Guarantee Requirement for California Law Corporations
Shareholders of Professional Law Corporations must execute a guarantee as a condition of obtaining a certificate pursuant to the Professional Corporation Act and California Business and Professions Code Section 6171(b). A Professional Law Corporation is required to provide and maintain security by insurance or otherwise for claims against it by its clients for errors and omissions arising out of the rendering of professional services.
The Standard Law Corporation Guarantee must be signed and submitted to the state bar to confirm the company shareholders will cover up to $50,000 per attorney practicing law on behalf of the corporation, per claim, and up to $100,000 per attorney practicing law on behalf of the corporation, per calendar year. The guarantee amounts can be covered by adequate errors and omission insurance policies or Shareholders’ personal assets.