How you draft an operating agreement can have a bearing on who has the burden of proof when a dispute arises. This is particularly true when managers engage in transactions with the company.
In the corporate context, by statute in Iowa and most other states, the burden is on the director to prove that the challenged transaction was fair. But in the case of LLCs the operating agreement can be drafted, intentionally or not, to shift the burden to the unit holder challenging the transaction.
It all depends on how you write the provision on conflicts of interest. If you borrow from the corporate world, the burden will be on the managers. But, as was the case in Zimmerman v. Crothall, 2013 WL 398946 (Del. Ch. 1/31/13), if the operating agreement instead grants the managers the right to contract with the Company so long as it fair, then the burden is on the unit holder.