Managed Payroll · Legal
Partner distributions, trust account tracking, IOLTA compliance, and multi-tier compensation structures make legal payroll unlike any other. We manage all of it as a fully managed service at $25-$45 per employee per month -- less than the cost of one payroll specialist.
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The Cost of Running It Yourself
How It Works
We map your current payroll process, employee roster, and complexity. You get a fixed monthly cost -- no surprises.
We configure and run your first payroll cycles. No migration required -- we work in your existing system. Transition takes 30-60 days.
Every pay cycle, every filing, every compliance update -- fully managed by BEG. Your team touches nothing.
Compliance Requirements
Law firm compensation is not one-size-fits-all. Equity partners in a partnership or LLP typically receive guaranteed payments and profit distributions reported on Schedule K-1 -- not W-2 wages. Non-equity partners and of-counsel attorneys at the same firm may receive fixed salaries on W-2s. Associate attorneys receive base salary plus merit or productivity-based bonuses on W-2. Law firms structured as professional corporations or professional associations issue W-2s to all attorney-shareholders. Managing multiple compensation structures in the same payroll system requires separate pay codes, separate tax treatment, and correct year-end reporting for each type -- a configuration that most generic payroll systems are not designed to handle cleanly.
IOLTA (Interest on Lawyer Trust Accounts) accounts hold client funds -- retainers, settlement proceeds, advance cost deposits. State bar rules require strict separation between IOLTA accounts and the firm operating account. Payroll draws only from the operating account. A payroll processing error that creates an overdraft in the operating account -- causing funds to be inadvertently drawn from a linked account structure -- can trigger a misappropriation of client funds finding if any IOLTA account is in the banking relationship. BEG manages payroll banking integrations with full awareness of trust account segregation requirements and confirms operating account sufficiency before each payroll run.
Law firms track realization rates -- the ratio of fees collected to fees billed, and fees billed to the theoretical value of hours worked. Managing attorney billing data against payroll cost per attorney is a core function in profitability analysis and discretionary bonus determination. BEG maintains payroll records at the individual attorney level in a format that supports this reconciliation: total compensation, hours worked, gross wages by period, and bonus amounts -- structured so that finance and managing partners can calculate cost per billable hour without requiring custom payroll exports or manual data assembly.
Law firms with offices in multiple states face the same multi-state employer tax compliance requirements as any other multi-state employer -- separate registrations, different withholding rates, different SUI rates -- plus some additional considerations. Remote attorneys who work from home states different from the office jurisdiction may create employer nexus in those states. Associates who relocate trigger new state registrations. Lateral hires from other states bring their own state compliance requirements. BEG manages state-by-state registration as your attorney roster changes, and monitors the states where your attorneys physically work so registrations are in place before the first payroll is run.
Law firm year-end payroll includes several items that require careful handling: discretionary bonuses paid in December (the year-end bonus cycle at most firms), reimbursements that exceed the accountable plan limits and must be added to W-2 gross income, partner guaranteed payments that need K-1 coordination with the firm accountants, and any attorney who departed mid-year and received a separation payment. BEG manages each of these elements through the year-end process so W-2s are accurate on the first issuance and do not require corrections that create confusion for attorneys during tax season.
Who This Serves
Firms with 15 to 100 attorneys managing partners, associates, paralegals, and administrative staff across mixed compensation structures.
Litigation boutiques, IP firms, transactional practices, and family law offices where billable hour tracking and bonus structures require payroll coordination.
Practices with attorneys in multiple states face multi-state registration, variable withholding rates, and remote attorney nexus questions that require proactive management.
Contingency-based practices with large staff swings around active litigation cycles and settlement distributions that affect firm cash flow and payroll timing.
Each lateral hire from another state may create new payroll tax registration requirements and compensation structure questions that need resolution before the first paycheck.
The sweet spot for managed payroll -- large enough to have real compensation complexity, not large enough to justify a dedicated payroll compliance function internally.
What You Get
Common objection: "Switching payroll systems is too disruptive."
We do not require you to switch platforms. BEG operates as your managed payroll team inside your current system. If you want to move to a better platform, we can handle that too -- but it is never a requirement to get started.
Common objection: "Payroll services always add fees for every little thing."
The $25-$45 PEPM rate is all-inclusive: payroll processing, tax filing, compliance updates, year-end W-2s, and support. One number, everything included.
Common objection: "Payroll vendors disappear after onboarding."
Your BEG payroll specialist is your ongoing contact. When something changes -- a new hire, a state registration, a compliance update -- you send one message. There is no ticket queue, no chatbot, and no calling a 1-800 number. Your team has a real person who knows your account.
The Math on Waiting
An internal payroll specialist at your law firm costs $60,000-$100,000 per year in fully-loaded compensation. Fully managed payroll at $25-$45 PEPM on a 50-person team costs $15,000-$27,000 per year. Every month you run payroll manually or pay an internal specialist is a month you are overpaying for a function that costs $25-$45 PEPM fully managed.
Your Next Transition Window
Payroll transitions take 30-60 days. If you want a clean cutover at Q3, Q4, or January 1 -- the window to start is now. Companies that miss the quarter-start timing typically wait another 3 months. The savings you defer are gone for good.
15 minutes. We scope your payroll, give you a fixed monthly cost, and show you what transition looks like.
FAQ
Partners, associates, paralegals, legal administrators, and support staff at law firms of all sizes.
No. We operate as your managed payroll team inside your existing system. Migration is an option, never a requirement.
Everything: payroll processing, federal and state tax filing, compliance updates, year-end W-2s, and dedicated BEG support.
30-60 days from scope review to first managed payroll run. We handle setup, testing, and go-live. Your team reviews and approves before anything goes live.
Your rate adjusts with headcount. Adding or removing employees updates your monthly cost at the same per-employee rate. No contracts to renegotiate.
BEG manages both compensation types within the same engagement. Equity partner guaranteed payments and distributions are documented and coordinated with the firm accountants for K-1 reporting. Non-equity partner and associate salaries are processed on W-2 with standard withholding. Each compensation type gets the correct tax treatment without requiring separate payroll relationships.
An overdraft in the firm operating account -- caused by a payroll timing error -- can inadvertently cause funds to be drawn from a linked trust account, creating a potential client funds misappropriation issue under state bar rules. BEG confirms operating account sufficiency before each payroll run and manages banking integrations with full awareness of trust account segregation requirements.
Yes. BEG maintains compensation data at the individual attorney level -- total compensation, hours worked, bonus amounts by period -- in a format that supports cost-per-billable-hour analysis without requiring custom exports. Managing partners and finance directors can run the reconciliation without pulling additional data from the payroll system.
BEG processes year-end bonus payrolls as supplemental payroll runs with the correct federal and state supplemental withholding rates. We coordinate the bonus payroll schedule with your normal payroll cycle so year-end tax deposits are made on time and W-2s reflect the full year compensation -- including the December bonus -- accurately on the first issuance.
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