Who owns a law firm?

Jan 11, 2023

Written By Claudia Chan

Law firms are ultimately businesses. As such, it is important to know who owns a law firm to widen your commercial awareness. Typically, law firm partners are also law firm owners. This article seeks to explain how this is the case.

Law firm partners as owners

It is first important to note the particular type of terminology in relation to law firm business structures. Law firms do not have Chief Executive Officers (CEO) to run the company. This is attributed to the fact that law firms are not companies, but partnerships. Instead, its owners are partners. The law firm’s equivalent to CEOs are known as ‘managing partners’ or ‘senior partners’. All law firms have one and who they are can be located on the individual law firm’s website.

In a traditional law firm partnership, all law firm partners are equity partners who buy into the firm and generate revenue in exchange for share of ownership and profits. As a result of this practice, they are partial owners, and thus they are more involved with the operation of a law firm as a business than associates. They are also concerned with implementing strategies and policies that are best for the firm’s growth.

Two-tier partnerships

Alternatively, in two-tier partnerships, some are equity partners, while others are non-equity partners. Equity partners are those who funded a buy-in to own a portion of the law firm. Non-equity partners, on the other hand, do not have to buy-in and thus do not have an ownership stake in the firm. They merely have the title of partner, and depending on the firm, they may have additional powers like limited voting rights.

Non-lawyers as owners

The introduction of the Legal Services Act in 2007 allowed for the creation of alternative business structures (ABS). This gave non-lawyers the power to form business alongside lawyers, and to get involved in the owning and managing of businesses that provide legal services. Learn more about the capabilities of non-lawyers here.

Becoming a Lawyer