Law firm

A law firm is a business entity formed by one or more lawyers to engage in the practice of law.

Structure and Promotion

Larger firms are typically organized around partners, who are joint owners and business directors of the legal operation; associates, who are employees of the firm with the prospect of becoming partners; and a variety of staff employees, providing paralegal, clerical, and other support services. An associate may have to wait as long as 9 years before the decision is made as to whether the associate "makes partner". Many law firms have an "up-or-out policy": associates who do not make partner are required to resign, either to join another firm, go it alone as a solo practitioner, go to work in-house in a corporate legal department, or change professions (burnout rates are very high in law).

Related Topics:
Partner - Business directors - Associate - Employee - Paralegal - Profession - Burnout

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Making partner is very prestigious, especially at a large or midsize firm. Such firms take out advertisements in legal newspapers to announce who has made partner. Traditionally, partners shared directly in the profits of the firm, after paying salaried employees, the landlord, and the usual costs of furniture, office supplies, and books for the law library (or a database subscription). However, many large law firms have moved to a two-tiered partnership model, with equity and non-equity partners. Equity partners are considered to have ownership stakes in the firm, and share in the profits (and losses) of the firm. Non-equity partners are generally paid a fixed salary (albeit much higher than associates), and they are often granted certain limited voting rights with respect to firm operations. It is rare for a partner to be forced out by his fellow partners, although that can happen if the partner commits a crime or malpractice, becomes insane or senile, or is not contributing to the firm's overall profitability. In contrast, most corporate executives are at much higher risk of being fired, even when the underlying cause is not directly their fault, such as a drop in the company's stock price.

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Many large and midsize firms have attorneys with the job title of "counsel", "special counsel" or "of counsel." These attorneys are employees of the firm like associates, although some firms have an independent contractor relationship with their of counsel. But unlike associates, and more like partners, they generally have their own clients, manage their own cases, and supervise associates. However, even though the firm trusts them enough to take them under its roof and let them share its brand name and resources, the firm does not trust them enough to make them partners and let them share in the firm's profits or in its management. The title is often seen among former associates who do not make partner, or who are laterally recruited to other firms, or who work as in-house counsel and then return to the big firm environment. At some firms (such as Skadden, Arps), the title "of counsel" is given to retired partners who maintain ties to the firm.

Related Topics:
Independent contractor - Skadden, Arps

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Size

Law firms range widely in size. At the bottom are solo practitioners (lawyers practicing alone), who form the vast majority of lawyers in most countries. In North America, there are also many small firms (2 to 50 lawyers) and midsize firms (50 to 200 lawyers).

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Lawyers in small cities and towns may still have old-fashioned general practices, but most urban lawyers tend to be highly specialized due to the overwhelming complexity of the law today. Thus, some small firms in the cities specialize in practicing only one kind of law (like employment or intellectual property) and are called "boutique" firms.

Related Topics:
Employment - Intellectual property

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At the top are the huge megafirms with more than 1,000 lawyers. These firms have offices on multiple continents, bill $500 per hour or higher, and have a high ratio of support staff per attorney. They can and do litigate every issue, often burying their opponents in a blizzard of paper; the result has been a kind of legal "arms race" where every large corporation tries to retain the services of the biggest law firm they can afford.

Related Topics:
Arms race - Corporation

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Megafirms like to call themselves "full-service" firms because they have departments specializing in every type of legal work that pays well, which usually means transactions and defense. These firms rarely do plaintiffs' personal injury work. However the largest law firms are not very large compared to other major businesses. The tradition of firms being based in a single state limits the size of U.S. firms and four of the six largest firms in the world are based in London in the United Kingdom http://www.bmacewen.com/blog/pdf/Global100.2004.pdf. In 2003 the largest was Clifford Chance, which had revenue of just over one and a half billion U.S. dollars (this can be compared with $285 billion for Wal-Mart, though this is a somewhat unfair comparison since like its retail cousins Wal-Mart operates on narrow margins).

Related Topics:
London - United Kingdom - Clifford Chance - Wal-Mart

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