What is the structure of a law firm?

Jun 12, 2023

Written By Stephen Demery

The organisational structure of law firms can, at first glance, seem much more complicated than businesses of a similar size. This article provides some transparency on how exactly law firms are structured, which is hugely important in understanding legal practice as a whole. Law firm also may expect prospective trainess to have an understanding of how they operate.

Limited liability partnerships

The vast majority of large commercial law firms are structured as limited liability partnerships (“LLPs”). This is why you so often see ‘LLP’ on the end of law firm names, such as ‘Linklaters LLP’ or ‘Kirkland & Ellis LLP’. This structure is favoured for the protection it offers partners – the potential liability of partners in the event of the firm becoming insolvent is limited to the terms of their partnership agreement.

In simpler terms, when someone is promoted to or joins the partnership of a law firm, they agree to stake a sum of money in order to buy into the firm and receive profits. If the firm ever became unable to pay its debts and got wound up, partners would be liable to lose this stake but nothing further – their liability is limited. Senior lawyers have found this arrangement less risky than traditional partnerships which explains the rise and dominance of the LLP.

There are exceptions to the LLP model, the most notable example of which being Magic Circle law firm Slaughter and May, which remains a traditional partnership. Some law firms are also limited liability companies, including DWF and Gateley, and as such are listed on the stock market. But these firms are the exception rather than the rule.

Lawyer Hierarchy

Partners are therefore at the top of law firm hierarchies. They own a stake in the firm, bring in clients who provide the vast majority of revenue, and generally supervise the firm’s operation. They manage the practice areas and departments of the firm, which are discussed later on.

Legal Directors are situated just below partners in the law firm hierarchy, although they are not necessarily present in every firm. They will perform similar management duties to partners, including leading deals and managing a client portfolio. The key distinction is that legal directors do not have equity in the firm – this prevents them from ownership and input on key business decisions at the top of the firm. Instead of deriving their income from equity profit, they receive a salary.

Next step down are the Associates - fully qualified solicitors who conduct day-to-day legal practice in a department or seat led by a partner. Associates are often defined by the amount of years they have been qualified for, with recent qualifiers (3+ years) often termed as ‘Junior Associates’ and those more seasoned as ‘Senior Associates’ (6+ years). Law firms often (but not always) promote their senior associates to partnership.

The difference between Solicitors and associates is that associates have at least three years experience post-qualification. Solicitor refers to someone who has recently become qualified, after completing two years legal work experience, passing the SQE exams and meeting the Solicitor Regulation Authority’s character and suitability requirements.

Below qualification level are the Trainees and Paralegals. Both groups have a level of legal expertise and will usually undertake a lot of the administrative leg-work that is needed to complete a deal or meet a deadline, and are usually supervised by an associate.

The primary difference between the two is that paralegals will remain in one seat whilst trainees will move seats every four to six months depending on the nature of their training contract. Trainees will often also be given tasks that will help train them to become solicitors.

Support Staff (Non-fee-earners)

Law firms have a wide variety of support staff to assist lawyers in their legal practice, who are often referred to as ‘non-fee earners’. This is because the work they do won’t be found on an invoice to a client so they don’t earn fees directly from them. Despite this, they are still an indispensable cohort within a law firm. Support staff work includes:

- IT

Human Resources and Recruitment

- Finance & Accounting

- Secretaries and Personal Assistants

- Business Development

- Mailroom

Practice Areas

Partners divide their law firms into what are known as ‘practice areas’ which are simply fields of legal practice such as family or employment. They take the work the client wants them to perform to their team of lawyers and trainees/paralegals who then complete the work as a team in the allotted time. Once it is finished, the firm sends a bill containing the number of hours worked to the client.

Practice areas tend to be categorised as either:

- Contentious – Meaning the work revolves around litigation or a legal dispute of some kind, with lawyers in these seats often acting for their clients in a court case.

- Transactional/Non-Contentious – Meaning the work revolves around the legal issues and formalities involved in a transaction such as a business deal or a merger.

Although some practice areas do not fit neatly into these two categories, the structure of law firms can generally be viewed in the above format. Training contracts almost always require trainees to spend a rotation in each category.

Law Firm Structure