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

Arrangements
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 possession 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 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.
Restrictions on possession interests
In lots of countries, including the United States and the United Kingdom, there is a rule that only lawyers may have an possession interest in, or be managers of, a law firm. Thus, law firms cannot quickly raise capital through preliminary public offerings on the stock market, like most corporations. In the United States this rule is promulgated by the American Bar Association and is adhered to in all U.S. jurisdictions, except the District of Columbia.[1] The U.K. has a similar rule, but in recent years law firms have been able to take on a limited number of non-lawyer partners.

The rule was created in order to prevent conflicts of interest. In the adversarial method of justice, a lawyer has an obligation to be a zealous and loyal advocate on behalf of the client, and also has an obligation to not bill the client excessively. Also, as an officer of the court, a lawyer has an obligation to be honest and to not file frivolous cases or raise frivolous defenses. 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 cost and the shareholders, which would directly conflict with the lawyer's duties to the client and to the courts.
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