By

Adv. (Sol.) Debashish Goswami,

BSL, LLB (ILS), MSc (Gla) DL (LSE)
 Definitions

 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, business transactions, and other matters in
which legal advice and other assistance are sought.

This is a traditional definition

 Structures
 Any entity – firm, company, PVO, NGO, trust etc evolve on the
source – REVENUE

 Depending on the Revenue Stream, the structure adopts its

shape/design

 Therefore, for any entity to grow and develop, the importance is on

flexibility more than specific attributes

Moh Ming, Moh Meng

(Old Chinese proverb – no money, no life!!!)
 Legal Structures
 Law firms are organized in a variety of ways, depending on the
jurisdiction in which the firm practices.

 Common arrangements include:

 Sole proprietorship
 General partnership
 Professional corporations
 Limited liability company
 Professional association
 Limited liability partnership (LLP)
 Law Firms Defined
 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.
 Firm Construction
Law firms are typically organized around the following people;

 Partners, who are joint owners and business directors of the legal operation;
 Associates, who are employees of the firm with the prospect of becoming partners; upon the
decision of performance or discretion.
 A variety of staff employees, providing paralegal, clerical, and other support services.

 Partners who create the law firm usually are known as equity partners – they
are the real movers & shakers of the firm – in short, they share profits.

 Associates, who by high levels of performance make partner, are known as

“salaried” or “retained” partners who may or may not share profits.
 Remuneration
 Law firm salary structures typically depend on firm size - The most famous
compensation structure is the Lockstep Compensation

 This is a system of remuneration in which the employees' salaries are based purely on
their seniority within the organization. For example, all law school graduates hired by a
law firm who graduated in the same year receive the same base pay, regardless of the
background, experience, or ability of each.

 The lockstep system of compensation has the benefit of being easy to administer,
reducing internal competition within firms, and maintaining a single company
philosophy. At the same time, however, it has been criticized for being inefficient and
reducing incentives for employees to improve performance.

 During the global financial crisis of 2008–2009, some law firms began replacing the
lockstep system with "merit-based" systems.
 Premises
Location is ALL ?

 Most law firms are located in office buildings of various sizes, ranging from modest
one-story buildings to some of the tallest skyscrapers (Manhattan law firms) in the
world

 Some solo practitioners practice out of their homes or in offices built as special
additions to their homes which is a typical traditional structure saving on costs
(found in small town India as well as small town America)

 Because their "work product" is often intangible, or at least conceptually difficult

for clients to grasp, large corporate firms are notorious for using jaw-dropping
interior design (huge amount of floor space and fantastic views) as a "shock and
awe" tactic to impress prospective clients and intimidate opposing counsel.

 Other firms will find more modest office space, depending on the nature of the
practice. A recent design being the mobile law office out of a modified SUV or a
caravan trailer which is more convenient for those with rural clients etc
 Identity
 Name – Decisive and Memory Sticky

 Logo – Eventual Process

 Website – Immediate Priority

 USP and PR – Essential in Long Run

 Development Plan – Eventual Process

 Focal Review Structure – Eventual Process

 Perks & Benefits – Envisage & Implement

 Internal Infrastructure (Comfort Zone) - ?

 Rules & Regs
 Similar to any other partnership firm, a law firm has traditionally been
governed by the same acts – with the main difference being the addition of
two other Acts.

 The main acts from which a law firm evolves;

 The Indian partnership Act, 1932
 The Advocates Act, 1961
 The Bar Council of India Rules

 One of the primary differences with other firms is that a law firm may liaison
with a CA firm but may not have it as part of the same masthead.
 Methodology
 A law firm comes into existence upon the execution of the below
steps;

 A registered partnership deed outlining the jurisdiction and subject matter

of said partnership

 Proper accounts and auditing of the records and registering under the
concerned taxation details (service/professional tax etc)

 Presence of premises wherein the partnership is shown as having its

registered offices

 Clients who PAY – LOTS of CLIENTS

 Management - I
 Running a law firm successfully is often a matter of clever management.

 There are four key elements for a law firm’s success:

 Being clear about your chosen area of business;
 Finding and keeping good people; both employees & clients
 Delivering an excellent service to clients; and
 Securing a financial return that enables the firm to reward its people and invest in
the continuing development of the business.

 These four elements are applicable regardless of the size or location of the firm and
whether it is a two-partner general practice or a major commercial firm.

 Firms, however, have to work hard to achieve these four elements; it does not happen
on its own.
 Management - II
 It is not sufficient that the firm has technically competent lawyers. Having technically competent and
motivated lawyers is important but it is no longer sufficient to guarantee success.
 
 Success today has a lot to do with the way a firm is run and structured, where the markets it serves are
going, and where the firm is positioned in all these developments.

 The truth is, lawyers generally have not had the training to manage people and many lawyers find this
difficult.

 Law firm management therefore should be as uncomplicated as possible, and the structure should be to
deliver a solution that is;

 Simple
 Appropriate to the firm
 Able to draw on the strengths and talents of the partners and staff.

 It is important not to loose sight of what the staff can contribute. Equity partners are not the only ones with
ideas.
 Firm Administration
Management not Administration
 There is often a major confusion about what we actually mean by
‘management’ and the distribution between management and
administration.

 Partners can easily confuse administration with management and get

involved with things that need to be done, but not necessarily by them.

 For example, being the person that secretaries go to when their printer is not
working, changing the paper in the photocopier, fixing minor staff problems.

 While a partner may need to take overall responsibility for the administration, they
rarely need to do it themselves.

 If you assume a partner charge out rate of $500 per hour, then two hours used in
unnecessary administration a day amounts to $240,000 of lost revenue annually!
 Time Management
 Time is one thing most partners lack and it must be used carefully. Partners should be more
concerned with strategic issues and with driving the business forward.

 The starting point will be the management structure and the role of the partner in that
management structure. The problem is, because of pressures on time, partners simply undertake
their fee earning work and pay lip service to management.

 It is important in the management of the firm to:

 Assess the operational structure of the firm;

 Define the roles appropriate to the operational structure and to identify the best people to
fill these roles;
 Prepare business and marketing plans and budgets for each team or business unit;
 Translate team plans into individual objectives and an action plan for each fee earner and
member of the staff; and
 Ensure effective financial management controls and establish a simple reporting system, so
that progress can be monitored and the plans reviewed and modified on an on-going basis.
 Summary
 In summary, here are some of the key elements in managing a law firm:

 A sense of focus on the markets you serve;

 Recruiting and retaining good people;
 Providing excellent client services; and
 Generating sufficient profit.

 Constantly reminding the partners that they should be engaged in management, not
administration.

 Reviewing your operational and management structure every three to five years to ensure that
they are appropriate for the future and are innovative.

 Defining the roles and ensuring that the right people are running your firm.

 The recent recession and increasing competition, both between firms and professionals, has
left firms struggling to make profits. It is important that lawyers recognise that good
management can enable them to maximise the profitability of their firms.
 Current Status
 The context of this PPT was to outline designs/structures for a
proposed law firm and offer some background / ideas

 Being unaware of either the client list or area of operations, i.e. the
sub-text of organizational design, its not possible to draw up scale
models of structures

 However, the best designs are organic – free flowing, adaptable and
flexible for future growth and development
 Proposition
 The simplest organic structure present in the Indian legal-management scene
is the LLP or the Limited Liability Partnership.

 As stated before; an LLP is a structure where the extent of liability is

protected

 Being an organic structure, it is also a hybrid entity which lends itself to a

variety of designs as per requirements or exigencies of the situation

 The taxation is also beneficial for any initial start-up venture.

 Logical Review
 The overall aim and purpose of your firm’s management structure should be
to:
 help the partners realise their aspirations for the firm, in particular with regard to
profitability, both in the short term and also in the longer term;
 enable the partners to concentrate on the important issues facing the firm rather than
on day-to-day matters;
 provide leadership and a sense of direction;
 use partner time effectively; and get things done.

 In essence its function is two-fold:

 to ensure the smooth running of the firm; and
 to enable the firm to move forward and develop.

 The LLP Structure should answer for most requirements as part of any start-
up entity in Guwahati, Assam
 Variations/Modifications
 Depending on the variety of areas envisaged, a law firm can
ALSO assume the following facets;

 Lobbyist Group
 Private Voluntary Organization
 Liaison Consultancy
 Legal Process Outserver
 T&D Chapters

 The variants or modifications could also be considered once the

actual main structure (LLP) is in place – while care must be
taken that the averments of the LLP protocol leave enough
flexibility for the same
 Conclusion

 Structures and designs can be constructed as per the

demands of the revenue streams or clientele modality

 The basic requirements are always;

 Authorization (Paperwork)
 Resource Application (Premises/Recruitment)
 Revenue Generation (Clientele)

And you’re in business…..

 You’re
Welcome !!!