Over the last couple of years, New York architecture firms have been quietly changing the acronyms behind their names, moving from ‘PC’ or ‘PLLC’ to ‘DPC.’ More than an edit to the company letterhead, the change has significant implications in the business of design across the state.
For a long time, architecture firms—necessarily registered as either Professional Corporations (PC) or Professional Limited Liability Corporations (PLLC)—had to be owned entirely by licensed professionals. Firms of an entrepreneurial bent were hamstrung by this requirement, since they could not offer ownership options to recruit and retain employees who happened to not be licensed architects. In 2012, however, New York State created a new type of professional entity—the Design Professional Corporation, or DPC—stipulating that ownership stake by licensed professionals amount to more than 75 percent. In practice, this now means that business developers, office managers, unlicensed designers, or other types of employees can now own up to 25 percent of an architecture company. Outside investors do not qualify.
According to Eric Morgenweck, an associate principal at Zetlin & De Chiara, a law firm specializing in the construction industry, “this change allows architecture firms to offer equity to key personnel who happen to not be licensed.” For firms considering this type of entity, Morgenweck suggests firms consider future growth and what type of personnel they might need. “The DPC allows them greater flexibility,” he said.
Firms have been taking notice. When architect Alan Gaynor began to consider succession plans with his co-principal Michele Boddewyn, they saw an opportunity to reconstitute the company as a DPC, positioning it to take on other owners whenever Gaynor decides to retire. “It made a lot of sense,” reasoned Boddewyn. “Right now, the firm is owned by me and Alan, but that’s not to say that in six months from now we may want to bring on another owner. The change to DPC builds in flexibility down the road.&
AIA New York backed the change. “We were strong supporters of this initiative,” said Rick Bell, AIANY Executive Director. With a delegation of local practitioners, including Ric Scofidio, from Diller Scofidio + Renfro, and F. Eric Goshow, the principal of Goshow Architects and a past president of AIANY, the Institute lobbied lawmakers in Albany to create the DPC distinction.
“I would advise firms to consider the DPC,” said Morgenweck, who has already overseen several conversions. “It can really be beneficial going forward.”