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Watson Glaser and Case Study Resources
An introduction to law firms
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<blockquote data-quote="Jaysen" data-source="post: 685" data-attributes="member: 1"><p>Hey, </p><p></p><p>I'll answer these questions over the next few days. Starting with the first - </p><p></p><p><strong>How are law firms structured?</strong></p><p><strong></strong></p><p>Most large commercial law firms operate as a limited liability partnership or "LLP". An LLP, like a company, has a separate legal personality. It can enter into contracts, incur debts and conduct business in its own name. If things go wrong, the members of the LLP - the partners - are only liable to the extent agreed (or as stated in the members agreement). </p><p></p><p>A majority of the large commercial firms have moved to an LLP. In the UK top 50, Slaughter and May is the only general partnership. As a general partnership, the firm is not obliged to register or file accounts with Companies House, so it's good for law firms that want to keep their financials private. But it's not so good if things go wrong because the partners in a general partnership have unlimited liability - so each partner is personally responsible for the debts/liabilities of the firm.</p><p></p><p>The partnership - whether an LLP or general partnership - is a structure that has been used by law firms for decades. The equity partners own the law firm and have a right to share in the profits once the firm's expenses are paid. They're flexible vehicles that can deal with changes to the partnership and compensation. As owners of the business, partners get a say in how a law firm is run, although the overall law firm strategy is often delegated to an executive committee.</p></blockquote><p></p>
[QUOTE="Jaysen, post: 685, member: 1"] Hey, I'll answer these questions over the next few days. Starting with the first - [B]How are law firms structured? [/B] Most large commercial law firms operate as a limited liability partnership or "LLP". An LLP, like a company, has a separate legal personality. It can enter into contracts, incur debts and conduct business in its own name. If things go wrong, the members of the LLP - the partners - are only liable to the extent agreed (or as stated in the members agreement). A majority of the large commercial firms have moved to an LLP. In the UK top 50, Slaughter and May is the only general partnership. As a general partnership, the firm is not obliged to register or file accounts with Companies House, so it's good for law firms that want to keep their financials private. But it's not so good if things go wrong because the partners in a general partnership have unlimited liability - so each partner is personally responsible for the debts/liabilities of the firm. The partnership - whether an LLP or general partnership - is a structure that has been used by law firms for decades. The equity partners own the law firm and have a right to share in the profits once the firm's expenses are paid. They're flexible vehicles that can deal with changes to the partnership and compensation. As owners of the business, partners get a say in how a law firm is run, although the overall law firm strategy is often delegated to an executive committee. [/QUOTE]
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