From Wikipedia, the free encyclopedia

A law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service provided by a law firm is to advise clients (individuals or corporations) about their legal rights and responsibilities, and to represent their clients in civil or criminal cases, business transactions and other matters in which legal assistance is sought

Smaller firms tend to focus on particular specialties of the law (e.g. patent law, labor law, tax law, criminal defense, personal injury); larger firms may be composed of several specialized practice groups, allowing the firm to diversify their client base and market, and to offer a variety of services to their clients.^[1]

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 and liability;
• 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 not directly liable to third party creditors of the law firm;
• Professional association, which operates similarly to a professional corporation or a limited liability company;
• Limited liability partnership (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.

In many countries, including the United States and the United Kingdom, 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 through initial public offerings on the stock market, like most corporations. In the United States this rule is promulgated by the American Bar Association and adhered to in almost all U.S. jurisdictions.

The rule was created in order to prevent conflicts of interest. In the adversarial system of justice, a lawyer has a duty to be a zealous and loyal advocate on behalf of the client. Also, as an officer of the court, a lawyer has a duty to be honest and to not file frivolous cases. A lawyer working as a shareholder-employee of a publicly traded law firm would be strongly 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.

In the United Kingdom, lawyers are divided between barristers, who plead in the higher courts and give expert opinions on points of law, and solicitors who act directly for clients. Even though barristers are traditionally seen as the senior branch of the legal profession, and the most distinguished British lawyers are generally barristers, most barristers are self-employed sole practitioners (although they share facilities in sets of rooms known as "chambers", usually at one of the four Inns of Court). All the main UK law firms are firms of solicitors.

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 handle necessary matters (such as discovery and motions filed with the court) throughout the process of litigation.