Corporate Law Firms – A Layman’s Explanation
We’ve all seen the dramatic depictions of criminal defense attorneys in shows like Law and Order, but there’s much more to the world of legal practice. Although they don’t share the same dose of cinematic limelight as criminal trials, corporate law firms play a big role in how the business world and the overall economy operate.
In the United States, each state has its own system of corporate rules and regulations. Following World War II, the American Bar Association created the Model Business Corporation Act in an effort to standardize the widely disparate legal standards regarding businesses state by state. Now followed by 24 states, the revised MBCA dictates state level regulations while federal laws dictate publicly traded corporations. After the Great Depression, Congress passed the Securities Act of 1933 to regulate the sale of securities on a federal level and inform investors on business operations with appropriate disclosure. While legislation alters particular aspects of law over time, these acts remain influential in how business is conducted and how corporate law firms advise companies to this day.
According to Harvard Law School, there are “between 760,000 and 1,100,000” lawyers practicing in the United States as of 2007. The numbers are difficult to pinpoint but around six percent of those lawyers work in business law. The largest concentration being insurance, with around 11,000 lawyers actively practicing in this field. After insurance, the largest sectors are employment, manufacturing, commercial banks, and investment banks and securities. Each of these sectors employs around 4,000 lawyers. The corporations with the largest in-house corporate law departments in 2006 were familiar names like Citigroup, GE, Liberty Mutual, and State Farm. While these in-house legal departments are large, Citigroup alone employed 1,500 lawyers in 2006, independent corporate law firms still employ the majority of lawyers. In terms of location, most of these lawyers work in the US, but a growing number of US attorneys practice outside the US with top law firms basing around ten percent of their employees abroad. At around 5,000, the United Kingdom has the largest amount of US lawyers in a foreign country.
What They Do
On a basic level, corporate lawyers advise companies on the legality of operations, from legal obligations regarding transactions to the internal responsibilities like accounting and employee contracts. They facilitate transactions between corporations to ensure full legal compliance in their specific industries. As such, the corporate lawyer generally needs to be well versed in contract laws, licensing and tax laws. Larger corporations tend to employ in-house legal counsel while smaller corporations contract external counsel from corporate law firms for specific needs like drafting company governance policies and stock option plans.
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