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A law firm is a business entity formed by one or more
lawyers A lawyer or attorney is a person who practices law, as an advocate An advocate is a professional in the field of law. Different countries' legal systems use the term with somewhat differing meanings. The broad equivalent in many English ...
to engage in the
practice of law In its most general sense, the practice of law involves giving legal adviceLegal advice is the giving of a professional or formal opinion regarding the substance or procedure of the law in relation to a particular factual situation. The provisi ...
. The primary service rendered by a law firm is to advise clients (individuals or
corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal ...

corporation
s) about their legal
rights Rights are legal Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environment, is desc ...
and responsibilities, and to represent clients in
civil Civil may refer to: *Civic virtue, or civility *Civil action, or lawsuit *Civil affairs *Civil and political rights *Civil disobedience *Civil engineering *Civil (journalism), a platform for independent journalism *Civilian, someone not a member ...
or criminal cases, business transactions, and other matters in which legal advice and other assistance are sought.


Arrangements

Law firms are organized in a variety of ways, depending on the jurisdiction in which the firm practices. Common arrangements include: *
Sole proprietorship A sole proprietorship , also known as a sole tradership, individual entrepreneurship or proprietorship, is a type of enterprise owned and run by one person and in which there is no legal distinction between the owner and the business entity I ...
, in which the attorney ''is'' the law firm and is responsible for all profit, loss and liability; *
General partnership A general partnership, the basic form of partnership under common law, is in most countries an association of persons or an unincorporated company with the following major features: *Must be created by agreement, proof of existence and estoppel. ...
, in which all the attorneys who are members of the firm share ownership, profits and liabilities; *
Professional corporation Professional corporations or professional service corporation (abbreviated as PC or PSC) are those corporate entities for which many corporation A corporation is an organization—usually a group of people or a company—authorized by the st ...
s, which issue stock to the attorneys in a fashion similar to that of a business corporation; *
Limited liability company A limited liability company (LLC) is the US-specific form of a private limited company A private limited company is any type of business entity in Privately held company, "private" ownership used in many jurisdictions, in contrast to a Pu ...
, in which the attorney-owners are called "members" but are not directly liable to third party creditors of the law firm (prohibited as against public policy in many jurisdictions but allowed in others in the form of a "Professional Limited Liability Company" or "PLLC"); *
Professional association A professional association (also called a professional body, professional organization, or professional society) usually seeks to further Further or Furthur may refer to: *Furthur (bus), ''Furthur'' (bus), the Merry Pranksters' psychedelic bus ...
, which operates similarly to a professional corporation or a limited liability company; *
Limited liability partnership A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not ...
(LLP), in which the attorney-owners are partners with one another, but no partner is liable to any creditor of the law firm nor is any partner liable for any negligence on the part of any other partner. The LLP is taxed as a partnership while enjoying the liability protection of a corporation.


Restrictions on ownership interests

In many countries, including the United States, there is a rule that only lawyers may have an ownership interest in, or be managers of, a law firm. Thus, law firms cannot quickly raise
capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller lowercase (or more formally ''minusc ...
through
initial public offering An initial public offering (IPO) or stock launch is a public offering A public offering is the offering of securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal defi ...
s on the stock market, like most
corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal ...

corporation
s. They must either raise capital through additional capital contributions from existing or additional equity partners, or must take on debt, usually in the form of a
line of credit A line of credit is a credit px, Domestic credit to private sector in 2005 Credit (from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally s ...
secured by their
accounts receivable Accounts receivable, abbreviated as AR or A/R, are legally enforceable claims for payment held by a business for goods supplied or services rendered that customers have ordered but not paid for. These are generally in the form of invoices An in ...
. In the United States this complete bar to nonlawyer ownership has been codified by the
American Bar Association The American Bar Association (ABA), founded August 21, 1878, is a voluntary Voluntary may refer to: * Voluntary (music)In music a voluntary is a piece of music, usually for an organ, that is played as part of a church service. In English-speak ...

American Bar Association
as paragraph (d) of Rule 5.4 of the
Model Rules of Professional Conduct The American Bar Association The American Bar Association (ABA), founded August 21, 1878, is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. The ABA's most important sta ...
and has been adopted in one form or another in all U.S. jurisdictions, except the District of Columbia. However, D.C.'s rule is narrowly tailored to allow equity ownership only by those nonlawyer partners who actively assist the firm's lawyers in providing legal services, and does not allow for the sale of ownership shares to mere passive nonlawyer investors. The U.K. had a similar rule barring nonlawyer ownership, but under reforms implemented by the Legal Services Act of 2007 law firms have been able to take on a limited number of non-lawyer partners and lawyers have been allowed to enter into a wide variety of business relationships with non-lawyers and non-lawyer owned businesses. This has allowed, for example, grocery stores, banks and community organizations to hire lawyers to provide in-store and online basic legal services to customers. The rule is controversial. It is justified by many in the legal profession, notably the American Bar Association which rejected a proposal to change the rule in its Ethics 20/20 reforms, as necessary to prevent
conflicts of interest A conflict of interest (COI) is a situation in which a person A person (plural people or persons) is a being that has certain capacities or attributes such as reason, morality, consciousness or self-consciousness, and being a part of a cultu ...
. In the
adversarial system The adversarial system or adversary system is a legal system used in the common law In law, common law (also known as judicial precedent or judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by v ...
of justice, a lawyer has a duty to be a zealous and loyal advocate on behalf of the client, and also has a duty to not bill the client excessively. Also, as an officer of the court, a lawyer has a duty to be honest and to not file frivolous cases or raise frivolous defenses. Many in the legal profession believe that a lawyer working as a shareholder-employee of a publicly traded law firm might be tempted to evaluate decisions in terms of their effect on the stock price and the shareholders, which would directly conflict with the lawyer's duties to the client and to the courts. Critics of the rule, however, believe that it is an inappropriate way of protecting clients' interests and that it severely limits the potential for the innovation of less costly and higher quality legal services that could benefit both ordinary consumers and businesses.


Multinational law firms

Law firms operating in multiple countries often have complex structures involving multiple partnerships, particularly in jurisdictions such as Hong Kong and Japan which restrict partnerships between local and foreign lawyers. One structure largely unique to large multinational law firms is the
Swiss Verein Swiss may refer to: * the adjectival form of Switzerland ,german: Schweizer(in),french: Suisse(sse), it, svizzero/svizzera or , rm, Svizzer/Svizra , government_type = Federalism, Federal semi-direct democracy under a multi-party assembly-indep ...
, pioneered by
Baker McKenzie Baker McKenzie is a Multinational corporation, multinational law firm. Founded as Baker & McKenzie, in 1949, the firm is headquartered in Chicago, Illinois, with 77 offices in 46 countries, and over 6,000 lawyers worldwide. Baker McKenzie is one ...
in 2004 or a
GRATA International
in which multiple national or regional partnerships form an association in which they share branding, administrative functions and various operating costs, but maintain separate revenue pools and often separate partner compensation structures. Other multinational law firms operate as single worldwide partnerships, such as British or American limited liability partnerships, in which partners also participate in local operating entities in various countries as required by local regulations.


Financial indicators

Three financial statistics are typically used to measure and rank law firms' performance: * Profits per equity partner (PPEP or PPP):
Net operating income In accountancy, accounting and finance, earnings before interest and taxes (EBIT) is a measure of a firm's profit (accounting), profit that includes all incomes and expenses (operating and Non-operating income, non-operating) except interest expens ...
divided by number of equity partners. High PPP is often correlated with prestige of a firm and its attractiveness to potential equity partners. However, the indicator is prone to manipulation by re-classifying less profitable partners as non-equity partners. * Revenue per lawyer (RPL):
Gross revenue Gross may refer to: Finance *Gross Cash Registers, a defunct UK company with a high profile in the 1970s *Gross (economics), is the total income before deducting expenses Science and measurement *Gross (unit), a counting unit equal to 144 i ...
divided by number of lawyers. This statistic shows the revenue-generating ability of the firm's lawyers in general, but does not factor in the firm's expenses such as associate compensation and office overhead. * Average compensation of partners (ACP): Total amount paid to equity and nonequity partners (i.e., net operating income plus nonequity partner compensation) divided by the total number of equity and nonequity partners. This results in a more inclusive statistic than PPP, but remains prone to manipulation by changing expense policies and re-classifying less profitable partners as associates.


Structure and promotion


Partnership

Law firms are typically organized around
partners Partner, Partners, The Partner, or, The Partners may refer to: Books *The Partner (Grisham novel), ''The Partner'' (Grisham novel), by John Grisham, 1997 *The Partner (Jenaro Prieto novel), ''The Partner'' (Jenaro Prieto novel), 1928 *The Partners ...

partners
, who are joint owners and business directors of the legal operation; associates, who are
employee Employment is the relationship between two party (law), parties, usually based on a employment contract, contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or ot ...

employee
s of the firm with the prospect of becoming partners; and a variety of staff employees, providing
paralegal A paralegal is the professional of legal science Legal science is one of the main components in the civil law tradition (after Roman law, canon law Canon law (from grc, κανών, , a 'straight measuring rod, ruler') is a set of ordinances ...
, clerical, and other support services. An associate may have to wait as long as 11 years before the decision is made as to whether the associate is made a partner. Many law firms have an "
up or out Up or out, also known as a tenure or partnership system, is the requirement for members of a hierarchical organization to achieve a certain rank within a certain period of time. If they fail to do so, they must leave the organization. Examples ...
policy", integral to the
Cravath System #REDIRECT Cravath System The Cravath System is a set of business management principles first developed at Cravath, Swaine & Moore Cravath, Swaine & Moore LLP (known as Cravath) is an American law firm with its headquarters in New York City, and a ...
, which had been pioneered during the early 20th century by partner
Paul Cravath Paul Drennan Cravath (July 14, 1861 – July 1, 1940) was a prominent Manhattan Manhattan (), known regionally as the City and the urban core of the New York metropolitan area, is the most densely populated of the five boroughs of New York ...
of
Cravath, Swaine & Moore Cravath, Swaine & Moore LLP (known as Cravath) is an American law firm with its headquarters in New York City, and an additional office in London. The firm, one of the most prestigious law firms in the United States, is known for its complex and ...
, and became widely adopted by, particularly,
white-shoe firmA white-shoe firm is a leading professional services Professional services are occupations in the service sector requiring special training in the arts The arts refers to the theory, human application and physical expression of creativit ...
s; associates who do not make partner are required to resign, and may join another firm, become a solo practitioner, work in-house for a corporate legal department, or change professions.
Burnout According to the World Health Organization The World Health Organization (WHO) is a specialized agency of the United Nations United Nations Specialized Agencies are autonomous organizations working with the United Nations and each other ...
rates are notably high in the profession. Making partner is very prestigious at large or mid-sized firms, due to the competition that naturally results from higher associate-to-partner ratios. Such firms may take out advertisements in professional publications 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 A law library is a used by , s, s and their s, historians and other scholars of in order to . Law libraries are also used by people who draft or advocate for new laws, e.g. s and others who work in , , and offices or the U.S. and professio ...
(or a database subscription). Partners in a
limited liability partnership A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not ...
can largely operate autonomously with regard to cultivating new business and servicing existing clients within their book of business. Partner compensation methods vary greatly among law firms. At major United States law firms, the "compensation spread" (ratio between the highest partner salary and lowest partner salary) among firms disclosing information ranges from 3:1 to 24:1. Higher spreads are intended to promote individual performance, while lower spreads are intended to promote teamwork and collegiality. 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. The oldest continuing partnership in the United States is that of
Cadwalader, Wickersham & Taft Cadwalader, Wickersham & Taft LLP, (known as Cadwalader), is New York City's oldest law firm and one of the oldest continuously operating legal practices in the United States. Attorney John Wells founded the practice in 1792. Cadwalader's Lower Man ...
, founded in 1792, in
New York City New York, often called New York City to distinguish it from New York State New York is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of ...

New York City
. The oldest law firm in continuous practice in the United States is Rawle & Henderson, founded in 1783, in
Philadelphia Philadelphia (colloquially known simply as Philly) is the largest city in the Commonwealth A commonwealth is a traditional English term for a political community founded for the common good In philosophy Philosophy (from , ) is ...

Philadelphia
.


Termination of one's partnership

It is rare for a partner to be forced out by fellow partners, although that can happen if the partner commits a crime or malpractice, experiences disruptive mental illness, or is not contributing to the firm's overall profitability. However, some large firms have written into their partnership agreement a forced
retirement age This article lists the statutory retirement age in different countries. In some contexts, the retirement Retirement is the withdrawal from one's position or occupation or from one's active working life. A person may also semi-retire by reducing ...
for partners, which can be anywhere from age 65 on up. 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. Worldwide, partner retirement ages can be difficult to estimate and often vary widely, particularly because in many countries it is illegal to mandate a retirement age.


"Of counsel" role

In the United States, Canada and Japan, many large and midsize firms have attorneys with the job title of "counsel", "special counsel" or "
of counsel Of counsel is the title A title is one or more words used before or after a person's name, in certain contexts. It may signify either generation, an official position, or a professional or academic qualification. In some languages, titles may be i ...
." As the
Supreme Court of California The Supreme Court of California is the highest and final court of appeals in the courts A court is any person or institution, often as a government A government is the system or group of people governing an organized community, g ...
has noted, the title has acquired several related but distinct definitions which do not easily fit into the traditional partner-associate structure. These attorneys are people who work for the firm, like associates, although some firms have an
independent contractor Employment is the relationship between two parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview; cropped away black border edge.jpg, 300px, ''Hip, Hip, Hurrah!'' ...
relationship with their counsel. But unlike associates, and more like partners, they generally have their own clients, manage their own cases, and supervise associates. These relationships are structured to allow more senior attorneys to share in the resources and "brand name" of the firm without being a part of management or profit sharing decisions. 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, the title "of counsel" is given to retired partners who maintain ties to the firm. Sometimes "of counsel" refers to senior or experienced attorneys, such as foreign legal consultants, with specialized experience in particular aspects of law and practice. They are hired as independent contractors by large firms as a special arrangement, which may lead to profitable results for the partnership. In certain situations "of counsel" could be considered to be a transitional status in the firm.


Mergers and acquisitions between law firms

Mergers, acquisitions, division and reorganizations occur between law firms as in other businesses. The specific books of business and specialization of attorneys as well as the professional ethical structures surrounding conflict of interest can lead to firms splitting up to pursue different clients or practices, or merging or recruiting experienced attorneys to acquire new clients or practice areas. Results often vary between firms experiencing such transitions. Firms that gain new practice areas or departments through recruiting or mergers that are more complex and demanding (and typically more profitable) may see the focus, organization and resources of the firm shift dramatically towards those new departments. Conversely, firms may be merged among experienced attorneys as partners for purposes of shared financing and resources, while the different departments and practice areas within the new firm retain a significant degree of autonomy. Law firm mergers tend to be assortative, in that only law firms operating in similar legal systems are likely to merge. For example, U.S. firms will often merge with English law firms, or law firms from other common law jurisdictions. A notable exception is
King & Wood Mallesons King & Wood Mallesons (KWM, ) is a multinational corporation, multinational top tier law firm headquartered in Hong Kong. Its predecessor firms include King & Wood, one of the Red Circle (law firms), Red Circle of leading Chinese law firms, Malleso ...
, a multinational law firm that is the result of a merger between an Australian law firm and a Chinese law firm. Though mergers are more common among better economies, slowing down a bit during recessions, big firms sometimes use mergers as a strategy to boost revenue during a recession. Nevertheless, data from Altman Weil indicates that only four firms merged in the first half of 2013, as compared to eight in the same period in 2012, and this was taken by them as indicating a dip in morale regarding the legal economy and the amount of demand.


Size

Law firms can vary widely in size. The smallest law firms are lawyers practicing alone, who form the vast majority of lawyers in nearly all countries. Smaller firms tend to focus on particular specialties of the law (e.g.
patent law A patent is a type of intellectual property Intellectual property (IP) is a category of property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depe ...
,
labor law Labour laws (also known as labor laws or employment laws) are those that mediate the relationship between workers, employing entities, trade unions and the government. Collective labour law relates to the tripartite relationship between employee, ...
,
tax law Tax law or revenue law is an area of legal study in which public or sanctioned authorities, such as federal, state and municipal governments (as in the case of the US) use a body of rules and procedures (laws) to assess and collect tax A ...
, criminal defense, personal injury); larger firms may be composed of several specialized practice groups, allowing the firm to diversify its client base and market, and to offer a variety of services to their clients. Large law firms usually have separate litigation and transactional departments. The transactional department advises clients and handles transactional legal work, such as drafting contracts, handling necessary legal applications and filings, and evaluating and ensuring compliance with relevant law; while the litigation department represents clients in court and handles necessary matters (such as discovery and motions filed with the court) throughout the process of litigation.


Anglo-American development


Boutique law firms

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 Employment is the relationship between two parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview; cropped away black border edge.jpg, 300px, ''Hip, Hip, Hurrah!'' ...

employment
,
antitrust Competition law is a law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environmen ...
,
intellectual property Intellectual property (IP) is a category of property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner o ...
,
investment funds 200px, thumbnail, The values and performance of collective funds are listed in newspapers An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such a ...
,
telecommunications Telecommunication is the transmission of information by various types of technologies over wire, radio, Optical system, optical, or other Electromagnetism, electromagnetic systems. It has its origin in the desire of humans for communication ov ...
or aviation) and are called
boutique law firm A boutique law firm is a collection of attorneys typically organized in a limited liability partnership A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilit ...
s.


Virtual Law Firms

A 21st Century development has been the appearance of the virtual law firm, a firm with a virtual business address but no brick & mortar office location open to the public, using modern telecommunications to operate from remote locations and provide its services to international clients, avoiding the costs of maintaining a physical premises with lower overheads than traditional law firms. This lower cost structure allows virtual law firms to bill clients on a contingency basis rather than by billable hours paid in advance by retainer. Related innovations include alternative legal services provider (ALSP), legal outsourcing and what is sometimes called "NewLaw". The largest law firms have more than lawyers. These firms, often colloquially called "megafirms" or " biglaw", generally have offices on several continents, bill US$750 per hour or higher, and have a high ratio of support staff per attorney. Because of the localized and regional nature of firms, the relative size of a firm varies.


"Full service" firms

The largest firms like to call themselves " BigLaw" firms because they have sections specializing on each category of legal work, which in the U.S. usually means
mergers and acquisitions In corporate finance Corporate finance is the area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the Value investing, value of the firm to the shareholders, ...
transactions, banking, and certain types of high-stakes corporate litigation. These firms rarely do plaintiffs' personal injury work. However the largest law firms are not very large compared to other major businesses (or even other professional services firms). In 2008, the largest law firm in the world was the British firm
Clifford Chance Clifford Chance LLP is a multinational law firmA law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise consumer, clients (individuals or corporations ...

Clifford Chance
, which had revenue of over
US$ The United States dollar (symbol A symbol is a mark, sign, or word In linguistics, a word of a spoken language can be defined as the smallest sequence of phonemes that can be uttered in isolation with semantic, objective or pragmatics, ...
2 billion. In 2020,
Kirkland & Ellis Kirkland & Ellis LLP is an American law firm. Founded in 1909 in Chicago, Illinois, Kirkland is the largest law firm in the world by revenue, the seventh-largest by number of attorneys, and is the first law firm in the world to reach US$4 billion ...
came out on top with US$4.15 billion in revenue while
Hogan Lovells Hogan Lovells is an American-British co-headquartered in and It was formed on May 1, 2010 by the merger of the American law firm of Hogan & Hartson and the British law firm Lovells. Hogan Lovells employs about 2,400 lawyers across 40 offices ...
rounded out the list at number ten with US$2.25 billion, with Clifford Chance remains the only British firm among the top 10 Biglaw. This can be compared with $404 billion for the world's largest firm by turnover
ExxonMobil Exxon Mobil Corporation, stylized as ExxonMobil, is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multip ...
and $28 billion for the largest professional services firm
Deloitte Deloitte Touche Tohmatsu Limited (), commonly referred to as Deloitte, is a multinational corporation, multinational professional services network with offices in over 150 countries and territories around the world. Deloitte is one of the Big ...

Deloitte
.


Worldwide

The largest law firms (known as the " BigLaw") in the world are headquartered primarily in the United Kingdom and the United States. However, large firms of more than 1,000 lawyers are also found in Australia (
MinterEllison MinterEllison is a multinational corporation, multinational top tier law firm, and professional services firm, based in Australia. The firm has fifteen offices and operates in five countries. By number of lawyers it is the largest law firm in Aus ...
, 1,500 attorneys), China (Dacheng, 2,100 attorneys) and Spain (Garrigues, 2,100 attorneys). The American system of licensing attorneys on a state-by-state basis, the tradition of having a headquarters in a single U.S. state and a close focus on profits per partner (as opposed to sheer scale) has to date limited the size of most American law firms. Thus, whilst the most profitable law firms in the world remain in New York, four of the six largest firms in the world are based in London in the United Kingdom. But the huge size of the United States results in a larger number of large firms overall – a 2003 paper noted that the United States alone had 901 law firms with more than 50 lawyers, while there were only 58 such firms in Canada, 44 in Great Britain, 14 in France, and 9 in Germany. There is an increasing tendency towards globalisation of law firms. Due to their size, the U.S.- and U.K.-based law firms are the most prestigious and powerful in the world, and they tend to dominate the international market for legal services. A 2007 research paper noted that firms from other countries merely pick up their leftovers: " ch of the competition is relatively orderly whereby predominantly Australian, New Zealand, and Canadian firms compete for business not required by English or American law firms."


Recession

As a result of the U.S. recession in 2008 and 2009 many U.S. law firms have downsized staff considerably, and some have closed. The ''
Denver Post ''The Denver Post'' is a daily newspaper and website published in Denver, Colorado. As of March 2016, it has an average weekday circulation of 134,537 and Sunday circulation of 253,261. In 2016 its website received roughly six million monthly un ...
'' reported that major law firms have cut more than 10,000 jobs nationwide in 2009. On February 12, 2009,
BloombergBloomberg may refer to: People * Daniel J. Bloomberg (1905–1984), audio engineer * Georgina Bloomberg (born 1983), professional equestrian * Michael Bloomberg Michael Rubens Bloomberg (born February 14, 1942) is an American businessma ...
reported that 700 jobs were cut that one day at law firms across the country. Among the firms closed included
Heller Ehrman Heller Ehrman LLP was an international law firm A law firm is a business entity formed by one or more lawyers A lawyer or attorney is a person who practices law, as an advocate, attorney at lawAttorney at law or attorney-at-law, usually a ...
, a San Francisco-based firm established in 1890 and Halliwells of the UK. Among those that survived, law firm layoffs became so common that trade publications like
American Lawyer ''The American Lawyer'' is a monthly legal magazine and website published by ALM (company), ALM Media. It was founded in 1979 by Steven Brill (journalist), Steven Brill. In 1986, ''The American Lawyer'' purchased Review Business Publications of ...
produced an ongoing “Layoff List” of the law firms nationwide that cut jobs.


Salaries

Law firm salary structures typically depend on firm size. Small-firm salaries vary widely within countries and from one country to the next, and are not often publicly available. Because most countries do not have unified legal professions, there are often significant disparities in income among the various legal professions within a particular country. Finally, the availability of salary data also depends upon the existence of journalists and sociologists able to collect and analyze such data.


United States

The U.S. is presently the only country with enough lawyers, as well as journalists and sociologists who specialize in studying them, to have widely available data on salary structures at major law firms. In 2006, median salaries of new graduates ranged from
US$ The United States dollar (symbol A symbol is a mark, sign, or word In linguistics, a word of a spoken language can be defined as the smallest sequence of phonemes that can be uttered in isolation with semantic, objective or pragmatics, ...
50,000 per year in small firms (two to ten
attorneys
attorneys
) to US$160,000 per year in very large firms (more than 501 attorneys). The distribution of these salaries was highly bimodal, with the majority of new lawyers earning at either the high end or the low end of the scale, and a median salary of US$62,000. In the summer of 2016, New York law firm
Cravath, Swaine & Moore Cravath, Swaine & Moore LLP (known as Cravath) is an American law firm with its headquarters in New York City, and an additional office in London. The firm, one of the most prestigious law firms in the United States, is known for its complex and ...
raised its first-year associate salary to $180,000. Many other high-end New York-based and large national law firms soon followed. Two years later, in the summer of 2018, New York law firm
Milbank
Milbank
raised its first-year associate salary to $190,000, with other major firms following shortly thereafter. The traditional salary model for law firm associates is
lockstep compensationLockstep compensation is a system of remuneration Remuneration is the pay or other financial compensation provided in exchange for an employee Employment is a relationship between two party (law), parties, usually based on employment contract, ...
, in which associate salaries go up by a fixed amount each year from the associate's law school graduation. However, many firms have switched to a level-based compensation system, in which associates are divided into three (or sometimes four) levels based on skills mastered. In 2013, the median salaries for the three associate levels were $152,500, $185,000 and $216,000 among large firms (more than 700 lawyers), and $122,000, $143,500 and $160,000 among all firms. Some prominent law firms, like
Goodwin Procter Goodwin Procter LLP (known as Goodwin) is a Global 50 law firm consisting of more than 1,200 lawyers. Headquartered in Boston, Goodwin has offices in Cambridge, Frankfurt, Hong Kong, London, Los Angeles, Luxembourg, New York City, Paris, Santa Moni ...
and
Paul Hastings Paul Hastings LLP, formerly known as Paul, Hastings, Janofsky & Walker LLP, is an international law firm with 22 offices worldwide. Paul Hastings serves a diverse client base that includes many of the top financial institutions and Fortune 500 c ...

Paul Hastings
, give generous signing bonuses (e.g., $20k) to incoming first-year associates who hold JD/MBA degrees. Another way law firm associates increase their earnings or improve their employment conditions is through a lateral move to another law firm. A 2014 survey by
LexisNexis LexisNexis is a corporation that sells data mining Data mining is a process of extracting and discovering patterns in large data sets involving methods at the intersection of machine learning, statistics, and database systems. Data mining is an ...

LexisNexis
indicated that over 95% of law firms consulted intended to hire lateral attorneys within the next two years. Though the success for both the attorney and the law firms in lateral hiring has been questioned. The
National Law Review ''The National Law Review'' is an American law journal, daily legal news websites, news website and legal analysis news aggregator, content-aggregating database. In 2020, the National Law Review published over 20,000 legal news articles and experie ...
reported that the cost of recruiting, compensating, and integrating a lateral attorney can be upwards of $600,000 and that 60% of lateral attorney hires fail to thrive at their new law firms.


United Kingdom

British firms typically practise
lockstep compensationLockstep compensation is a system of remuneration Remuneration is the pay or other financial compensation provided in exchange for an employee Employment is a relationship between two party (law), parties, usually based on employment contract, ...
. In
London London is the capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller lowerc ...

London
, entry-level solicitor salaries (NQ - Newly Qualified) are typically: (i) £40,000-70,000 at boutique and national firms, (ii) £80,000-100,000 at magic circle firms, and (iii) £120,000-£155,000 at London offices of leading US firms. A senior associate with six years' experience may make £68,000-120,000 at a national firm or upwards of £160,000 at a global firm. Salary levels are lower in areas outside London.


Australia

Australia has regional variation in lawyer salaries, with the highest salary levels in
Sydney Sydney ( ; Dharug The Darug or Dharug people are an Aboriginal Australian people, who share strong ties of kinship and, in Colonial Australia, pre-colonial times, survived as skilled hunters in family groups or clans, scattered througho ...

Sydney
, followed by
Melbourne Melbourne ( ) is the capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller ...

Melbourne
,
Perth Perth () is the list of Australian capital cities, capital and largest city of the Australian state of Western Australia (WA). It is Australia's list of cities in Australia by population, fourth-most populous city, with a population of 2.1 mi ...

Perth
,
Brisbane Brisbane ( ) is the capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller low ...

Brisbane
, then
Adelaide Adelaide ( ) is the capital city A capital or capital city is the municipality holding primary status in a Department (country subdivision), department, country, Constituent state, state, province, or other administrative region, usually ...

Adelaide
. Salaries vary between top-tier, mid-size, and small firms. At top-tier firms in Sydney, salaries of lawyers who have been admitted to practice range from $75,000 to $92,000 and partners make on average $1,215,000. In Sydney, mid-tier starting salaries for admitted lawyers range from between $65,000 and $82,000 Most Australian lawyers are not admitted until ten months into their time at their law firm, since the initial period involves supervised legal training before admission is granted. Typically in Australian firms lawyers are in a lock-step system for the first two years of practice, following which pay increases are dependent on performance assessed, in large measure, by satisfaction of billable hour targets.


Hong Kong

Newly qualified associates at leading firms in Hong Kong typically make HK$840,000 to HK$948,000, with partners in the HK$1.6 million to HK$4 million+ range; many firms pay New York salaries with cost of living adjustments.


Singapore

At local firms in Singapore, associates in their first three years typically make $60,000 to $100,000, while midlevel (4–7 years) associates make $110,000 to $180,000 and senior (8+ years) associates make $160,000 or more. International firms pay significantly more, with senior associates often making more than $250,000.


India

There is more information available for entry level associates. First-year lawyers earn anywhere between INR 8,000 to INR 1,10,000 per month. Tier 1 law firms provide the best pay package, of about INR 15,00,000 annually. There is wide difference in the salary range depends on the city, law firm, and university of the candidate. The salary is higher in cities like Mumbai and Delhi as opposed to other cities like Kolkata, Benaras, Pune, Ahmedabad, etc.


Location

Most law firms are located in office buildings of various sizes, ranging from modest one-story buildings to some of the tallest
skyscraper A skyscraper is a tall continuously habitable building having multiple floors. Modern sources currently define skyscrapers as being at least 100 metres or 150 metres in height, though there is no universally accepted definition. Skyscrapers ar ...

skyscraper
s in the world (though only in 2004,
Paul Hastings Paul Hastings LLP, formerly known as Paul, Hastings, Janofsky & Walker LLP, is an international law firm with 22 offices worldwide. Paul Hastings serves a diverse client base that includes many of the top financial institutions and Fortune 500 c ...

Paul Hastings
was the first firm to put its name on a skyscraper). In late 2001, it was widely publicized that John C. Dearie's personal injury plaintiffs' firm in the state of New York has been experimenting with
bus A bus (contracted from omnibus, with variants multibus, motorbus, autobus, etc.) is a road vehicle A vehicle (from la, vehiculum) is a machine A machine is a man-made device that uses power to apply forces and control movement t ...

bus
-sized "mobile law offices." The firm insists that it does not " chase ambulances". It claims that a law office on wheels is more convenient for personal injury plaintiffs, who are often recovering from severe injuries and thus find it difficult to travel far from their homes for an intake interview.


Rankings

Law firms are ranked both objectively, such as by
revenue In accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be used to comp ...
, profits per partner, and subjectively, by various legal publishers and journalists. As legal practice is adversarial, law firm rankings are widely relied on by prospective associates, lateral hires and legal clients. Subjective rankings typically cover practice areas such as
The American Lawyer ''The American Lawyer'' is a monthly legal magazine A magazine is a periodical literature, periodical publication which is printing, printed in Coated paper, gloss-coated and Paint sheen, matte paper. Magazines are generally published on a ...
's Corporate Scorecard and Top IP Firms. Work place rankings are directed toward lawyers or law students, and cover such topics as quality of life, hours, family friendliness and salaries. Finally,
statistical Statistics is the discipline that concerns the collection, organization, analysis, interpretation, and presentation of data. In applying statistics to a scientific, industrial, or social problem, it is conventional to begin with a statist ...
rankings generally cover profit-related data such as profits per partner and revenue per lawyer. Third party attorney ranking services such as Chambers and Partners and
Martindale-Hubbell Martindale-Hubbell is an information services company to the legal profession that was founded in 1868. The company publishes the ''Martindale-Hubbell Law Directory'', which provides background information on lawyers and law firms in the United St ...
are generally very competitive and can help raise an individual attorney's professional profile, and to catch this marketing advantage, over 1,200 attorney ranking and or awards have sprung up in the U.S. Various state bar associations have taken notice of the prolific growth of attorney honor awards and have determined that lawyers may refer to such honors in advertising
only when the basis for comparison can be verified” and the organization providing the award “has made adequate inquiry into the fitness of the individual lawyer.
In an October 2007 press conference reported in ''
The Wall Street Journal ''The Wall Street Journal'', also known as ''The Journal'', is an American business-focused, English-language international daily newspaper A newspaper is a periodical Periodical literature (also called a periodical publication or sim ...

The Wall Street Journal
'' and ''
The New York Times ''The New York Times'' is an American daily newspaper based in New York City with a worldwide readership. Founded in 1851, the ''Times'' has since won List of Pulitzer Prizes awarded to The New York Times, 132 Pulitzer Prizes, the most of a ...

The New York Times
'', the law student group
Building a Better Legal Profession Building a Better Legal Profession (BBLP) was a non-profit organization founded by students at Stanford Law School in 2007. They analysed employment data at large private law firms to promote workplace reform at these companies by encouraging stude ...
released its first annual ranking of top law firms by average billable hours, ''
pro bono ''Pro bono publico'' ( en, "for the public good"; usually shortened to ''pro bono'') is a Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoke ...
'' participation, and demographic diversity. Most notably, the report ranked the percentages of women,
African-Americans African Americans (also referred to as Black Americans or Afro-Americans) are an ethnic group An ethnic group or ethnicity is a grouping of people A people is any plurality of person A person (plural people or persons) is a being t ...
, Hispanics,
Asian-Americans Asian Americans are Americans of Asian people, Asian ancestry (Naturalization, naturalized Americans who are Immigration to the United States, immigrants from Asia may also identify as Asian-Americans). Although it had historically been used to ...
, and gays & lesbians at America's top
law firms A law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise consumer, clients (individuals or corporations) about their legal rights and Obligation, respon ...
. The group has sent the information to top law schools around the country, encouraging students to take this demographic data into account when choosing where to work after graduation. As more students choose where to work based on the firms' diversity rankings, firms face an increasing market pressure in order to attract top recruits.


In popular culture

A number of
television Television, sometimes shortened to TV or telly, is a telecommunication Telecommunication is the transmission of information by various types of technologies over wire A wire is a single usually cylindrical A cylinder (from Gre ...

television
shows, movies and books have revolved around relationships occurring in fictional law firms, highlighting both public fascination with and misperception of the lives of lawyers in high-powered settings. One popular American legal drama television series is called '' Suits''. There is one popular American dramedy, also known as,
comedy-drama Comedy music, Comedy-drama, or dramedy, is a genre of dramatic works that combines elements of comedy and Drama (film and television), drama. In the United States Example include ''The Days and Nights of Molly Dodd'', which aired from 1987 to ...
called ''
Boston Legal ''Boston Legal'' is an American legal drama, legal comedy-drama television series created by David E. Kelley and produced in association with 20th Century Fox Television for American Broadcasting Company, ABC. The series aired from October 3, 20 ...
'' which was created by
David E. Kelley David Edward Kelley (born April 4, 1956) is an American television writer A screenplay writer (also called screenwriter for short), scriptwriter or scenarist, is a writer who practices the craft of screenwriting, writing screenplays on whi ...
and produced in association with 20th Century Fox Television for ABC. It is a spin-off of another long running Kelley series, ''
The Practice ''The Practice'' is an American legal drama A legal drama, or a courtroom drama, is a genre of film and television that generally focuses on narratives regarding legal practice and the justice system. The American Film Institute (AFI) defi ...
'', following the exploits of former character Alan Shore at the legal firm of Crane, Poole & Schmidt. One famous legal movie is called '' The Firm'', which was adapted from a book written by
John Grisham John Ray Grisham Jr. (; born February 8, 1955) is an American novelist and lawyer known for his popular legal thriller The legal thriller is a subgenre of Thriller (genre), thriller and crime fiction in which the major characters are lawyers an ...

John Grisham
.


See also

*
List of largest law firms by revenue This is a list of the world's largest law firmA law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise consumer, clients (individuals or corporations) ab ...
*
List of largest law firms by profits per partner A ''list'' is any set of items. List or lists may also refer to: People * List (surname) Organizations * List College, an undergraduate division of the Jewish Theological Seminary of America * SC Germania List, German rugby union club Ot ...
*
Book of business (law) Book of business is common parlance in the United States legal services sector and refers to the collection of clients that a lawyer (usually a partner) has assembled throughout their career. Since most U.S. law firms are organized as limited liab ...
*
Law firm network A law firm network (law firm association or legal network) is a membership organisation consisting of independent law firmA law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered b ...
*
Multidisciplinary professional services networks Multidisciplinary professional services networks are organizations formed by law, accounting and other professional services firms to offer clients new multidisciplinary approaches solving increasingly complex issues. They are a type of Profession ...
* White shoe firm


References


External links

*
Different types of law firm in the UK
{{DEFAULTSORT:Law Firm Law firms, Practice of law Legal entities Legal organizations