Design Professional Service Corporation

Move over LLC, LLP and P.C., come January 1, 2012, you might start to see some new initials following the names of design professional firms in New York State.

D.P.C.

A Design Professional Service Corporation is the newest member of the New York corporate family, recently signed into law by Governor Cuomo. The law allows New York licensed professional firms, such as architects, engineers and land surveyors to consist of a minority (less than 25%) share of non-licensed owners. Previously, New York State required that all owners of a design firm be licensed. This is viewed as a big win for design professionals who have been lobbying for this change for quite some time. They believe it will enable them to be more competitive in the industry since many other states do not have the requirement that 100% of the design firm owners be licensed.

What does this mean for developers/owners who hire a D.P.C.? When entering into a new contract with a D.P.C., probably, not that much. All design services, as was true previously, must be rendered by a licensed professional. The new law mandates that the President, CEO and Chairman be licensed. Owners, however, should make sure that the new entity is properly registered with the State and that there is consistency between the entity that owner is contracting with and the “insured” on the design professional’s certificate of insurance.

In the case of an existing contract with a design professional who forms a D.P.C and wants to assign the contract to the new D.P.C, owners should contact their counsel to make sure a proper assignment, if permitted by the contract, and/or amendment to the agreement is executed.