WageTime is payroll for law firms: partners, associates, of-counsel, and staff each paid the right way, funded from operating and never from client trust, and every hour carries a cost coded to the matter it served.
Law offices run about 189,625 US establishments (BLS QCEW, Q4 2024), and most are small: a couple of partners, a few associates, the paralegals and staff who keep matters moving, and an of-counsel or two on contract. The billable hour is tracked to the tenth in one system, while payroll runs in another that knows nothing about matters, origination credit, or which timekeepers are actually overtime-eligible. And unlike any other business, one of the firm’s bank accounts is money it is ethically forbidden to touch.
Partners are not W-2 employees of their own firm: their pay is a draw and a K-1 matter, and an associate promoted to partner comes off payroll mid-year. Associates are salaried W-2. Of-counsel and contract attorneys are often 1099. Paralegals and staff are hourly. One small firm runs four tax treatments at once, and generic payroll assumes everyone is just salaried.
Small-firm comp is production math: revenue generated minus overhead times a payout percentage, or origination credit split across the partner who introduced the client, the one who closed, and the one who runs the matter. That credit even sunsets year over year. It changes every collection period, and it lands on payroll as commission and bonus inputs someone rebuilds by hand each month.
Paralegals are presumptively non-exempt under repeated DOL opinion letters, and it goes further: in Lola v. Skadden the Second Circuit held that document review “devoid of legal judgment” may not be the practice of law at all, so even a licensed contract attorney can be owed overtime. Pay a non-exempt timekeeper a flat salary and skip the overtime, and the back pay is real.
Associate bonuses run on a class-year scale, often gated on a billable-hour threshold near 1,900 to 2,000 hours. When a bonus like that is promised on a target, it is nondiscretionary under federal rules, so for any non-exempt timekeeper who earns one it folds back into the regular rate and re-prices every overtime hour in the period. That is the true-up nobody remembers until it is late.
Client retainers and cost advances sit in the IOLTA trust account, the firm’s earned fees in the operating account, and ABA Model Rule 1.15 forbids mixing them. Paying wages out of trust, even by accident, is commingling, one of the fastest routes to bar discipline. Payroll and trust have to stay on opposite sides of a wall that generic payroll tools were never built to respect.
How do you pay a firm where four people are paid four different ways? WageTime runs associates, paralegals, and of-counsel on 1099 in one payroll, W-2s and 1099s included at year-end, while bona fide partner draws stay a K-1 matter for your CPA.
Replaces the month-end reconciliation of an origination tab, a stack of of-counsel invoices, and a paralegal timesheet that were never kept in the same place.
Can payroll ever come out of the client trust account? It must not, and WageTime is built so it can’t: every run draws from the operating account your firm designates, and the client trust (IOLTA) account is never a funding source.
| Matter / code | Timekeepers | Hours | Labor cost |
|---|---|---|---|
| Hollings v. Delta Freight LIT-2291 | 3 | 142.0 | $9,230.00 |
| Aldern estate administration EST-1187 | 2 | 88.5 | $5,310.00 |
| Brightwater LLC formation CORP-0442 | 2 | 61.0 | $3,965.00 |
| Firm / non-billable ADMIN-INT | 4 | 96.0 | $4,320.00 |
Replaces the quarterly guess where someone multiplies headcount by a blended rate and calls it the cost of a matter.
How do you pay origination credit and class-year bonuses without a fee every time? They run as pay codes in the same WageTime payroll, and when an hours-threshold bonus reaches a non-exempt timekeeper, the overtime true-up computes in the same run.
Replaces the month-end ritual of rebuilding origination splits in a spreadsheet and paying each bonus as its own invoiced run.
Are paralegals and contract attorneys exempt from overtime? Often not, and the license does not decide it: DOL opinion letters treat paralegals as presumptively non-exempt, and the Lola precedent reaches first-pass document review too; WageTime prices the hours for whoever you classify.
| Timekeeper | Classification | Weighted-OT true-up |
|---|---|---|
| Priya Anand senior associateUses independent judgment | Exempt learned professional | none |
| Dana Cole paralegalAttorney-directed case support | Non-exempt | +$97.20 on 6 OT hrs |
| Sam Reyes contract attorneyNo-judgment first-pass review | Non-exempt firm-classified | +$155.25 on 9 OT hrs |
| Ivy Chen billing coordinatorBilling and intake | Non-exempt | +$61.20 on 4 OT hrs |
Replaces a misclassification that surfaces as an overtime back-pay claim from a paralegal or a contract reviewer, long after the checks cleared.
How do you keep a bar admission, a CLE deadline, and an out-of-state associate from slipping through? In WageTime, admissions live on the employee record with expiration alerts, and withholding resolves from home and office addresses, wherever the associate actually works.
| Person | Admission / credential | Status | Next deadline / state |
|---|---|---|---|
| Priya Anand | NY and NJ bar admission | Active | CLE due Jan 31 · NY |
| Marcus Webb | PA bar admission | Active | MCLE 60-day alert · PA |
| Rosa Lin | NY bar, CA pending | CA pending | On admission · NY |
| Sam Reyes | Notary and paralegal cert | 30-day alert | Renewal filed · NC |
Replaces the credential spreadsheet nobody reopens until an insurer or a new-state client asks for proof.
Full-service payroll is $10 a month per person paid that month, plus $50 a month per company, with unlimited runs. No long-term contracts, no per-run charges.
Off-cycle runs and bonuses cost nothing extra. No long-term contracts; cancel anytime.
Example: 50 people paid × $10 + $50 company = $550 for the month
HR & hiring, onboarding, PTO, time tracking, benefits, and workers’ comp are optional add-ons, priced separately when you’re ready.
See a demoNo, and you should not: client trust funds are unearned money held separately under ABA Model Rule 1.15, and paying wages from them is commingling. WageTime funds every run from the operating account your firm designates and never uses the trust account as a source. Matter-level labor cost is reporting coded to your matter numbers, not a movement of client funds.
Bona fide partners are generally not employees of their own firm (IRS Rev. Rul. 69-184): partner draws flow as K-1 matters for you and your CPA, not W-2 checks. Associates are W-2 employees. WageTime runs the W-2 side, salaried associates, hourly staff, and of-counsel on 1099, in one payroll, and closes an associate’s W-2 record cleanly the month they make partner.
Often not. DOL opinion letters treat paralegals as presumptively non-exempt, and in Lola v. Skadden the Second Circuit held that document review devoid of legal judgment may not be the practice of law, so a contract review attorney can be non-exempt too. Classification is your call with counsel; WageTime tracks the hours with attestation and locking and computes overtime automatically.
Origination credit and base-plus-formula comp settle through tiered commission structures and custom pay codes, so a working-versus-originating split or a sunset-credit schedule is configuration rather than a monthly rebuild. It runs in the same payroll as salary, and off-cycle bonus runs cost nothing extra, so a quarter-end payout does not become a separate invoiced run.
For non-exempt staff it can. A bonus promised on a billable-hour threshold is nondiscretionary under DOL rules, so it folds into the regular rate that prices overtime; whether a given bonus belongs there is your advisor’s call. In WageTime the bonus runs as a pay code and the weighted-average overtime true-up computes in the same run, so the math is in one place instead of a spreadsheet in April.
Generally you withhold where the work happens, and a hybrid or multi-office schedule can trigger more than one state. WageTime resolves it from home and office addresses, geolocated to rooftop level across 11,000+ local jurisdictions, applies reciprocity and overrides with effective-dated setup, and files in every state and locality automatically.
The origination splits, the paralegal you’re not sure is non-exempt, the of-counsel on 1099, and the matter whose cost never quite adds up. Twenty minutes with a payroll specialist on a live demo company: you’ll see a mixed W-2 and 1099 run funded from operating, origination and class-year bonuses as pay codes, and labor cost coded to your matters.
Book a 20-minute demo