I hear two beliefs from Minnesota professionals who’ve formed an entity, and both are wrong.
The first is that the Professional Firms Act applies because the firm’s name ends in “P.A.” or “P.L.L.C.” It doesn’t. Chapter 319B applies to a Minnesota firm only if that firm has made an election: a set of specific statements that must appear in the organizational document filed with the Secretary of State. Minn. Stat. § 319B.03, subd. 2. A name isn’t an election.
The second is that the point of chapter 319B is to put a wall between the professional and a malpractice claim. It isn’t. Section 319B.06, subd. 3 does the opposite of building that wall. It declares that the act leaves the law governing the professional-to-client relationship exactly where it found it, “including liability arising out of the professional services and the confidential relationship and privilege of communications” between them.
What chapter 319B actually does is impose restrictions: on who may own the firm, on who may govern it, on what else the firm may do, and on what happens within 90 days of an owner’s death or license suspension. It’s a compliance regime, not a shield. I run my own firm under these rules, and I read them the way I read any compliance statute. Traps first.
The covered professions are a closed statutory list
Section 319B.02, subd. 19 defines “professional services” by an enumerated cross-reference to specific licensing statutes. The list covers services required or permitted to be furnished under a Minnesota license, registration, or certificate to practice: medicine and surgery under §§ 147.01 to 147.22; as a physician assistant under §§ 147A.01 to 147A.27; chiropractic under §§ 148.01 to 148.105; registered nursing under §§ 148.171 to 148.285; optometry under §§ 148.52 to 148.62; psychology under §§ 148.88 to 148.98; social work under chapter 148E; marriage and family therapy under §§ 148B.29 to 148B.39; professional counseling under §§ 148B.50 to 148B.593; dentistry and dental hygiene under §§ 150A.01 to 150A.12; pharmacy under §§ 151.01 to 151.40; podiatric medicine under §§ 153.01 to 153.25; veterinary medicine under §§ 156.001 to 156.14; architecture, engineering, surveying, landscape architecture, geoscience, and certified interior design under §§ 326.02 to 326.15; accountancy under chapter 326A; or law under §§ 481.01 to 481.17 — “or under a license or certificate issued by another state under similar laws.”
That list is closed, and it’s keyed to statutes, not job titles. Find your own licensing statute in it before you assume chapter 319B governs your entity. That’s the first thing I check when a professional-firm question comes in. And notice who “board” means: under § 319B.02, subd. 2, a “board” is the state agency with jurisdiction to license the relevant services — “except that in the case of a professional firm that provides legal services, ‘board’ means the Board of Professional Responsibility.”
The election is three sentences in a filed document
The “election” sounds grander than it is. Under § 319B.03, subd. 2, to become a Minnesota professional firm the firm must, in its organizational document:
(1) state that the Minnesota firm elects to operate under those sections;
(2) acknowledge that the Minnesota firm is subject to those sections; and
(3) specify from the list stated in section 319B.02, subdivision 19, the category or categories of professional services the Minnesota firm is authorized to provide.
The subdivision adds that “[t]he statement, acknowledgment, and specification may be made when a Minnesota firm initially files the organizational document or may be added at a later time by updating that document.”
“Organizational document” is defined at § 319B.02, subd. 12: articles of incorporation for a chapter 302A or 317A corporation, articles of organization for a chapter 322C limited liability company, and the statement of qualification for a limited liability partnership under § 323A.1001. So whether a firm has elected is a public-filing question. You can answer it in a minute by pulling the entity’s articles from the Secretary of State.
Is the election mandatory? Chapter 319B doesn’t answer that on its own. Section 319B.03, subd. 1(a) provides that a Minnesota firm may furnish professional services within Minnesota without an election only if “no Minnesota statute, Minnesota rule, or tenet of Minnesota common law requires the Minnesota firm to make that election in order to furnish professional services within Minnesota,” and “no Minnesota statute, Minnesota rule, or tenet of Minnesota common law precludes the Minnesota firm from furnishing professional services within Minnesota in the absence of that election.” That’s a deliberate hand-off. Whether your profession’s own licensing statute, your board’s rules, or Minnesota common law requires the election is a question you answer in those sources. I run that check before advising any client not to elect, and I wouldn’t skip it.
The election can be rescinded. Section 319B.03, subd. 3(a) lets a firm rescind by updating its organizational document “to delete the statement, acknowledgment, and specification required by subdivision 2.” Watch the asymmetry in § 319B.11, subd. 8: a board’s claim for involuntary dissolution or revocation “does not abate simply because the professional firm has rescinded its election,” while “[a] voluntary rescission does abate a board’s claim to obtain reprimands, restrictions, conditions, or involuntary rescission.”
The election changes which law wins a conflict. Section 319B.03, subd. 4: if an election is in effect “and the Minnesota firm’s generally applicable governing law conflicts with sections 319B.01 to 319B.12, sections 319B.01 to 319B.12 govern.” Generally applicable governing law, defined at § 319B.02, subd. 8, is the state statute under which the firm is incorporated, organized, or registered (for a Minnesota firm, chapter 302A or 317A, chapter 322C, or chapter 323A) “plus any other law that is generally relevant to the structure, governance, operations, or other internal affairs of the firm.” So electing the act overrides parts of the entity statute you may have relied on when you drafted the operating agreement. See Minnesota LLC operating agreements.
Who may own an interest in a professional firm?
This restriction has the sharpest teeth, because violations are void, not voidable. In my experience it’s also the one nobody audits until a transfer has already happened.
Section 319B.07, subd. 1 permits ownership interests to be “owned or held, either directly or indirectly,” only by six categories: professionals licensed and not disqualified in at least one category of the pertinent professional services; general partnerships other than limited liability partnerships authorized to furnish at least one such category; other professional firms so authorized; a qualifying voting trust in which all trustees and all beneficial-interest holders are so licensed; a qualifying employee stock ownership plan under section 4975(e)(7) of the Internal Revenue Code of 1986, as amended; and “sole ownership by a surviving spouse of a deceased professional who was the sole owner of the professional firm at the time of the professional’s death, but only during the period of time ending one year after the death of the professional.”
The words “either directly or indirectly” matter. A holding company owned by a non-professional doesn’t solve the problem by adding a layer.
Subdivision 2 extends the restriction to every transfer, by the firm or by an owner, and applies “regardless of whether a purported sale, grant, gift, allocation, issuance, or other transfer” is “voluntary or involuntary,” is present or future, or is “permanent or subject to defeasement.” Involuntary transfers are inside the restriction, and that matters directly in divorce, judgment enforcement, and probate. Subdivision 3 separately restricts “partial rights,” defined at § 319B.02, subd. 15 as “a right in or with respect to an ownership interest where the right is by itself insufficient to make the right’s holder an owner”; options, proxies, and voting agreements live there.
Then subdivision 4, one sentence: “A sale, grant, gift, allocation, issuance, undertaking, creation, pledge, or other transfer in violation of this section is void.” Not rescindable. Void.
Who may govern, and what cannot be delegated?
Section 319B.09, subd. 1(a) requires that governance authority rest with one or more professionals licensed in at least one category of the pertinent services, or with the surviving spouse of a deceased sole owner during the one-year window. “Governance authority” is defined at § 319B.02, subd. 9 as the authority and responsibility to “determine important policies for a professional firm,” to “superintend the professional firm’s overall operations,” and to “maintain general, active management of and ultimate control over all matters involving professional judgment.”
If you’re building a management structure, the sentence that matters is § 319B.09, subd. 1(c): administrative and operational matters may be delegated, but “[n]o decision entailing the exercise of professional judgment may be delegated or assigned to anyone who is not a professional licensed to practice the professional services involved in the decision.” A management-services arrangement has to be drafted around that provision, not through it.
One more restriction is easy to miss. Section 319B.06, subd. 1(d): a professional firm “may not conduct any other business or provide any other services beyond those authorized in this subdivision, either within or outside of Minnesota.” Ancillary powers are permitted under subd. 1(c) only “solely to provide the pertinent professional services or to accomplish tasks ancillary to providing those services.” A professional firm isn’t a general-purpose holding vehicle. Side ventures, real estate, and unrelated consulting belong in a separate entity.
Does the act protect a professional from a malpractice claim?
No. Section 319B.06, subd. 3(a) provides:
Sections 319B.01 to 319B.12 do not alter any law applicable to the relationship between a person furnishing professional services and a person receiving the professional services, including liability arising out of the professional services and the confidential relationship and privilege of communications between the person furnishing professional services and the person receiving the professional services.
Paragraph (b) says the same thing about the relationship between the firm furnishing the services and the person receiving them.
Read the verb. The act does “not alter any law applicable to” that relationship. It doesn’t create a defense and it doesn’t remove one. Whatever a professional owed the person served before the election is exactly what the professional owes after it. Electing chapter 319B doesn’t improve a malpractice position. I practice under this chapter, and I carry malpractice coverage precisely because the election buys me nothing there.
Paragraph (c) answers a different question, and I keep the two strictly apart: “Whether a professional firm’s owners and persons who control, manage, or act for the firm are personally liable for the firm’s debts and obligations is determined according to the firm’s generally applicable governing law.” So the entity-level limited liability people associate with a “P.A.” or “P.L.L.C.” comes from the firm’s own entity statute (chapter 302A, 317A, 322C, or 323A), not from chapter 319B. That shield covers the firm’s debts and obligations, and it’s subject to the ordinary doctrines that defeat it. See piercing the corporate veil in Minnesota.
Chapter 319B does speak to liability in one place, and it’s a limit on regulators, not a gift to professionals. Section 319B.11, subd. 2(a) provides that, except as stated in paragraph (b), “no board may directly or indirectly require a person providing professional services through a professional firm to assume greater liability for the firm’s debts and obligations than is contemplated by section 319B.06, subdivision 3.” Paragraph (b) preserves a board’s power to require a professional to assume personal liability for specified obligations “as a term or requirement of board disciplinary or corrective action concerning the professional.”
That subdivision carries the boldface headnote “Liability shield.” Under Minn. Stat. § 645.49, headnotes “are mere catchwords to indicate the contents of the section or subdivision and are not part of the statute.” Don’t read the catchword as the rule. The rule is that boards may not impose extra liability for firm obligations. That’s no shield against anything a client would sue you for.
The 90-day trap: death or disqualification of an owner
This provision quietly ends professional-firm status, and there’s no notice. Nobody sends a letter. The status just lapses.
Under § 319B.08, subd. 1(a), if an owner dies or “becomes disqualified to practice all the pertinent professional services,” then within 90 days all of that owner’s ownership interest must be acquired by the firm, by persons permitted by § 319B.07 to own it, or by some combination. Or, at the end of the 90 days, “the firm’s election under section 319B.03, subdivision 2, or 319B.04, subdivision 2, is automatically rescinded, the firm loses its status as a professional firm, and the authority created by that election and status terminates.” Paragraph (b) makes that automatic: the firm must immediately update its organizational document, but “[e]ven without that updating, however, the rescission, loss of status, and termination of authority provided by paragraph (a) occur automatically at the end of the 90-day period.”
There’s one extension, and it’s narrow. Section 319B.08, subd. 4 provides that for purposes of that section, each mention of “90 days,” “90-day period,” or similar term “shall be interpreted as one year after the death of a professional who was the sole owner of the professional firm if the surviving spouse of the deceased professional owns and controls the firm after the death.” That’s the same one-year window § 319B.07, subd. 1(6) gives a surviving spouse to hold the interest. Every other death, and every disqualification, runs on 90 days.
“Disqualified” is defined at § 319B.02, subd. 4 as having a license suspended — “unless by its terms the suspension will automatically end less than 90 days after it takes effect” — or revoked, with disqualification occurring “when the suspension or revocation first takes effect.”
Section 319B.08, subd. 2 supplies a cascade of acquisition terms: the firm’s own valid buy-sell mechanism if it has one and the parties don’t set it aside (paragraph (a)); otherwise an arrangement agreed before the end of the 90 days (paragraph (b)); and, failing both, a statutory tender under paragraph (c). The tender must be made within the 90 days, at “the fair value of the owner’s ownership interest, as determined by the Minnesota professional firm’s governance authority,” and at least “the book value, as determined in accordance with the Minnesota professional firm’s regular method of accounting, as of the end of the month immediately preceding the death or loss of license.” If a compliant tender is made in time, “the deceased or disqualified owner’s ownership interest immediately transfers to the Minnesota professional firm regardless of any dispute as to the fairness of the price,” and the recipient may take the money and sue for more. But “[t]he suit must be commenced within one year after the payment is tendered.”
The drafting lesson is simple. Put a compliant buy-sell mechanism in the documents at formation. Without one, a firm has 90 days to negotiate a buyout with a grieving family or a suspended partner, and the alternative is losing professional-firm status by operation of law. See Minnesota LLC member disputes and buyouts.
What has to be filed, and with whom?
Not just the Secretary of State. Under § 319B.11, subd. 3(a), no professional firm may furnish professional services within Minnesota until it files with each board having jurisdiction the organizational document, a report containing the same information required by subd. 4, and a $100 fee. Then every year, subd. 4(a) requires a report “on or before January 1” with each such board. It has to contain eight items, including the positions holding governance authority and the name and address of every owner and every person occupying such a position, plus licensure statements that “must be made and signed under oath by a professional who is an owner or employee of the professional firm, licensed in at least one category of the pertinent professional services and duly authorized to make the statement on behalf of the professional firm.” The fee is $25 to each board. And under subd. 5(a), within 30 days after the death or disqualification of an owner the firm must report it to each board with jurisdiction, except, under paragraph (b), to the board that took the action causing the disqualification.
These board filings are separate from, and on top of, the Secretary of State’s annual renewal that keeps the underlying entity alive.
A name tells you nothing
Section 319B.05, subd. 2 requires a professional firm’s name to end with one of a list of permitted phrases or abbreviations. For a limited liability company that list is “Professional Limited Liability Company,” “Limited Liability Company,” “P.L.L.C.,” “P.L.C.,” or “L.L.C.”
Read that line again. A firm that has elected under chapter 319B may lawfully be named plain “L.L.C.” So a plain “LLC” ending tells you nothing about whether the act has been invoked, and nothing stops a firm that hasn’t elected from having been named years ago in a way that suggests it did. The only reliable answer is the organizational document on file. That’s why I pull the articles before I answer any question about a professional firm’s status.
What I tell professional-firm clients to do
- Pull your articles. Confirm the three § 319B.03, subd. 2 statements are actually there, and that the specified category matches what the firm actually does.
- Check your own licensing law, not chapter 319B, for whether the election is required. Section 319B.03, subd. 1(a) points you there.
- Audit the cap table against § 319B.07, subd. 1, including indirect holders. A transfer in violation of that section is void under subd. 4.
- Draft the buy-sell before anyone needs it. Section 319B.08’s 90-day clock runs to automatic rescission of professional-firm status.
- Calendar the board filings: the January 1 annual report and $25 per board under § 319B.11, subd. 4, and the 30-day death-or-disqualification report under subd. 5.
- Don’t treat the election as insurance. Section 319B.06, subd. 3(a) leaves your liability to the person you served untouched. Carry the coverage.
At Madgett Law, LLC I advise Minnesota professionals (physicians, dentists, accountants, engineers, architects, and lawyers) on forming and maintaining professional firms under chapter 319B. That means drafting the election and the organizational document, structuring ownership and governance to survive a board audit, and building the buy-sell mechanism that keeps a death or a suspension from ending the firm’s status. Send us a message or call 612-470-6529.
Sources: Minn. Stat. § 319B.02 (subd. 2, “board,” including the Board of Professional Responsibility for legal services; subd. 4, “disqualified,” including the under-90-day suspension carve-out and when disqualification occurs; subd. 8, “generally applicable governing law”; subd. 9, “governance authority” and its three components; subd. 12, “organizational document” for corporations, limited liability companies, and limited liability partnerships; subd. 15, “partial right”; subd. 19, the enumerated list of professional services and the licensing statutes cross-referenced); Minn. Stat. § 319B.03 (subd. 1(a), authority to furnish services without an election only where no Minnesota statute, rule, or tenet of common law requires or precludes it; subd. 2, clauses (1)–(3), the three statements constituting the election and the ability to add them later by updating the organizational document; subd. 3(a), rescission of the election; subd. 4, chapter 319B governs over conflicting generally applicable governing law); Minn. Stat. § 319B.05, subd. 2(2) (permitted name endings for a limited liability company); Minn. Stat. § 319B.06 (subd. 1(c), ancillary powers only to provide the pertinent services; subd. 1(d), prohibition on other business or services within or outside Minnesota; subd. 3(a) and (b), the act does not alter law applicable to the professional-to-client and firm-to-client relationships, including liability arising out of the professional services; subd. 3(c), personal liability for the firm’s debts and obligations determined by generally applicable governing law); Minn. Stat. § 319B.07 (subd. 1, clauses (1)–(6), the six permitted holders of ownership interests, directly or indirectly; subd. 2, transfer restrictions applying to voluntary and involuntary, present and future, permanent and defeasible transfers; subd. 3, partial rights; subd. 4, improper transfers void; subd. 6, chapter 80A inapplicable); Minn. Stat. § 319B.08 (subd. 1(a), the 90-day acquisition requirement and automatic rescission, loss of status, and termination of authority; subd. 1(b), automatic effect without updating; subd. 2(a)–(c), the acquisition cascade, the statutory tender, the fair-value and book-value floors, immediate transfer notwithstanding a price dispute, and the one-year period to sue for additional payment; subd. 4, the 90-day periods read as one year where the surviving spouse of a deceased sole owner owns and controls the firm); Minn. Stat. § 319B.09 (subd. 1(a), where governance authority must rest; subd. 1(c), no delegation of decisions entailing professional judgment); Minn. Stat. § 319B.11 (subd. 2(a) and (b), limit on boards requiring greater liability for firm debts and obligations, and the disciplinary-action exception; subd. 3(a), pre-service filing with each board and the $100 fee; subd. 4(a), the January 1 annual report, its eight required items, and the oath requirement; subd. 4(b), the $25 per-board fee; subd. 5(a) and (b), the 30-day report of an owner’s death or disqualification and the exception; subd. 8, the abatement rules on rescission); Minn. Stat. § 645.49 (headnotes are catchwords and are not part of the statute) (Minnesota Office of the Revisor of Statutes, 2025 Minnesota Statutes). Chapter 319B’s table of sections runs § 319B.01 through § 319B.12, plus § 319B.40; the operative provisions discussed here are those the chapter itself refers to as “sections 319B.01 to 319B.12.” Nothing in §§ 319B.01 to 319B.12 creates a defense to a malpractice claim against the professional who furnished the services; § 319B.06, subd. 3(a) states that those sections do not alter the law applicable to that relationship. This article is general legal information about Minnesota law, not legal advice, and reading it does not create an attorney–client relationship. Whether the act applies to a particular firm, and what a particular licensing board requires, depends on the specific facts, the firm’s organizational document, and the governing licensing law. No outcome is promised or implied.