What is a SIC Code?
SIC Codes – the Standard Industrial Classification code is the general way of categorizing businesses, first introduced in the United States in 1937, in a manner that allows for cross-comparison across industries. As there are several different fields of business, within which many law firms exist, they are classified, in a general way based on the service that is provided, by SIC codes. There are three main classifications within which a law firm, or any entity providing professional services, is placed:
- 61 – The services and operations of a law office are found in the broad category, 61, which covers "Legal Services". The 61 category is a huge grouping for all types of services to the legal field and to the average citizen. In addition to firms providing legal services , the 61 category includes law schools and universities that provide legal education, as well as general counselors for the legal system, such as notaries public.
- 86 – Not to be confused with the usual designation of background noise in a film, the 86 code in the SIC code system refers to "Organizations, Business, Professional membership". This group covers associations that are designed to advance the professional standards of and provide assistance to lawyers, law offices, and other groups associated with the legal industry.
- 86 also includes legal organizations such as the District and Trial Courts, State Supreme Courts, State Courts of Last Resort, City Courts, and other government offices such as the District Attorney General’s Office and the Defender General’s Office.
SIC Code for Law Firms
For classification purposes, law offices fall under the same Standard Industrial Classification as legal services in general. Their description reads: "offices of persons… [ …who are] holding themselves out to the public as offering to provide legal services to the general public." This is a broad definition that encompasses the wide array of legal services where a law office might be involved. The SIC does not break law into specific categories, as the North American Industry Codes do.
One of the potential pitfalls of the SIC code is that it can change based on which country is doing the analysis. The definition for legal offices in the United States is different than the one in Canada or Great Britain. This can lead to potential confusion if you are trying to cover an instance across more than one country because you will be getting a somewhat different look at it under each SIC code. American law offices, Canadian law offices and British law offices are all classified differently, under different codes, so there is no easy way to compare them all as the different countries have different analytic systems in play.
The codes, however, are all based on the same principle so as long as you keep in mind that the numbers will vary, you should be good. However, understanding the scope of the codes is important before you start your research. Law offices will often fall under first SIC code, which is limited to offices of persons holding themselves out to the public as offering to provide legal services to the general public.
Although the primary SIC code for law offices reads differently, classification and definition of what constitutes a law office is largely similar in the United States, Canada, and Great Britain. It is important to know the restrictions of the SIC code, however, for comparative purposes.
SIC Code Importance for Law Firms
SIC codes are inportant for most law firms since they affect business operations as well as statistics. Some lawyers and law firms may think of them only as products of government bureaucracy. But these industry codes can help in managing compliance issues and reporting requirements. The SIC system remains in use and is supplemented by the North American Industry Classification System (NAICS). Nevertheless, many businesses, including law firms, continue to identify themselves with their SIC code.
The SIC codes make it possible to easily find industry-specific statistics on a wide range of issues. For law and accounting firms, SIC codes can be used by the IRS in evaluating potentially abusive tax shelters—including UITs.
But law firms are not the typical law-related business (such as title insurance, collections, or other service industries). They focus on their practice areas (litigation, tax, etc.), and their primary operations groups—the administrators and the non-attorney staff—do not usually take the industry into consideration. What is relevant are the types of customers served: individual versus business, needs of the fixed-billing practices, billable-hour billing, etc. Statistics tracked by the state bar association are sometimes also tracked by SIC code. The courts use these codes, too.
When you open an office, remember to double-check its classification to make sure that your attorney classifications are correct. When you hire an attorney, make sure that you classify them correctly according to their practice area.
How to Locate a Law Firm’s SIC Code
The SIC Code for a law office can be found in numerous ways and most would be a logical deduction. A law office deals with the practice or profession involving lawyers. Accordingly, the the number 81 codes for the service sector is the basic point of departure for finding the correct code for a law office. In light of that, this is a logical starting point for checking from the 1987 SIC Manual.
In the Service Sector, there are two general categories a law office would fall under, Business Services or Other Services (except Public Administration). Business Services would include a law office with respect to Management, Services to Dwellings, Security and Investigative Services, Miscellaneous Personal Services, and Legal Services . Other Services would include a law office with respect to any of the following: Repair, Equipment Rental or Leasing, Motion Pictures, and Services-Personal & Business.
The Occupational List is further subdivided into subcategories, but for this example a law office would fall under the category of Legal Services.
As shown below, the general headings of the SIC codes for a law office include:
86—Legal Services
Lawyers and Attorneys
General and specialized legal services
The best way to find your specific code is by contacting the Bureau of Labor Statistics at 1-800-999-9915, for the specific code numbers for your business. In addition, Bureau of Labor Statistics maintains a web page on the subject.
SIC Codes vs NAICS Codes
There are some distinct advantages to using the NAICS code over the SIC code when you’re classifying your law office or firm. First of all, the SIC code is quite outdated, and it can therefore hamper your attempts at marketing. The NAICS has replaced the SIC as the principal way of classifying legal offices, and the vast majority of law firms, large and small, have thereby been integrated into the NAICS system.
That’s not to say that the NAICS code is completely error-free, of course. Code 541 is the "Professional, Scientific, and Technical Services" category, and it includes what would have been under "SIC code 81", the legal services industry. The problem, however, is that "code 541" is a very large category that includes such diverse services as research and development and scientific testing, writing, translation, accounting, building design and maintenance, and much more.
For law office practice, we actually find it much more effective to use a more specific NAICS code such as 813920, for "Professional Organizations", 922130, for "Legal Services", 541110, the "Offices of Lawyers" code, or even 541990 for "All Other Professional, Scientific, and Technical Services". Code 541110 is the most common one for law firms and office, but again, we think that it does not include some of the other services that your firm might offer.
If your particular practice is more focused, than it’s best to use 811211 or 811212 for "Real Estate Legal Services", if that’s a focus of yours, or 541211 for "Offices of Certified Public Accountants" or 541213 for "Tax Preparation Services", or 541219 if you’re emphasizing tax law in your practice.
Using a very specific code such as one of these makes it much easier for potential clients to find you, and that’s the most important reason we think that the NAICS code is better, overall, than the SIC code for law offices.
SIC Code Applications
Understanding the SIC Code for Law Offices
The SIC Code can be used for many practical applications for law offices. Law firms can use the SIC Code to better understand their market segments and potential clients. For example, if your firm specializes in intellectual property law, you can use the SIC Code to pinpoint companies that might require your services. First, you’d identify the SIC Code that corresponds to intellectual property. Then, you’d filter results on a business database to find company names that might be good targets for business development efforts. Or you might want to use the SIC Code as a comparable benchmark when developing a budget . SIC Codes are sometimes used by government agencies to monitor interstate commerce, business transactions, and industry specific regulations. However, a more common application in the modern marketplace is for third-party vendor databases to categorize businesses. Smaller companies often get unsolicited communications from online lead generation companies. These companies target businesses based on the SIC code listed on their website. For example, if the business is listed in SIC 8111, which covers lawyers and law offices, you might hear from a vendor selling websites to law firms.
