Legal Question in Business Law in California

That's not a question that can be answered in a vacuum. There certainly are ethical issues raised by it, but I don't think it is possible to say that it is absolutely prohibited, and it certainly is not absolutely permitted without dealing with conflicts of interest and self dealing issues under the applicable law and rules.

The danger is that in giving advice, an attorney may find himself in an attorney-client relationship with the counseled members, whether any of them intended this or not. Giving professional advice often results in the advised party or parties becoming clients of the attorney. Being paid, or the signing of a representation agreement, is not required. Once the attorney has taken on a client, all sorts of duties and responsibilities arise, including a duty of the lawyer to avoid conflicts of interest with the clients. So, the situation can become quite complicated very fast.

Did he form the LLC? Typically, the attorney forming an LLC would have something like the following provision in the attorney-client retention agreement, "Only the organization whose name appears in the subject of this letter will be considered as a client of mine. I only represent the interests of the organization. Therefore, I do not individually represent any founders, members, managers, officers, employees, or agents of the organization, other than in their company capacity." This is important from an ethical standpoint, and nothing short of full disclosure by the attorney of the potential conflict of interest in representing multiple clients followed by a written consent of all such clients should be required prior to such representation.