief Justice Steele. The protocol, however, will be similar in kind but dependent in degree, on the particular state statute's emphasis of the contractual underpinnings of the LLC. There are two reasons why reliance on contract principles does not end the inquiry even in states that have expressly emphasized the contractual nature of the LLC. First, contract has a rich doctrinal texture of its own. (222) Second, states have adopted quite different approaches to contract interpretation. (223) Both reasons are embedded in Chief Justice Steele's conclusion concerning the contractually based Delaware law and fiduciary duties:
   I conclude that parties to contractual entities such as ... limited
   liability companies should be free--given a full, clear disclosure
   paradigm--to adopt or reject any fiduciary duty obligation by
   contract. Courts should recognize the parties' freedom of choice
   ... and should not superimpose ... judicial scrutiny associated
   with [fiduciary duties], where the parties have not contracted for
   those governance mechanisms in the documents forming their business
   entity. (224)

The quote seems to leave interpretive room, for example, for an analysis of the sophistication of the parties and the respective bargaining power of each. (225)

Relatedly, the open definition of the operating agreement suggests that determining the actual behavior or the behavior expected under the operating agreement, and as modified thereafter, is relevant to phenotype identification. (226) It is possible that, like the slime mold, any particular LLC can be designed to act as an aggregate under certain conditions and times and for specified purposes, and like an entity under other conditions and times for other purposes. (227)

It is possible, of course, that the operation of the regulatory genes in a given genotype will manifest a phenotype near a polar end of a composite continuum running between aggregate and entity. Illustratively, an LLC may be crafted to "look" just like a corporation and consistently adopt an entity theory for that individual LLC phenotype. A lesson from biological evolution, however, is applicable here. An LLC is not a corporation even though an individual phenotype is designed to "look" just like a corporation. Simply, a Tazmanian wolf is not a real wolf even though they share common features and fill the same niche in their respective ecosystems. (228) The zookeeper and veterinarian need to know the distinction between the two "wolves" in order to provide appropriate care. Moreover, just because a snail and an eagle both have eyes and can "see" does not mean that their eyes are physiologically similar. (229)

Conversely, the phenotype will affect (but not necessarily control) the way the individual genes are deployed and manifested including the genes supplied by the LLC statute. The mouse and human, after all, share 80 percent of their genome. (230) This does not mean that analogies between the mouse and human genomes should not be used. Rather, such analogies must be used appropriately. (231) A Wisconsin Supreme Court opinion concerning LLC member inspection rights, for example, follows the general regulatory gene protocol suggested by biological evolution and is consistent with Chief Justice Steele's observations. The case clearly and carefully distinguishes the inspection rights in the LLC statute from those in Wisconsin's corporation law, on one hand, and from its limited partnership law on the other. (232)

In short, a number of metrics exist concerning phenotype identification under LLC law, and like the recipe function performed by genotypes in biological evolution, recourse to both the ingredients and process are necessary in order to understand the phenotypic souffle. (233) The cost of phenotype plasticity, of flexibility, is a high cognitive load that requires a rather sophisticated and developed array of regulatory genes for phenotypic success.


This essay has identified selected points of comparison between biological evolution and LLC law for purposes of informing the question of the theory of the LLC. One broader inference from these comparisons is that designing law is not so different than the natural design process of biological evolution and that law, like the spider's web, can be seen as just another artifact that is an extension of the human phenotype.

The focus of this essay has been on the law of LLCs. The law of LLCs, while an evolved artifact, acts as the genotype for real companies formed by and for the benefit of their members. From this perspective, members of an LLC are like individual cells, each carrying a copy of the law governing the LLC to which they refer as they interact with other cells within the LLC organism and with the external economic environment.

The evolutionary analysis suggests that the single theory of the LLC relates to its inherent plasticity and fundamentally is a theory of how its genetic code's regulatory (Hox) genes operate. The single theory of the LLC looks to its variable recipe and the unique souffle that is prepared each time the recipe is used rather than to the list of its ingredients exclusively.

This single theory suggests that LLCs carry a high level of complexity (cognitive load) that geometrically increases as existing provisions mutate or new provisions are added. Moreover, the evolutionary metaphor cautions the existence and possible introduction of genetic parasites (cheater genes) into the LLC for purposes other than the success of the LLC as an operating phenotype.

Finally, evolutionary biology suggests that at some point in time accumulated complexity may become maladaptively inefficient for some uses for which the LLC is now used. In turn, it suggests these inefficiencies may create pressure for speciation (for example, bifurcation into different statutory types of LLCs) or, perhaps, will create room for competition from unrelated species for selected niches in the ecosystem where LLCs now dominate.

Using the metaphor of evolution is but one analytical tool to help gain an understanding of the theory of the LLC. Standing alone, the metaphor to biological evolution means nothing, but it may help explain quite a lot. (234)

Thomas Earl Geu (1)

(1.) Professor at the University of South Dakota School of Law. For other articles the author has written related to evolution or science and law see, e.g., John H. Davidson & Thomas Earl Geu, The Missouri River and Adaptive Management: Protecting Ecological Function and Legal Process, 80 NEB. L. REV. 816 (2001); Thomas Earl Geu, Policy and Science: A Review Essay of Wilson's Consilience: The Unity of Knowledge, 44 S.D. L. REV. 612 (1999); Thomas Earl Geu, Chaos, Complexity, and Coevolution: The Web of Law, Management Theory, and Law Related Services at the Millennium, 65 TENN. L. REV. 925 (1998).

The outline of this paper was presented at Limited Liability Companies at 20: Cutting Edge Issues, a Symposium held June 13, 2008, at Suffolk University Law School. I am grateful to Carter G. Bishop, Robert R. Keatinge, and Thomas E. Rutledge (Symposium Co-chairs) for inclusion in the Symposium and the Suffolk University Law Review for its editorial help and courtesies on this essay. Any errors, of course, are mine alone.


(3.) RICHARD DAWKINS, THE SELFISH GENE (3d ed. 2006) (previous editions published 1976, 1989). The submission of this essay also roughly corresponds with the market release of the much ballyhooed computer game "Spore." According to one review,
   Spore is an enjoyable game that pulls off an interesting balancing
   act. On one hand, it lets you create a creature and guide its
   maturation from a single cell to a galactic civilization through an
   unusual process of evolutionary development. Because the tools used
   to create and revise this creature are so robust and amusing, and
   each creation's charms are so irresistible, it's hard not to get
   attached to your digital alter ego. On the other hand, this
   intimacy is abandoned in the long, later portions of the game, when
   you lead your full-grown civilization in its quest for universal

Kevin VanOrd, Gamespot Editors' Review, Sept. 4, 2008, 31484467.html (last visited Apr. 20, 2009); see also Seth Schiesel, Playing God, the Home Game, N.Y. TIMES, Sept. 5, 2008, at E1, available at (last visited Apr. 20, 2009).

(4.) DAWKINS, supra note 3, at xvi. Dawkins explains further:
   [I]t is for this kind of reason that I prefer not to make a clear
   separation between science and its 'popularization.' Expounding
   ideas that have hitherto appeared only in the technical literature
   is a difficult art. It requires insightful new twists of language
   and revealing metaphors. If you push novelty of language and
   metaphor far enough, you can end up with a new way of seeing. And a
   new way of seeing, as I have just argued, can in its own right make
   an original contribution to science.


For an example of another use of evolution in legal analysis see Susan Haack, The Pluralistic Universe of Law: Toward a Neo-Classical Legal Pragmatism (Univ. of Miami School of Law Research Paper, 2008), available at (last visited Jan. 24, 2009). Professor Ribstein has written that statutory variations of LLCs by state "create statutory mutations." Larry E. Ribstein, Possible Futures for Unincorporated Firms, 64 U. CIN. L. REV. 319, 365 (1996).

(5.) RICHARD LEWONTIN, THE TRIPLE HELIX: GENE, ORGANISM, AND ENVIRONMENT 3 (2000). The larger context of the quote is
   It is not possible to do the work of science without using a
   language that is filled with metaphors. Virtually the entire body
   of modern science is an attempt to explain phenomena that cannot be
   experienced directly by human beings, by reference to forces and
   processes that we cannot perceive directly because they are too
   small ... or too vast ... or the result of forces that our senses
   cannot detect ... or the outcome of extremely complex


(6.) See infra notes 59-207 and accompanying text.

(7.) See infra notes 16-59 and accompanying text.

(8.) DAWKINS, supra note 3, at 235. This chapter first appeared in the second edition in 1985. The selfish-gene perspective is then scaled upward. The individual organism that contains the successful gene will propagate better than its competitors. In turn, a species with more successful individuals will, itself, be more successful: "Success in biology is an evolutionary idea. It is best defined as longevity of a species with all its descendants." WILSON, supra note 2, at 129. Those species that can "diversify" have probably "better balanced their investments and will probably persist longer into the future." Id. at 129-30.

(9.) See DAWKINS, supra note 3, at 235.

(10.) Id. at 238.


(12.) See DAWKINS, supra note 3, at 235.

(13.) Id. at 236 (attributing quoted phrase to James Crow).

(14.) Id.; see also infra notes 186-199 and accompanying text.



(17.) Id.


(19.) Id.

(20.) Id.

(21.) SHUBIN, supra note 18, at 164.

(22.) Darian M. Ibrahim & D. Gordon Smith, Entrepreneurs on Horseback: Reflections on the Organization of Law, 50 ARIZ. L. REV. 71, 74-75 (2008).


(24.) RICHARD DAWKINS, CLIMBING MOUNT IMPROBABLE 106 (1996) (emphasis added).

(25.) Evolutionist David Sloan Wilson identifies the necessary components of biological evolution as variations, consequences, and heredity. "Consequences" is the component that includes success (or lack thereof). In his words:
   Then we add consequences. The differences between you and me
   [variations] sometimes make a difference in our ability to survive
   and reproduce. Perhaps your superior size enables you to take my
   stuff or even kill me directly. Perhaps my inferior size enables me
   to survive the winter on less food.

WILSON, supra note 15, at 17.

(26.) Id.

(27.) EDWARD J. LARSON, EVOLUTION 84 (2004).

(28.) WILSON, supra note 15, at 18.

(29.) See id. at 33-34.

(30.) See id. at 34.

(31.) See id.

(32.) See WILSON, supra note 15, at 34.

(33.) See id.

(34.) Id. The last sentence calls into issue some great debates within biology about group selection.

(35.) Id.

(36.) Dawkins underscores the nonexclusive nature of "selfish" in the Introduction to the thirtieth anniversary edition of The Selfish Gene:
   Given the dangers of that style of error, I can readily see how the
   title could be misunderstood, and this is one reason why I should
   perhaps have gone for The Immortal Gene. The Altruistic Vehicle
   would have been another possibility.

   Another good alternative to The Selfish Gene would have been The
   Cooperative Gene. It sounds paradoxically opposite, but a central
   part of the book argues for a form of cooperation among
   self interested genes.

DAWKINS, supra note 3, at ix.

(37.) See supra note 25 and accompanying text.

(38.) See DAWKINS, supra note 3, at 238.

(39.) See id.

(40.) DAWKINS, supra note 24, at 19.

(41.) Id. Dawkins designed a program to evolve spider webs by simulating genes, gene mutation, and the behavior of spiders spinning webs. The fitness of the webs was judged based on randomly generating fly flight patterns. The virtual spiders generating the webs lived, died, and reproduced based on how well "their" webs faired in an energy cost-benefit analysis on the web.

The result, he reports, is that "something like natural selection can work in a computer to produce artificial webs that are more efficient in catching flies than the original webs." Id. at 64. The graphic webs generating the webs over generations look strikingly similar to "real webs." See, e.g., id. at 63.

The computer algorithms are a form of artificial selection. For example, one of the many artificial decision algorithms designed by the human programmer is "how costly a given length of 'silk' is, in the same currency as the value of a 'fly.'" Id. at 64, 66-67. Moreover, the "rate at which fly 'flesh' is converted into baby spiders is also decided by the programmer." Id. at 65. These decisions are somewhat arbitrary though thoughtful. Dawkins recognizes the distinction in the different manner of decision making by the spider in nature and the programmer. See id.
   In real life, none of these decisions is arbitrary. None of them is
   really a decision at all, and no computational machinery is used to
   make them. They just happen, naturally and without fuss. Fly flesh
   just is converted to spider offspring flesh, and the currency
   conversion factor just is. If we come along afterwards and
   calculate it, that is our business.


More starkly, if a mutation in a real spider makes its web less efficient it dies sooner and produces less offspring than spiders without the mutation. If, on the other hand, a computer simulation does not yield webs that are similar to nature, the programmer rethinks her algorithm or input values and tries again, hoping for a more realistic result. Both processes are a kind of trial and error.

Professor Schwarcz provides an example of applying engineering concepts to law and business. He suggests the complexities of financial instruments interrelate with (and amplify) financial market failure stating, "these complexities are characteristic of complexities in engineering systems with nonlinear feedback." Steven L. Schwarcz, Complexity as a Catalyst of Market Failure: A Law and Engineering Inquiry 5 (Duke Law School Public Law & Legal Theory Paper No. 216, 2008), available at (last visited Jan. 24, 2009).

(42.) For example, Professor Petroski asks, "Is the proliferation of made things, such as the seemingly endless line of serving pieces that complement a table service, merely a capitalist trick to sell consumers what they do not need? Or do artifacts multiply and diversify in an evolutionary way as naturally as do living organisms, each having its purpose in some wider scheme of things?" HENRY PETROSKI, THE EVOLUTION OF USEFUL THINGS 21 (1992).

(43.) In Petroski's other book referenced herein, he abstracted the design history of hammers:
   Better hammers resulted from eliminating the failures. [E]ven the
   best of rocks have limitations as hammers.... Among the problems
   with a hammer-rock can be that it is awkward or uncomfortable to
   wield. An improvement might be sought in the shape of the rock or
   in providing a handle for it--or from replacing the rock with
   something better. In time, a growing variety of metal hammer heads
   and wooden hammer handles, appropriate to a variety of tasks and
   grips [appeared]. Among such diversity, one might expect that there
   was a single best hammer for a particular task. All others would
   fail to work as well at that task. Should all existing hammers fail
   to work properly for a newly developed task, then a still newer
   hammer might have to be developed. By the latter part of the
   nineteenth century, some five hundred different types of hammers
   were being produced in Birmingham, England, alone.


(44.) PETROSKI, supra note 42, at 3.

(45.) Id. at 10.

(46.) Id.

(47.) See id. at 11.

(48.) PETROSKI, supra note 42, at 11.

(49.) Id.

(50.) See supra note 41.

(51.) Note that not all artifacts designed by humans are first conceived based on conscious recognition of underlying principles. Some are based on observation and trial and error. See, e.g., supra note 43 (discussing hammers). Some are based on intuition. See generally JONAH LEHRER, PROUST WAS A NEUROSCIENTIST (2007). And some are based on observational narrative or from another way of knowing. Cf. FRITJOF CAPRA, THE TAO OF PHYSICS: AN EXPLORATION OF THE PARALLELS BETWEEN MODERN PHYSICS AND EASTERN MYSTICISM (1991)). At some point these alternatives to scientific design from first principles blur the distinction between conscious human design and unconscious design by spiders. See ROBERT C. ELLICKSON, ORDER WITHOUT LAW: HOW NEIGHBORS SETTLE DISPUTES (1991) (providing criticism of assumption that people reason from first legal principles to resolve disputes).

(52.) PETROSKI, supra note 43, at 81-96 (Chapter 3, captioned Intangible Things).

(53.) Id. at 5.

(54.) PETROSKI, supra note 42, at 134. An unrelated story in the popular press suggests that Hoover's actions were the result of "complaints from retailers, who couldn't afford to keep full settings of numerous patterns on hand." Charles Perry, What the Heck Is That? An Heirloom, L.A. TIMES, Nov. 26, 2003, at F-1, available at (last visited Jan. 24, 2009).

(55.) PETROSKI, supra note 43, at 81. Readers familiar with literature on evolution will note that I have fastidiously avoided the use of the term meme which was coined by Dawkins in The Selfish Gene. It is tempting to integrate memes in this essay but I fear, first, it would be more complicating than it is worth because it is unnecessary for present purposes and I do want to cleave to the biological evolution model; second, memes, while fascinating, have not yet scientifically matured; and, third, memes deal with the emotionally charged (if misunderstood) topic of cultural transmission and any inclusion could be terribly distracting. Nonetheless, the topic is at least related to the one in the text of the essay so I briefly acknowledge memes in this note.
   Dawkins speculated,

   But do we have to go to distant worlds to find other, kinds of
   replicator and other, consequent kinds of evolution? I think that a
   new kind of replicator has recently emerged on this very planet.

   ... We need a name for the new replicator, a noun that conveys the
   idea of a unit of cultural transmission, or a unit of imitation.

   Examples of memes are tunes, ideas, catch-phrases, clothes
   fashions, ways of making pots or of building arches. Just as genes
   propagate themselves in the gene pool by leaping from body to body
   via sperms or eggs, so memes propagate themselves in the meme pool
   by leaping from brain to brain.... As my colleague N.K. Humphrey
   neatly summed up an earlier draft of this chapter: " ... memes
   should be regarded as living structures, not just metaphorically
   but technically. When you plant a fertile meme in my mind you
   literally parasitize my brain, turning it into a vehicle for the
   meme's propagation in just the way that a virus may parasitize the
   genetic mechanism of a host cell.

DAWKINS, supra note 3, at 192.

For a book length treatment of memes see, e.g., ROBERT AUNGER, THE ELECTRIC MEME: A NEW THEORY OF HOW WE THINK (2002). The subtitle alone suggests that memes are one level too deep for purposes in this essay because I take the position "how we think"--that is, what goes on inside our heads--is not necessary for purposes of the current analysis because "how we think" is just another evolutionary adaptation. See supra note 51. Could it be consciousness and emotions are simply evolved traits to, on average, force us to make survival and reproductive decisions? See DYLAN EVANS, EMOTION: THE SCIENCE OF SENTIMENT (2001); MATT RIDLEY, THE ORIGINS OF VIRTUE: HUMAN INSTINCTS AND THE EVOLUTION OF COOPERATION (1996); cf. CHARLES DARWIN, THE EXPRESSION OF EMOTIONS IN MAN AND ANIMALS (Univ. of Chicago Press 1965) (1872). There is an ever expanding literature on decision making and judgment. See, e.g., THE CAMBRIDGE HANDBOOK OF EXPERTISE AND PERFORMANCE (K. Anders Ericsson et al. eds., 2006); EMERGING PERSPECTIVES ON JUDGMENT AND DECISION RESEARCH (Sandra L. Schneider & James Shanteau eds., 2003); SALVATORE RIZZELLO, THE ECONOMICS OF THE MIND (1999); LAW AND THE BRAIN (Semir Zeki & Oliver Goodenough eds., 2004).

(56.) PETROSKI, supra note 43, at 3.

(57.) See William H. Rodgers, Where Environmental Law and Biology Meet: Of Pandas' Thumbs, Statutory Sleepers, and Effective Law, 65 U. COLO. L. REV. 25, 48-56 (1993).

(58.) Id. at 50.

(59.) PETROSKI, supra note 43, at 161-62. A computer game that reminds me of the "evolution of artifacts" is "Fantastic Contraptions," available at (last visited Apr. 20, 2009).

(60.) See supra notes 25-36 and accompanying text.


(62.) See DENNET, supra note 11, at 303; RICHARD FORTEY, LIFE: A NATURAL HISTORY OF THE FIRST FOUR BILLION YEARS OF LIFE ON EARTH 239-60 (1997) (Chapter 6, Theories of the End). Fortey details some of the debates about dinosaur and other extinctions. Regarding the asteroid theory he analyzes the reasons that life, including mammals, might have survived when dinosaurs did not:
   Birds and mammals, of course, survived and prospered. We know that
   they were hot-blooded, and thus it can be suggested reasonably
   enough that they could have outlived a cooling event that would
   have finished off a cold-blooded reptile (assuming dinosaurs were
   cold blooded, of course); their small size might also have helped
   them to shelter from the worst effects. Flowering plants survived
   as seeds.... I have a problem with the insects.

FORTEY, supra note 62, at 253-54.

(63.) See Susan Pace Hamill, The Origins Behind the Limited Liability Company, 59 OHIO ST. L.J. 1459, 1463 (1998).

(64.) Reading articles from the 1990s about LLCs is a bit like a paleontologist looking at the fossil record. The materials and presentation that I prepared for this Symposium, held on June 13, 2008, included the evolutionary history and extended the metaphor of biological evolution to paleontology by speculating about the evolutionary root species and branch bifurcations in the LLCs' tree of life. Therein I suggested that property, agency, and contract law were all predecessors of the LLC. I also suggested that the LLC shares certain characteristics similar to partnerships and, further, that the LLC branched from the partnership phenotype, which itself continues to evolve and branch. While such a discussion is relevant and adds a certain depth to the metaphor, I have not included much of the paleontological discussion here because it can be seen as a separate topic, because it complicates and muddles the analysis, and because of length constraints on this essay.

Paleontology, like law, is now a multidisciplinary subject and its approach is similar to law enforcement's investigation of violent crime scenes (particularly cold cases where some physical evidence has been preserved). Readers interested in drawing their own analogies for LLCs from paleontology might consult a number of good "dinosaur" books. See generally PHILLIP MANNING, GRAVE SECRETS OF DINOSAURS: SOFT TISSUES AND HARD SCIENCE (2008) (chronicling science, to date, surrounding a 1999 fossil find in Badlands of North Dakota).

(65.) Larry E. Ribstein, The Emergence of the Limited Liability Company, 51 BUS. LAW. 1, 1 (1995) (footnotes omitted). This explosive growth of LLC law is comparable to the evolutionary concept of "punctuated equilibrium" that has roiled among evolutionary biologists. See Thomas Earl Geu, Chaos, Complexity, and Coevolution: The Web of Law, Management Theory, and Law Related Services at the Millennium, 66 TENN. L. REV. 137, 221-51 (1998) (providing discussion of punctuated equilibrium).

(66.) See Robert R. Keatinge et al., Limited Liability Partnerships: The Next Step in the Evolution of the Unincorporated Business Organization, 51 BUS. LAW. 147, 147-48 (1995) (footnotes omitted).

(67.) This is because a new competitor better for an ever smaller micro-niche will either evade or evolve from the super-hero phenotype. In biological evolutionary theory, this is known as the trade-off principle. The trade-off principle is operatively described as follows:
   Suppose one single phenotype--call it the super-hero phenotype--could
   do everything better than any other. Natural selection would
   discover it and promote it. All other phenotypes would disappear.
   Only one homogeneous super-hero species would remain.

   The tradeoff principle asserts that a super-hero species does not
   exist and has never existed. It says that phenotypes excel at most
   functions by losing the ability to perform other functions well.
   Tongue-in-cheek, the humorist Ephraim Kishon put the point
   perfectly: "If only they'd manufacture pins with heads on both
   ends, nobody would prick himself."


(68.) DAWKINS, supra note 24, at 77.

(69.) Id.


(71.) The limited liability feature was the result of relatively few changes in RUPA. See, e.g., UNIF. P'SHIP ACT [section] 106(b) (1997) [hereinafter RUPA] ("Governing Law"); [section] 306(b) & (c) ("Partner's Liability"); [section] 1001 ("Statement of Qualification"); [section] 1002 ("Name"); [section] 1003 ("Annual Report").

(72.) See Thomas E. Rutledge, Carter G. Bishop & Thomas Earl Geu, Foreclosure and Dissolution Rights of a Member's Creditors: No Cause for Alarm, 21 PROB. & PROP. 35, 36-38 (2007). Compare REV. UNIF. LTD. LIAB. CO. ACT [section] 503 (2006) [hereinafter RULLCA], with UNIF. LTD. LIAB. CO. ACT [section] 504 (1996) [hereinafter ULLCA].

(73.) See generally Daniel S. Kleinberger, Carter G. Bishop & Thomas Earl Geu, Charging Orders and the New Uniform Limited Partnership Act: Dispelling Rumors of Disaster, 18 PROB. & PROP. 30 (2004); Elizabeth M. Schurig & Amy P. Jetel, The Alarming Potential for Foreclosure and Dissolution by an LLC Member's Personal Creditors, 20 PROB. & PROP. 42 (2006).

(74.) See RULLCA [section] 404(b).

(75.) See REV. UNIF. LTD. P'SHIP ACT [section] 604 (1976) (amended 1985) [hereinafter RULPA]. The Prefatory Comments to ULPA (2001) state, "Due to estate planning concerns, several states have amended RULPA to prohibit limited partner withdrawal unless otherwise provided in the partnership agreement." Prefatory Comments to UNIF. LTD. P'SHIP ACT (2001).

(76.) I.R.C. [section] 2704(b)(3)(B) (1996).

(77.) See RULLCA [section] 104(c).

(78.) See, e.g., RULLCA Art. 5 (2006).

(79.) RULLCA [section] 701(a)(5).

(80.) RULLCA [section] 104(b); see also Thomas Earl Geu, Selected Estate Planning Aspects of the Uniform Limited Partnership Act (2001), 37 SUFFOLK U. L. REV. 735, 829-49 (2004) (providing general overview of the kinds of features that make an entity fit for estate-planning purposes).

(81.) See generally DAVID G. EPSTEIN ET AL., BUSINESS STRUCTURES 811 (2d ed. 2007).


(83.) Id.


(85.) Phenotype plasticity is the technical term. See, e.g., Anurag A. Agrawal, Phenotypic Plasticity in the Interactions and Evolution of Species, 294 SCI. 321 (2001) available at content/full/294/5541/321 (last visited Apr. 20, 2009).

(86.) See also KIRSCHNER & GERHART, supra note 84, at 87-89.

(87.) Id. at 89.


(89.) See DENNETT, supra note 11, at 269.

(90.) Id. at 271. Dennett then suggests that the idea of a space where arches meet, under a loose definition of "spandrel," might be a true statement. Id. at 272.

(91.) "Preadaptation" is a rather unfortunate selection of jargon because it can suggest "preordination" of a future evolutionary path. It does not mean preordination. Id. at 280. Rather, it simply is the flipside of the path dependency coin. See supra notes 68-73 and accompanying text (discussing path dependency).

(92.) See, e.g., DENNETT, supra note 11, at 281; supra text accompanying notes 20-21 (discussing evolution of jaw).

(93.) DENNETT, supra note 11, at 274.

(94.) Id. 273-74.

(95.) Another example comes from selective (artificial) fox breeding. Dmitry Belyaev was the director of the "Department of Fur Animal Breeding at the Central Research Laboratory of Fur Breeding" in the Soviet Union. WILSON, supra note 15, at 42. One of his jobs was to "create a tamer variety of silver fox." Id. He started selected breeding in 1959, based only on the trait of tameness. Id. "Forty years ... later" his experiment "produced a new breed [of fox] that ... was eager for human contact." Id. at 42-43. However,
   [t]he most amazing thing about the experiment ... was that the
   foxes had become like dogs in other respects. Their tails had
   become curly. Their ears had become floppy.... Their legs had
   become shorter and their skulls more broad. These physical traits
   had not been selected, but they still came along for the ride, as
   if connected to the behavioral traits of tameness by invisible

Id. at 43.

(96.) Id.

(97.) See supra note 67.

(98.) WILSON, supra note 2, at 60-61.

(99.) See infra notes 206-207 and accompanying text.


(101.) WILSON, supra note 2, at 95.

(102.) See Mammals, 23 THE NEW ENCYCLOPEDIA BRITANNICA MACROPAEDIA 360 (15th ed. 1994).

(103.) Id.

(104.) Id. at 358.

(105.) Id.

(106.) DAWKINS, supra note 24, at 139-40.

(107.) Id. at 141.

(108.) See id. at 142-43.

(109.) A standard formulation for corporate shareholder liability is in the Revised Model Business Corporation Act (RMBCA), which in relevant part states:

"Unless otherwise provided in the articles of incorporation, a shareholder of a corporation is not personally liable for the acts or debts of the corporation except that he may become personally liable by reason of his own acts or conduct."

REV. MODEL BUS. CORP. ACT [section] 6.22(b).

The Revised Uniform Limited Partnership Act, on the other hand, is quite different in its approach. Its provision is predicated on status. That is, limited liability for limited partners is based on the fiction that the general partner will have unlimited personal liability. Unless the limited partner acts like a general partner and a creditor is misled by that action, the limited partner will be protected. See RULPA [section] 303 (1976) (amended 1985) [hereinafter RULPA (1976/1985)]. In an odd way, RULPA (1976/1985) contains control elements that would be factors in piercing the corporate liability shield in equitable piercing actions. The distinction in mechanism is the important point for present purposes.

The convergence of fiduciary duties in unincorporaed and incorporated entities has been discussed. See Questions to Symposium Participants, Symposium: The Convergence of Fiduciary Duties in Unincorporated and Incorporated Entities: The Issue, Its Implications, Its Limitations, 28 DEL. J. CORP. L., 999 (2003).


(111.) See supra note 110 and accompanying text.

(112.) See generally infra text accompanying notes 133-139 (describing slime mold behavior).

(113.) Contract is multidimensional and, as questions concerning contract theory or doctrine plumb foundational issues, is complicated. Compare, for example, the following three quotes:

1. "One shift in method from the Restatement [of Contracts] to the Restatement Second is revealed by the dominance of standards over rules in the processes of contract formation and interpretation." Richard E. Speidel, Restatement Second, Omitted Terms and Contract Method, 67 CORNELL L. REV. 785, 786 (1982).

2. "Contracts with discretion illustrate most vividly that the world of the contract does not simply contain some one determinate action that is required on the part of the discretion-exercising party. Rather, it contains a restricted set of possible acts-for-reasons-in-circumstances. Other reasons are not a part of that world, and action for those reasons is a breach of contract." Steven J. Burton & Eric G. Andersen, The World of a Contract, 75 IOWA L. REV. 861, 869 (1990).

3. "Contract is an amalgam; it defies simple reduction, heuristic reduction, into accessible theoretical terms. The reason for that is largely because of the nature of Contract doctrine and because theoretical analysis cannot yield the results we would have it yield. The deck is stacked against the endeavor." Peter Alces, Unintelligent Design in Contract, 2008 U. ILL. L. REV. 505, 554 (2008).

(114.) WILSON, supra note 15, at 133 (Chapter 18, Groups All the Way Down).

(115.) Id.

(116.) SHUBIN, supra note 18, at 117.

(117.) Id.

(118.) See id. at 118.

(119.) See id.

(120.) SHUBIN, supra note 18, at 119.

(121.) Id. at 118.

(122.) WILSON, supra note 15, at 134.

(123.) Id. at 135.

(124.) Id. at 136 (emphasis added). More directly:

My use of words borrowed from human social life ... is not just poetic license to indulge a general audience. It is how the experts talk to each other. A single review article titled "The Social Gene" by Harvard biologist David Haig, a recognized authority on the subject, used the following words: allegiance, binding agreements, cabal, ... contractual arrangement, corrupt, deceit, ... fair play, firm, fraud, free-riders, ... institutions, licensing ... marketplace, misappropriate, monopoly, motivation, ... partnership, ... self-interest, ... team, trade, transaction costs, and unauthorized. No one fifty years ago could have dreamt that these words would be used to describe genetic, developmental, and physiological interaction within a single individual! Id. at 136-37 (citation omitted).

(125.) WILSON, supra note 15, at 134.

(126.) The term emergence represents a deep concept that is at the heart of complex adaptive systems theory, which studies the underlying laws and principles of systems that exhibit evolutionary features not limited to biological evolution. For purposes of this essay, evolution is used metaphorically. It might be far more than a metaphor. See generally STEVEN JOHNSON, EMERGENCE: THE CONNECTED LIVES OF ANTS, BRAINS, CITIES, AND SOFTWARE (2001); KAUFFMAN, supra note 61. There is a growing body of literature about complex adaptive system theory and law. See, e.g., Thomas Earl Geu, Chaos, Complexity, and Coevolution: The Web of Law, Management Theory, and Law Related Services at the Millennium, 65 TENN. L. REV. 925 (1998) (providing dated but relatively thorough review of that literature).

(127.) Treas. Reg. [section] 301.7701-1(a)(1) (2006).

(128.) Treas. Reg. [section] 301.7701-1(a)(2).

(129.) Specifically:

"A business entity organized under a Federal or State statute, or under a statute of a federally recognized Indian tribe, that is referred to as incorporated or as a corporation, body corporation, or body politic."

Treas. Reg. [section] 301.7701-2(b)(1).

(130.) As stated in a treatise:
   At common law, a partnership was considered to be an aggregate of
   the individual partners, rather than a distinct legal entity
   separate from the partners. Extrapolating the aggregate theory to
   its extreme, a partnership is nothing more than a relationship
   between persons acting for a common business purpose. For that
   common business purpose, these persons jointly own assets, jointly
   incur obligations, and conduct a pro rata share of the partnership
   business in their own behalf.



(132.) SHUBIN, supra note 18, at 119.

(133.) See supra notes 122-128 and accompanying text.

(134.) FORTEY, supra note 62, at 73.

(135.) Id. at 74.

(136.) Id.

(137.) Id.

(138.) FORTEY, supra note 62, at 74. It gets even better. As this essay goes to press, a group of scientists "showed that a slime mould negotiated the shortest route between two exits in a maze," indicating it has a "primitive intelligence" borne of cellular computation. Slime Mould Solves Maze Puzzle, NEWS IN SCIENCE, Sept. 28, 2000, available at (last visited Apr. 20, 2009).

(139.) See supra notes 85-87 and accompanying text.

(140.) EPSTEIN ET AL., supra note 81, at 82.

(141.) Id.


(143.) EPSTEIN ET AL., supra note 81. "The debate ... is of very limited practical significance." Id.

(144.) See, e.g., Larry E. Ribstein, Reforming Limited Liability Company Fiduciary Litigation, (Univ. Illinois Law & Econ. Research Paper No. LE08-017, 2008), available at

(145.) Kwang-II Goh, Michael E. Cusick, David Valle, Marc Vidal & Albert-Laszlo Barabasi, The Human Disease Network, 104 PROC. NAT'L ACAD. SCI. 8685 (May 22, 2007).

(146.) See id. at 8686-87; see also Andrew Pollack, Redefining Disease, Genes and All, N.Y. TIMES, May 6, 2008, at F1.

(147.) Pollack, supra note 146.

(148.) See supra notes 145-147; infra notes 158-162 and accompanying text.

(149.) RIDLEY, supra note 82, at 180-81. Ridley extends the analogy for the organization of genetic information as follows:
   Imagine that the [human] genome is a book.
   There are twenty-three chapters called chromosomes.
   Each chapter contains several thousand stories, called genes.
   Each story is made up of paragraphs, called exons, which are
      interrupted by advertisements called
   Each paragraph is made up of words, called codons.
   Each word is written in letters called bases.

Id. at 6. "There are one billion words in the book ... as long as 800 Bibles." Id.

(150.) KIRSCHNER & GERHART, supra note 84, at 109.

(151.) Mouse Clues to Human Genetics, BBC NEWS WORLD EDITION, Dec. 4, 2002, available at http://news. (last visited Apr. 20, 2009). "[I]f one considers just the different classes of genes ... then the similarity rises to 99%." Id.

(152.) See supra text accompanying note 11.


(154.) Id.

(155.) Id.

(156.) Id.

(157.) DAWKINS, supra note 153, at 105.

(158.) Id.

(159.) See text accompanying supra note 153. The time and developmental component of "evolution" has made a comeback in the past decade or so:
   At the annual meeting of the Society for Integrative and
   Comparative Biology in January of the year 2000, a new Division was
   formed: the Division of Evolutionary Developmental Biology. This
   new organization would serve as a home for a lively field by the
   same name: evolutionary developmental biology, popularly known as
   evo-devo. In the minds of many of its practitioners (especially the
   more junior ones), evo-devo was new.... Nevertheless ... [t]he
   conceptual connection between the development of the individual
   (ontogeny) and the evolution of a lineage (phylogeny) predates the
   1859 publication of Darwin's Origin of Species.


(160.) See Sean B. Carroll, Benjamin Prud'homme & Nicolas Gompel, Evo-Devo: Regulating Evolution, SCI. AM., May 2008, at 61-62; see also supra text accompanying notes 150-152.

(161.) Carroll et al., supra note 160, at 61.

(162.) Id. at 62.

(163.) SHUBIN, supra note 18, at 108.

(164.) RIDLEY, supra note 82, at 177; see also infra text accompanying note 167.

(165.) RIDLEY, supra note 82, at 177.

(166.) As related to embryonic development, Matt Ridley says that each cell has a "hand-held GPS" to "taste the soup within itself" and determine its location relative to the developing body. Id. at 175. With this information, it consults its homeotic gene guidebook to take appropriate action through regulatory switching:
   There are no computers [GPSs] and no guidebooks, just a series of
   automatic steps in which gene switches on gene. But a guidebook is
   a handy analogy, nonetheless, because the great beauty of embryo
   development, the bit that human beings find so hard to grasp, is
   that it is a totally decentralised process. Since every cell in the
   body carries a complete copy of the genome, no cell need wait for
   instructions from authority; every cell can act on its own
   information and the signals it receives from its neighbours.


This completes the metaphor. To reiterate, LLC members are the physical cells that build the LLC and the law (the operating agreement and codified LLC law) is the genetic code that each member references to govern its own behavior.

(167.) RULLCA [section] 110 (2006).

(168.) Id. [section] 110(a).

(169.) Id. [section] 110(c), (d).

(170.) Id. [section] 110(e), (f), (g).

(171.) RULLCA [section] 110(h).

(172.) Id. [section] 111.

(173.) RULLCA [section] 112 (2006).

(174.) Id. [section] 104.

(175.) Id. [section] 105.

(176.) Using RULLCA (2006), for example, a member in a member-managed company owes the company and the other members fiduciary duties of loyalty and care (as further detailed in the relevant section). RULLCA [section] 409(a). If the LLC is manager-managed, however, members do not have those particular duties (again as further detailed therein) but managers do have them. Id. [section] 409(g). The contractual obligation of good faith and fair dealing applies to both members in member-managed LLCs and to both members and managers in a manager-managed LLC. Id. [section] 409(d). Interestingly, but explicably, RULLCA determines whether an LLC is member- or manager-managed by looking to the operating agreement rather than to a required public filing. See Id. [section] 407(a).

(177.) The operating agreement can vary the fiduciary duties but cannot reduce or eliminate some of them if to do so is "manifestly unreasonable" standard. RULLCA [section] 110(d). It may also "prescribe the standards by which to measure the performance of the contractual obligation of good faith and fair dealing ...." RULLCA [section] 110(d)(5). Therefore, because of the flexibility and authority of the operating agreement, an LLC may increase the fiduciary duties and the standards by which they are measured for members in a manager-managed company to a level equal to (or depending on the terms of the operating agreement even exceeding) the fiduciary duties of managers in the same company.

(178.) See RULLCA Art. 2 (captioned "Formation; Certificate of Organization and Other Filings").

(179.) RULLCA [section] 102(13) (2006).

(180.) See supra note 85 and accompanying text.

(181.) See supra note 126 and accompanying text.

(182.) RULLCA [section] 112(a).

(183.) DEL. CODE. ANN. tit. 6, [section] 18-101(7) (2008).

(184.) Id.

(185.) DAWKINS, supra note 24, at 103.

(186.) See supra text accompanying notes 13-15.

(187.) RIDLEY, supra note 82, at 127.

(188.) Id.

(189.) Id.


(191.) Id. at 128.

(192.) RIDLEY, supra note 82, at 128.

(193.) Id.

(194.) See supra note 57 and accompanying text.

(195.) See Ann E. Conaway, A Business Review of the Delaware Series: Good Business for the Informed, 1677 PLI/CORP. 645 (2008).

(196.) See, e.g., VA. STAT. ANN. [section] 13.1-1041.1 (2008).

(197.) This is simply regulatory competition. See e.g., Mark J. Loewenstein, Delaware as Demon: Twenty-Five Years After Professor Cary's Polemic, 71 U. COLO. L. REV. 497 (2000); Omari Scott Simmons, Branding the Small Wonder: Delaware's Dominance and the Market for Corporate Law, 42 U. RICH. L. REV. 1129 (2008); Mathias M. Siems, Regulatory Competition in Partnership Law (Dec. 20, 2008) (unpublished working paper, on file with the Social Science Research Network), available at (last visited Apr. 20, 2009).

(198.) See supra text accompanying notes 82-84.

(199.) John Hagedoorn & Geerte Hesen, Contractual Complexity and the Cognitive Load of R&D Alliance Contracts 1 (Am. Law & Econ. Assoc. Annual Meetings Working Paper No. 20, 2008), available at (last visited Apr. 20, 2009).

(200.) Id. at 9.

(201.) Id. at 29.

(202.) Natalie Ram, Tiered Consent and the Tyranny of Choice, 48 JURIMETRICS J. 253, 269 (2008) (quoting BARRY SCHWARTZ, THE PARADOX OF CHOICE: WHY MORE IS LESS 19 (2004)) (further citation omitted). See generally, Schwarcz, supra note 41.

(203.) A possible statutory example is the absence of redemption or buy-back provisions in order to maximize estate-tax planning opportunity (though there are business reasons for this choice in many circumstances). See supra notes 74-80 and accompanying text.

(204.) John Cunningham, The New Hampshire LLC Act: Bad News for LLC Members Who Lack Good Lawyers, JOHN CUNNINGHAM'S LLC NEWSL. FOR TAX & LEGAL PROF. (Law Offices of John M. Cunningham, Concord, N.H.), Feb. 12, 2008, available at (last visited Apr. 20, 2009). He bases his suggestion on two purported facts: (1) "That most New Hampshire LLCs have only one or two members and very limited initial capital"; and (2) "That at least one-third of all New Hampshire LLCs have been formed without the assistance of lawyers." Id. (citation omitted). Cunningham's observations come close to a biomass ecological perspective. By way of illustration, E.O. Wilson implies we sometimes focus on the unusual, which blinds us to the more universal:
   "No one looks twice at a sparrow or squirrel, or even once at a
   dandelion, but a peregrine falcon or mountain lion is a lifetime
   experience. And not just because of their size (think of a cow) or
   ferocity (think of a house cat), but because they are rare."

WILSON, supra note 2, at 36. They are rare because the available energy from the sun nourishes a pyramid of plants and animals and "[e]ach level above the plants diminishes [as a percentage of total biomass] until you come to the top carnivores, which are so scarce that the very sight of one in the wild is memorable." Id. Yet the carnivores are dependant, ultimately, on plants for the energy they consume because they eat the herbivores: "[T]hey are [paradoxically] the first to suffer when the ecosystem starts to erode." Id.

(205.) See supra text accompanying notes 98-99.

(206.) See supra text accompanying notes 98-99 (discussing speciation). For example, in the Galapagos a single species of finch branched into thirteen contemporary species. WILSON, supra note 2, at 101.

(207.) The Uniform Limited Cooperative Association Act (2007) (ULCAA) was derived from unincorporated cooperative laws in Wyoming, Minnesota, and Tennessee. See James B. Dean & Thomas Earl Geu, The Uniform Limited Cooperative Association Act: An Introduction, 13 DRAKE J. AGRIC. L. 63, 73-74 (2008). According to ULCAA's Prefatory Note:
   This Act (ULCAA) combines an unincorporated and flexible
   organizational structure with cooperative principles and values in
   order to obtain increased equity investment opportunity for capital
   intensive and start-up cooperative enterprises. It encourages
   equity investment by allowing, but not requiring, a limited
   cooperative association to have voting investor members in addition
   to patron members.

   Another defining feature of this Act is that it
   is based in large part on unincorporated law and entities formed
   under it are intended to be unincorporated entities for state law
   purposes in the style of limited liability companies and limited

Prefatory Note to UNIF. LTD. COOP. ASSOC. ACT. (2007) [hereinafter ULCAA].

(208.) See supra note 67 (please, it is important here, too!).

(209.) See Robert R. Keatinge, LLCs and NonProfit Organizations--For Profits, Nonprofits, and Hybrids, 42 SUFFOLK U. L. REV. 553 (2009).


(211.) See supra text accompanying notes 163-171.

(212.) See id.

(213.) See supra notes 122-132 and accompanying text.

(214.) See supra text accompanying notes 133-139.

(215.) See supra notes 167-184 and accompanying text.

(216.) See supra note 86 and accompanying text.

(217.) DEL. CODE ANN. tit. 6, [section] 18-1101(b) (2008).

(218.) The fiduciary duties of loyalty and care evolved in successive generations of the Uniform LLC acts. By way of illustration ULLCA (1996) states, "(a) The only fiduciary duties a member owes to a member-managed company and its other members are the duty of loyalty and the duty of care imposed by subsections (b) and (c)." ULLCA [section] 409(a) (1996) (emphasis added). The Revised Act, on the other hand, states, "(a) A member of a member-managed limited liability company owes to the company and, subject to Section 901(b), the other members the fiduciary duties of loyalty and care stated in subsections (b) and (c)." RULLCA [section] 409(a) (2006) (emphasis added). Beyond "mere" semantics, ULLCA states, "(b) A member's duty of loyalty to a member-managed company and its other members is limited to the following ..." ULLCA [section] 409(b) (emphasis added). Importantly, the following change was made in RULLCA: "(b) The duty of loyalty of a member in a member-managed limited liability company includes the duties ..." RULLCA [section] 409(b) (emphasis added).

(219.) See supra notes 194-198 and accompanying text. There is also the engineering design lesson derived from successful bridge designs. It is possible to become "intoxicated" with the success of a particular design and push it to the point of failure. See supra text accompanying note 56. It is also possible to artificially select traits on mistaken beliefs and end up with the correlative law cages of psychopathic chicks. See supra note 34 and accompanying text.

(220.) Sometimes, however, the tensions created are difficult to resolve and may be maladaptive because, like the peacock's tail, the tension is created from pursuing two inconsistent goals. The following statement interpreting an LLC organized in Wisconsin illustrates one such tension:
   The paramount importance of flexibility and freedom of contract is
   evident throughout the WLLCL. All statutory provisions dealing with
   governance, membership, finance, dissolution and even fiduciary
   duties may be varied by the operating agreement. The drafters
   intended the operating agreement to give members the opportunity to
   establish the real law applicable to the LLC, even with the
   attendant risk to the unsophisticated investor.

   Notwithstanding this approach, it was also intended that the LLC
   form be suitable for the "mom and pop" grocery store. The drafters
   hoped that the LLC would provide an inexpensive and simple vehicle
   that did not require legal guidance at every step. Indeed, it was
   visualized that an operating agreement would not even be required
   for many LLCs or that the agreement would merely focus on the
   specifics of the business deal, permitting the statute to fill in
   the gaps. Thus, the default provisions were drafted with a
   common-sense business approach.

Kasten v. Doral Dental USA, LLC, 733 N.W.2d 300, 309 (Wis. 2007) (footnote omitted, emphasis added). In the footnote accompanying the quoted material the court observed:
   We note that the drafters intended 'that the LLC would provide an
   inexpensive and simple vehicle that did not require legal guidance
   at every step.' Some LLCs may decide that the inspection rules of
   the WLLCL do not meet their needs and therefore adopt their own

Id. at 309 n.9 (emphasis added).

(221.) Myron T. Steele, Judicial Scrutiny of Fiduciary Duties in Delaware Limited Partnerships and Limited Liability Companies, 32 DEL. J. CORP. L. 1, 25 (2007).

(222.) See supra note 113.

(223.) An abstract from a recent article states in part:
   This paper compares New York's contract law with that of its most
   natural competitor, California. It turns out that New York strictly
   enforces bargains and displays little tolerance for efforts to
   rewrite deals ex post. California, in contrast, is more willing to
   reform contracts for reasons of fairness, equity, morality or
   public policy. The revealed preferences of sophisticated parties
   support arguments by Schwartz, Scott and others that formalistic
   rules offer superior value for the interpretation and enforcement
   of commercial contracts.

Geoffrey P. Miller, Bargaining on the Red-eye: New Light on Contract Theory (N.Y. Univ. Law and Econ. Research Paper No. 08-21, 2008), available at (last visited Apr. 20, 2009) (emphasis added).

(224.) Steele, supra note 221, at 4.

(225.) See id.; see also supra notes 204-205 and accompanying text.

(226.) See supra notes 167-171 and accompanying text.

(227.) See supra text accompanying notes 133-139. The biological tools necessary to build a body in biology are instructive here as well. See supra text accompanying note 132.

(228.) See supra text accompanying notes 101-105.

(229.) See supra notes 106-109 and accompanying text.

(230.) See supra text accompanying notes 150-151. Moreover, there is always the issue of whether a phenotypic trait was "selected" or merely incidental--a spandrel. See supra notes 88-90 and accompanying text.

(231.) As Chief Justice Steele observed:
   For purposes of this article, it must be accepted that fiduciary
   duties will be developed in each new business context by drawing
   analogies from duties recognized in already existing contexts....
   But given their [limited partnerships and LLCs] rapid growth and
   continued variety, there is also a danger in continuing to
   analogize principles of fiduciary duty as used in the corporate
   governance context to the internal governance of limited
   partnerships and limited liability companies. Wrong analogies can
   be drawn for many possible reasons: a lack of appropriate focus, a
   desire to effect a particular purpose or result, or a desire to
   delegate or distribute power so that the fiduciary can act more
   effectively while preventing the fiduciary from effecting its own
   conflicting needs.

Steele, supra note 221, at 8-9 (footnote omitted).

(232.) Kasten v. Doral Dental USA, L.L.C., 733 N.W.2d 300, 313, 317 (Wis. 2007).

(233.) See supra text accompanying note 158.

(234.) This is a close paraphrase of an observation made by my teenage son, Taylor Dodd Geu, in an unrelated context. Perhaps in the not so distant future evolution, complex adaptive systems, and law will be more than metaphorically linked. Cf. MARTIN A. NOWAK, EVOLUTIONARY DYNAMICS: EXPLORING THE EQUATIONS OF LIFE (2006); Paul H. Robinson, Robert Kurzban & Owen D. Jones, The Origins of Shared Institutions of Justice, 60 VAND. L. REV. 1633 (2007).
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Date:Jun 22, 2009
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