Well, when you say link farm you can be talking about ones used for either positive or negative purposes. Link farms used to improve a sites results are always setup in a pyramid format so that any penalties that occur from the practice are not passed on to the "important" sites.

http://seoblackhat.com/2009/07/10/link-pyramids/

If you check the backlinks of many mainstream sites that compete for common keywords (anything pharmaceutical or related to gambling for example) you will see this sort of thing setup. However, as this is still a tricky practice, most sites will make sure that they are never getting more than about 1/5 of their incoming links from their pyramids.