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Law firm

Law firm

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Published by 121281
Law Firm, Corporate Lawyer, attorney, lawyer
Law Firm, Corporate Lawyer, attorney, lawyer

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Published by: 121281 on Sep 15, 2009
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Law firm
The examples and perspective in this article
may not represent aworldwide viewof the subject
. Pleaseimprove this articleand discuss the issue on thetalk page. A
law firm
is a business entity formed by one or more lawyersto engage in the practice of law. The primary service provided by a law firm is to advise clients(individuals or corporations) about their legalrights andresponsibilities,and to represent their clients in civilor criminal cases,business transactions and other matters in which legal assistance is sought.
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[edit] Arrangements
 
Law firms are organized in a variety of ways, depending on the jurisdiction in which the firm practices. Common arrangements include:
Sole proprietorship, in which the attorney
is
the law firm and is responsible for all profit,loss and liability;
General partnership, in which all of the attorneys in the firm equally share ownership andliability;
Professional corporations, which issue stock to the attorneys in a fashion similar to that of  a business corporation;
Limited liability company,in which the attorney-owners are called "members" but are notdirectly liable to third party creditors of the law firm;
Professional association, which operates similarly to a professional corporation or alimited liability company;
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.
[edit] Restrictions on ownership interests
In many countries, including theUnited Statesand theUnited Kingdom, there is a rule that only lawyers may have an ownership interest in, or be managers of, a law firm. Thus, law firmscannot quickly raisecapitalthroughinitial public offeringson the stock market, like most corporations. In the United States this rule is promulgated by theAmerican Bar Associationand is adhered to in all U.S. jurisdictions, except the District of Columbia.
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 prevent conflicts 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.
[edit] Structure and promotion
[edit] Partnership
Law firms are typically organized around partners, who are joint owners and business directors of the legal operation;associates, who areemployees of 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
 
around 1900 by partner Paul Cravathof  Cravath, Swaine & Moore
 
): 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 are very 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 in legal 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 partnership can largely operate autonomously 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,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 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.
[edit] 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 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.
[edit] "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." As theSupreme Court of Californiahas noted, 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 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. 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.

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