is a business entity formed by one or morelawyersto engage in the practice of law.The primary service provided by a law firm is to adviseclients(individuals or corporations)about their legalrightsandresponsibilities,and to represent their clients incivilor criminalcases,business transactions and other matters in which legal assistance is sought.
Limited liability partnership(LLP), in which the attorney-owners are partners with oneanother, 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 whileenjoying the liability protection of a corporation.
The U.K. has a similar rule, but in recent years there have been discussions about relaxing it in order to allow law firmsto expand more rapidly.The rule was created in order to preventconflicts of interest.In theadversarial systemof justice,a lawyer has a duty to be a zealous and loyal advocate on behalf of the client, and also has a dutyto not bill the client excessively. Also, as an officer of the court, a lawyer has a duty to be honestand to not file frivolous cases or raise frivolous defenses. A lawyer working as a shareholder-employee of a publicly traded law firm would be strongly tempted to evaluate decisions in termsof their effect on the stock price and the shareholders, which would directly conflict with thelawyer's duties to the client and to the courts.
Law firms are typically organized around partners, who are joint owners and business directorsof the legal operation;associates, who areemployeesof the firm with the prospect of becoming partners; and a variety of staff employees, providing paralegal, clerical, and other supportservices. An associate may have to wait as long as 9 years before the decision is made as towhether the associate "makes partner". Many law firms have an "up or outpolicy" (pioneered
): associates who do notmake 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( burnoutrates arevery high in law
).Making partner is very prestigious, especially due to competition at a large or mid-sized firm.Such firms may take out advertisements inlegal newspapersto 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 thelaw library(or adatabase subscription). Partners in alimited liability partnershipcan largely operateautonomously with regards to cultivating new business and servicing existing clients within their book of business. However, many large law firms have moved to a two-tiered partnership model,withequity and non-equity partners.Equity partners are considered to have ownership stakes inthe firm, and share in the profits (and losses) of the firm. Non-equity partners are generally paida fixed salary (albeit much higher than associates), and they are often granted certain limitedvoting rights with respect to firm operations. The world's oldest continuing partnership is that of Cadwalader, Wickersham & Taft, founded in 1792 in New York City.
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 tothe firm's overall profitability. However, some large firms have written into their partnershipagreement a forcedretirement agefor partners. This age can be anywhere from age 65 on up. Incontrast, most corporate executives are at much higher risk of being fired, even when theunderlying cause is not directly their fault, such as a drop in the company's stock price.
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." As theSupreme Court of Californiahasnoted, the title has acquired several related but distinct definitions which do not easily fit into thetraditional partner-associate structure.
These attorneys are employees of the firm likeassociates, although some firms have anindependent 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. These relationships are structured to allowmore senior attorneys 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 donot make partner, or who are laterally recruited to other firms, or who work as in-house counseland then return to the big firm environment. At some firms, the title "of counsel" is given toretired partners who maintain ties to the firm. Sometimes "of counsel" refers to senior or experienced attorneys, such as foreign legal consultants with experience in international law and practice and their own clients. They are hired as independent contractors by large firms as aspecial arrangement, which may lead to profitable results for the partnership. In these situation"of counsel" could be considered to be a transitional status in the firm.