Unfortunately, there is no uniform set of rules in the United States governing the practice of architecture and engineering by corporations or other types of firms. As a result, it is difficult for a single entity consisting of more than a handful of design professionals to qualify for licensing or certification in every state. Many states provide some form of limited exception from their regulations for a firm participating in a single, isolated project. However, firms considering work in multiple states need to be cognizant of the fact that the laws of many states purport to apply not only to the provision of professional design services on a project in the state, but also to offering such services in the state. Therefore, professional design firms should be familiar with the entity licensing or certification requirements in a state before embarking on a program to market or perform architectural or engineering services in that state.
This article describes some of these types of requirements. Of course, the following are in addition to the general statutory requirements on transacting business in a state; these requirements typically obligate entities having a certain nexus to register with the state. Unless otherwise noted, the following discussion only addresses laws that apply to business corporations performing architecture or professional engineering. Most states have similar rules that apply to other types of entities such as limited liability companies and professional corporations.
It is common for states to require that some portion of the corporation be owned by persons who are licensed to provide design services. Some states merely require that all or a certain percentage of the owners be licensed in architecture or engineering in any state. For example, in Massachusetts, unless a multi-tiered ownership structure is used, all of the stock of a corporation practicing architecture or engineering must be owned by persons who are licensed in any state to provide a professional service permitted by the organizational documents of the company.
In Pennsylvania, for a corporation practicing architecture, at least two-thirds of the voting stock must be owned by individuals licensed in any state to practice architecture, engineering, or landscape architecture, and at least one-third of the voting stock must be owned by an individual licensed under the laws of any state to practice architecture.
In Ohio, for a corporation practicing architecture, more than 50 percent of the shareholders must be licensed as architects, engineers, surveyors, or landscape architects in any state, and those persons must own more than 50 percent of the stock.
Other states require that a certain portion of the owners be licensed in the relevant professions in that state. For example, Connecticut requires for a corporation practicing only architecture, that two-thirds of the voting stock be held by Connecticut-licensed architects.
In Nevada, for a corporation practicing architecture and engineering, control (i.e., power to direct or cause the direction of management and policies) and two-thirds ownership must be held by persons registered in Nevada as architects or engineers.
In Mississippi, for a professional corporation practicing architecture or architecture and engineering, each shareholder must be licensed to practice architecture or engineering in his or her state of residence and, in the case of a foreign (non Mississippi) professional corporation, at least one shareholder must be a Mississippi-licensed architect.
It is also fairly common for states to require that one or more of the officers, principal officers (which is defined differently by different states), and/or directors of a corporation (or their counterparts in other types of entities) be licensed in that state for the design professions performed by the corporation.
For example, Illinois requires a corporation desiring to practice architecture to have two-thirds of the directors be licensed architects, professional engineers, land surveyors, or structural engineers in any state and at least one director be an Illinois-licensed architect.
In Georgia, architectural services performed through a corporation must be performed under the responsible control of a Georgia-licensed architect who is a director and employed full time at the premises where the architectural services are performed. Alternatively, services can be performed by an employee with an ownership interest in the entity and who has been designated in writing as holding a position of authority within the firm and authorizing him or her to direct the architectural services offered by the firm.
In Pennsylvania, for a corporation practicing architecture, at least two-thirds of the directors must be licensed in any state in architecture, engineering, or landscape architecture; at least one-third of the directors must be licensed in any state to practice architecture; and at least one director must be a Pennsylvania-licensed architect.
In Michigan, to practice architecture or professional engineering through a corporation, at least two-thirds of the principals (i.e., president, vice president, secretary, treasurer, or director) must be licensed in Michigan.
In Maine, for the corporate practice of architecture, at least one-third of the directors must be licensed to practice architecture in any state; an additional one-third of directors must be licensed in any state to practice architecture, engineering, or landscape architecture; and one director must be a Maine-licensed architect.
In Iowa, for a corporation practicing architecture, at least two-thirds of the directors must be licensed to practice architecture or engineering in a state recognized by the Iowa board, one-third of the directors must be licensed to practice architecture in a state recognized by the Iowa board, and one director must be an Iowa-licensed architect.
As indicated above, many states require that the person in the corporation who is responsible for the practice of architecture or engineering in that state be an officer or principal officer and be licensed in that profession in the state. Other states with this requirement for a corporation practicing architecture include Colorado, Florida, Indiana, and New Hampshire. Among the states having this requirement for a corporation practicing engineering are Alabama, Florida, Georgia, and New Hampshire.
Incidentally, in Ohio, the person in charge of the corporate practice of engineering must be an officer or director. In California, to practice civil, electrical, or mechanical engineering through a firm, the California-licensed engineer in charge of such a practice must be an owner, partner, or officer.
In addition to the general laws of a state regarding the types of names or assumed names that entities and businesses can use, some states place additional restrictions on entities practicing architecture or engineering. Frequently, these restrictions concern the inclusion of the names of individual professionals in the firm name. For instance, in Georgia, if the firm name contains the words architect, engineer, or derivations thereof, and the names of living persons, generally those named persons must be licensed in Georgia in their respective professions. In addition, if the principal or base office of the firm is not located in Georgia, the Georgia-licensed architect in responsible control of the practice of architecture in Georgia must also be identified on all letterhead, public identification, and instruments of service.
In Nevada, the name of an architectural firm may include the names of deceased or retired members, but their status must be indicated on the firm’s letterhead.
In Alabama, except for certain grandfathered companies, an architectural firm name may not contain the names of former partners who, by virtue of death, retirement, or resignation, are no longer active participants in the practice of architecture.
In addition to Georgia and Nevada, several other states have similar rules that require identification of individuals licensed in that state on a firm’s printed material. For instance, Mississippi requires that all stationery, printed matter, title blocks, and listings of an architectural firm contain the name of at least one Mississippi-licensed architect. Mississippi also requires that a professional corporation practicing architecture and engineering follow the following two practices: (i) all announcements, cards, stationery, printed matter, and listings indicate as to each member whether he or she is a registered architect or registered engineer; and (ii) no person be named on any announcement, card, stationery, printed matter, or listing of such professional corporation unless there is designated thereon whether or not such person is licensed in Mississippi.
Pennsylvania requires that the letterhead of a firm practicing architecture, among other things, contain the names of the principals (i.e., officers, principal stockholders, and persons having a substantial interest in or management responsibility for the architectural practice), followed by credentials indicating their respective professions. A copy of the firm’s proposed letterhead must even be submitted to the Pennsylvania Architects Licensure Board with the application for firm registration.
In Indiana, the statutes governing the practice of architecture require that the name of the officer in responsible charge of the practice of architecture appear whenever the firm name is used in the professional practice of the firm.
The rules governing the corporate practice of architecture in Nevada require that the names of all Nevada-licensed architects be on the firm’s letterhead.
Internal governing documents
A few states even go so far as to require that the internal governing documents of an entity, such as the bylaws in the case of a corporation, contain specific language or provisions satisfying the state’s legal requirements for the corporate practice of architecture or engineering. In Washington, for example, the bylaws of a corporation practicing architecture or engineering must include language that is set forth in the statutes which states that architectural or engineering decisions, as the case may be, pertaining to any project or activities in the state of Washington shall be made by the architects or engineers designated by the company as being in responsible charge of such practice in that state or other responsible architects or engineers under the direct supervision of those in responsible charge.
In Virginia, the bylaws of a professional corporation, but apparently not a business corporation, desiring to practice architecture, professional engineering, or land surveying are required to provide, among other things, that (i) not less than two-thirds of its stock be issued to individuals licensed to render the services of architecture, professional engineering, or land surveying, or to individuals legally authorized to use the title of certified landscape architect or certified interior designer; (ii) the remainder of stock may be issued only to employees of the professional corporation; and (iii) non-licensed or non-certified individuals will not have a voice or standing in any matter affecting the practice of the corporation requiring professional expertise or in any matter constituting professional practice, or both.
Finally, in Alaska, there is specific statutory language that is required to be contained in the bylaws of a corporation that practices architecture or engineering in that state. Generally, all architectural and engineering decisions on a project in that state must be made by the Alaska-licensed professional in responsible charge of such.
As illustrated by the above examples, there are numerous traps out there for unsuspecting design firms contemplating multi-state practice. Therefore, the statutes and rules applicable to the practice of architecture and professional engineering by an entity should always be checked before a decision is made to begin offering design activities in a state.
Sam Karnes is an attorney in the Fort Worth, Texas, office of Winstead PC. He has extensive experience in representing architecture and engineering firms, where he has applied his attention to detail, diligence, and tax background, as well as his experience in managing a small business. He can be contacted at 817-420-8213 or via e-mail at email@example.com.