Payroll for Law Firms: 8 Options Compared

A law firm with fifteen people can be paying five different ways at once. I build HR software for small businesses, and if another founder asked me about paying a firm like that, I would say the hard part is not the software but the rules around it, which come from tax law and bar ethics.

This comparison covers what actually differs about paying a law firm, which of eight options fit a small or growing firm, and the part of hiring an attorney that no payroll platform touches.

At a firm that size, equity partners take draws against profit and receive a K-1. Associates get salary and a bonus on a W-2. A contract attorney invoices on a 1099. Paralegals are hourly with overtime. And somewhere in the background sits a trust account holding client money that must never come near any of it.

That mix makes the search for law firm payroll frustrating. Practice management platforms such as Clio and MyCase do not run payroll, and there is no meaningful category of law-firm-native payroll software. You buy general small business payroll plus separate legal accounting tools for the trust side. Several of those payroll vendors keep law firm pages on partner pay and mixed W-2 and 1099 teams.

What makes law firm payroll different

Three things set law firm payroll apart: the mix of tax treatments, the client trust account, and multi-state practice. None of them requires legal-specific software, but all three change how ordinary software has to be configured.

The first is the sheer number of tax treatments running simultaneously. A firm of fifteen may have partners on K-1, associates and staff on W-2, and contract attorneys on 1099, which means the payroll system has to accommodate people who are deliberately outside the payroll run alongside those inside it.

The second is the trust account, covered below. The third is multi-state practice. Attorneys licensed and practicing across state lines are common even at small firms, while a comparable non-legal business of that size would still be single-state. Each additional state means registration for withholding and unemployment before anyone is paid there.

Why partners never run through payroll

A partnership cannot pay W-2 wages to its own partners: the Internal Revenue Service says partners are not employees and should not be issued a Form W-2, and a general partner's earnings from the firm count as self-employment income. This is the point that most surprises people arriving from a corporate background, and it is not a matter of firm preference.

Guaranteed payments for services are subject to self-employment tax, including for limited partners, who avoid it on their distributive share under 26 U.S.C. 1402(a)(13). The rate is 15.3 percent, made up of 12.4 percent Social Security on earnings up to the annual wage base of $184,500 for 2026 plus 2.9 percent Medicare with no cap.

An additional 0.9 percent Medicare tax applies above $200,000 for single filers and $250,000 for joint filers. Self-employment tax is calculated on 92.35 percent of net earnings, and half of it is deductible, per IRS Topic 554.

Income partners, sometimes called non-equity partners, are a different case. Many firms treat them as employees receiving a W-2, since they hold the partner title without an equity stake. The treatment varies between firms and depends on the partnership agreement, which is one of the reasons the payroll setup conversation should involve the firm accountant rather than only the office manager.

Trust account separation is an ethics rule, not an accounting preference

Client funds held in an Interest on Lawyers Trust Account (IOLTA) belong to the client, not to the firm. Under the American Bar Association's Model Rule 1.15 and the state equivalents that nearly all jurisdictions have adopted, those funds must be kept entirely separate from the firm's own property.

Paying operating expenses, payroll included, out of the trust account breaks that rule in two ways. Firm money left in trust is commingling (mixing firm and client funds), and client money spent on firm bills is misappropriation. The consequences for attorney misconduct range from reprimand through suspension to disbarment.

The rule bites even where the mistake was unintentional and no client ultimately lost money. California's Handbook on Client Trust Accounting, for one, holds a lawyer responsible for mishandled funds regardless of intent or the absence of injury to anyone.

Trust accounts also carry reconciliation duties. California, for example, requires a written monthly three-way reconciliation that balances the trust account journal against the individual client ledgers and the bank statement. That is trust accounting work for legal accounting tools, not for payroll software. On top of that, California's State Bar now requires annual trust account registration and a compliance certification.

8 payroll options for law firms compared

The table compares seven payroll providers plus one adjacent tool. The Runs Payroll column is there because the tool in the first row does not run payroll, and that distinction matters more than any feature comparison below it.

A note on the first row: FirstHR is our product. It heads the table as the onboarding layer that sits beside a payroll provider, and we have marked its gaps in the same columns we use for everyone else.

Payroll, partner compensation, and tax filing come from the seven providers below, and the full FirstHR review sits in the section on what payroll does not cover at hiring.

Gusto

Gusto pairs published pricing with onboarding built into the same account. The Simple plan costs $49 per month plus $6 per employee, after a base increase during 2025. Its law firm page describes support for lockstep and Cravath-scale associate salaries, with scale levels set from first-year associates through Of Counsel and administrative staff.

The catch for firms is that Simple covers single-state payroll only. Given how often attorneys are licensed across state lines, model the Plus tier at $80 plus $12 per employee if a second state is plausible.

OnPay

OnPay has one payroll plan at $49 per month plus $6 per employee, with no tier to climb. Tax filing covers all 50 states with no multi-state surcharge, which is the specific reason to prefer it over Gusto for a firm with attorneys practicing across state lines.

HR tools and time tracking are paid add-ons. OnPay maintains a law firm page addressing equity and non-equity partners, contract attorneys, and trust account separation.

SurePayroll

SurePayroll is Paychex's payroll for very small employers, at $29 per month plus $7 per employee. Its law firm page covers owner draws, partner distributions, and associate salaries alongside W-2 and 1099 workers. For a solo practitioner with an assistant or a two-attorney practice, it is the cheapest credible option, and the feature depth of the larger platforms is not needed.

Paychex

With Paychex you buy a service relationship rather than a software subscription, with a payroll specialist included on the Complete package and a professional employer organization (PEO) option for firms that want more buying power on benefits. Pricing is quote-only.

Paychex also runs a partner program for American Bar Association members, with its own sign-up page for the association, so a member firm should ask for those terms before comparing quotes.

ADP RUN

Every RUN package calculates, files, deposits, and reconciles payroll taxes, and ADP pays the resulting fines if it makes a filing error. Multi-state payroll is included in all four packages, and for a firm with offices in several states or attorneys admitted in multiple jurisdictions, that is the concrete argument for ADP.

ADP publishes no rates; every package is quoted. There is no law-firm-specific landing page, so the industry framing comes from general professional services.

Justworks

Justworks is two products under one name. Payroll at $50 per month plus $8 per employee is straightforward software.

The professional employer organization tier is a co-employment arrangement giving a small firm access to benefit plans priced off a much larger risk pool. That pooling is the main reason to consider it: a fifteen-person firm cannot negotiate health coverage the way a large group can.

Rippling

Rippling is built on a unified employee record where payroll, HR, and device provisioning share one data model. The IT provisioning is more relevant to a law firm than to most industries, given document management systems and the security requirements around client confidentiality.

Rippling's pricing page lists no rates. Its small-business page starts payroll plans at a $40 monthly base fee plus $8 per user. Its blog prices the core platform at $8 per employee and domestic payroll at another $8 on annual billing, so a configured quote can land above that starting figure.

Where practice management tools fit, and why they skip payroll

Practice management tools fit beside payroll, not in place of it. Firms often start this search assuming the platform they already use will handle payroll, but none of the six below runs payroll itself. Each centers on legal-specific work, whether practice management, billing, or trust accounting, while payroll needs no legal-specific software.

These platforms handle the trust side, which is the genuinely legal-specific accounting problem, and leave payroll to a separate provider. That means the stack for a typical small firm is practice management plus trust accounting plus a general payroll provider rather than one system doing everything.

What payroll does not cover when you hire an attorney

None of the providers above handles the law-firm-specific checks that have to happen before the first payroll run. Each pays people correctly once they are set up, and most include basic onboarding for tax forms and direct deposit, but in a law firm the list of what comes before that first run is longer than in most industries.

The pattern in that right-hand column is the point. Payroll platforms calculate and pay, and their onboarding covers tax forms, but bar admission checks and conflict checks happen outside them. Form I-9 handling varies by plan, but the deadline does not: an I-9 is due within three business days of the start date.

In a small firm, the hiring tasks in that table land on the office manager alongside everything else, and they are the part that gets discovered incomplete during an audit or a malpractice carrier review rather than at the time.

How to choose payroll for a law firm

Choosing payroll for a law firm comes down to the five questions below, and each one is about your own firm rather than about the software.

Frequently Asked Questions

Can law firm partners be paid through payroll?

Not in a partnership. Partners cannot receive W-2 wages from the firm they own; they take guaranteed payments and draws reported on Schedule K-1 instead. Guaranteed payments and a general partner's profit share carry self-employment tax at 15.3 percent, with the Social Security portion applying up to $184,500 for 2026. Income or non-equity partners are often treated as W-2 employees, depending on the partnership agreement.

What makes law firm payroll different from other small business payroll?

Several tax treatments run simultaneously, with partners on K-1, staff on W-2, and contract attorneys on 1099. Client funds in trust must never touch payroll. And multi-state practice is common at firm sizes where a comparable business would still be single-state.

Can a law firm pay payroll from its IOLTA trust account?

No. Under ABA Model Rule 1.15 and state equivalents, client funds must be kept entirely separate from firm property, and using them for operating expenses is misappropriation, with consequences up to disbarment. Payroll is funded from the operating account, and the trust account should not be connected to the payroll platform at all.

Is there payroll software built specifically for law firms?

Not really. Clio, MyCase, and PracticePanther do not run payroll. The market offers general small business payroll, with law firm pages from several of its vendors, plus separate trust accounting tools such as CosmoLex, LeanLaw, and TrustBooks.

How do law firms handle contract attorneys in payroll?

Usually as independent contractors paid on a 1099 rather than through the W-2 run, though classification depends on the actual working relationship rather than the engagement letter.

What should a law firm look for in payroll software?

Support for paying partners outside the W-2 run, multi-state filing if attorneys practice across state lines, clean banking separation so the trust account is never connected, and off-cycle runs for bonuses without a per-run fee. Legal-specific features beyond that rarely decide it for a small firm.

How much does payroll for a law firm cost?

A 10-person firm runs roughly $99 to $130 monthly on published pricing: $109 on Gusto or OnPay, $99 on SurePayroll, $130 on Justworks payroll. Paychex and ADP quote every package.

What does payroll software not cover when hiring an attorney?

Payroll software does not cover bar admission verification or conflict of interest checks. Signed employment and confidentiality agreements and ethics and malpractice acknowledgments often fall outside it too, and on payroll plans without onboarding, so do the I-9 and W-4.