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Law Firms: Payroll Features Every Business Needs (2026)
Law firms need payroll configured for billable hours tracking, partner draw vs. salary and attorney bonus structures, pay codes that general-purpose software leaves to the customer to build. BEG runs law firm payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
Pay codes a law firm cannot run without
Law firms pay attorneys and paralegals on different bases, and the payroll system has to hold every one of them as its own pay code with the right tax and overtime treatment: billable hours tracking, partner draw vs. salary, attorney bonus structures and IOLTA compliance. A generic setup collapses these into hourly and salary, and the errors show up in the regular rate, in year-end forms and in the first wage claim.
Employees holding a valid license to practice law who actually practice are exempt professionals, and the salary level and salary basis tests do not apply to them. Job titles alone do not determine exemption status; duties and pay must meet the regulations.
Paralegals and legal assistants generally do not qualify for the learned professional exemption because an advanced specialized degree is not a standard prerequisite for the field, so they are owed overtime after 40 hours unless another exemption applies. The exemption is available to a paralegal with an advanced degree in another field who applies it, such as an engineer hired for patent work.
Tax handling specific to law firms
Partners are not employees and should not be issued a Form W-2 for distributions or guaranteed payments from the partnership. Those amounts are reported to the partner on Schedule K-1 of Form 1065.
What is configured before the first run
At implementation every pay structure above is built as a code with its own taxability, its own overtime treatment and its own W-2 mapping, and the exemption status of attorneys and paralegals is documented against the rule that supports it. That is the difference between software with the features and a payroll that uses them correctly.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Employees holding a valid license to practice law who actually practice are exempt professionals, and the salary level and salary basis tests do not apply to them. Job titles alone do not determine exemption status; duties and pay must meet the regulations. [DOL Fact Sheet #17D]
- Paralegals and legal assistants generally do not qualify for the learned professional exemption because an advanced specialized degree is not a standard prerequisite for the field, so they are owed overtime after 40 hours unless another exemption applies. The exemption is available to a paralegal with an advanced degree in another field who applies it, such as an engineer hired for patent work. [29 CFR 541.301(e)(7)]
- Partners are not employees and should not be issued a Form W-2 for distributions or guaranteed payments from the partnership. Those amounts are reported to the partner on Schedule K-1 of Form 1065. [IRS Paying yourself]
Read the full guide to every managed payroll feature, explained, and the rest of the law firm payroll library.
Managed Payroll, Handled.
BEG manages payroll at $45 per employee per month, all-inclusive. Get an instant cost comparison for your business.
Frequently Asked Questions
Can you handle attorney bonus payroll?
Yes. Attorney bonuses are processed as supplemental pay runs with the correct federal and state supplemental withholding rates applied.
How do you handle partner draws vs. salary?
Partners taking guaranteed payments or draws are set up with the correct pay type. For W-2 partners, salary runs normally. For guaranteed payments outside W-2, we coordinate with your accounting team.
How do you handle attorney overtime exemptions?
Attorneys meeting the FLSA learned professional exemption are classified as exempt and not subject to overtime. We ensure exemption criteria are documented in the payroll system.
Can you process payroll across multiple office locations?
Yes. Law firms with multiple offices run on a single payroll system with state withholding and unemployment handled for each state.
What does BEG charge for law firm payroll?
Law firm payroll runs at $45 per employee per month, all-inclusive. For a 20-attorney firm with 30 total staff, that is approximately $1,350 per month.
What does managed payroll cost for a law firm?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Billable hours tracking, partner draw vs. salary and attorney bonus structures are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Law Firms. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Wage and Hour Division
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