Virtual law firms have lately started growing in popularity. The traditional law firm model has become outdated, and with what is happening around us in the past years, virtual law firms seem like the perfect option. Moreover, a virtual law firm usually has much less oversight than a traditional one, which means lawyers can earn more money for their legal services. This is especially appealing to partners, as they have the opportunity to collect more from the clients they bring in. However, just as with anything, even virtual law firms have advantages and disadvantages. That is why we have comprised a list of questions attorneys and partners, in particular, should ask themselves before they make the jump.
The Appeal of Virtual Law Firms
As a legal recruiter, I have heard more and more from attorneys considering switching to a virtual firm. However, I also hear from attorneys who have been in virtual firms and left.
Virtual law firms usually try to attract lawyers with their advantages, such as profit more from the business they generate, not having to come into the physical office space every day, thus having more flexibility and work-life balance, or being more in control of their work. A virtual firm will generally build a website where all the information about the attorneys, their marketing plan, and client billing concentrates. The virtual firm takes a small percentage of the profit for offering this virtual space. That is how some partners can collect 85% of their book of business, which would be impossible in traditional law firms.
These characteristics are very appealing, and many legal professionals consider this switch. And while many virtual lawyers become successful and earn a lot of money, many come out wanting to go back to a traditional law practice. Traditional law firms are built on decades of industry development and can offer things a virtual law firm cannot. Attorneys and partners considering going into a virtual law office should inform themselves about the following things before deciding.
What Are the Clients' Stances on Virtual Law Firms?
Although people are more and more open to advancement in all industries and the virtual world, some clients might still be wary of hiring a virtual lawyer or a virtual law firm. Traditional firms come with an established brand name, prestige, and years of success behind them, so clients do not have a reason to doubt the quality of representation they will get.
Virtual law firms do not have the same reputation as they are a much newer concept. Some might not care about it that much, but some may have a problem with such a law firm model, and it is essential to always check with your clients what their stance on virtual firms is before making such a switch. They might be afraid that being represented by a virtual firm will make them seem weak compared to an opposing side represented by a major prestigious traditional law firm.
While most clients care more about the lawyer's expertise and will not care that much if their attorney decides to switch to a virtual practice, it can happen, and you have to prepare for such a situation. This is especially true for big clients. They usually care for things like the brand name to ensure that they are in a powerful position, while smaller clients might be less focused on something like that and more on their relationship with the attorney.
What About a Physical Office Space?
A virtual law firm is virtual because it does not depend on a physical space to function. Attorneys are not required to show up in an office but can do their work from home or any other place they choose and secure for themselves. This has both advantages and disadvantages.
A traditional office offers things that are impossible to find by working from home or renting out an office for yourself. You meet with other attorneys daily in an office. That means you can have social support and opportunities to network, get help or cross-sell. Seeing other motivated attorneys every day is also a great way to stay motivated. Another important aspect of having an impressive, physical office your firm puts a lot of money into is having a place to take clients or opposing counsel.
Attorneys also often require deep focus, and an office is a space designed for that. Even when you have a spare room turned into a home office, working from home can be very distracting. Many clients also consider this aspect and might not be too keen on paying for legal services provided by a lawyer dressed in pajama all day.
At the same time, a lot of the work attorneys do daily does not need them to be present in an office. A lot of the research and writing is done alone in the office, and there are some practice areas, such as tax law or ERISA, where you do not need to meet with others that much.
Virtual Law Firms and Draws
One big advantage of working in a traditional law firm is that they take good care of all attorneys, even partners. If a partner is going through a slow period and is not bringing in enough business, the firm still provides them with a guaranteed draw. That means they still get compensated regularly even when they do not bring in the money. This is not true for virtual law firms.
In a virtual law firm, you only collect what you make. This can be both a bad and a good thing. Every practice area goes through motions, and sometimes attorneys are not at fault when they cannot generate enough business. Virtual lawyers are left to fend for themselves, and no one helps them in those times. However, this also serves as a great motivator for partners. They know that they will not collect anything they do not bring in. Their livelihood depends solely on their ability to generate business, so partners who are good at getting clients can do very well for themselves. Moreover, they collect bigger profits from the business they bring in than they would in a traditional law firm, so they can create a good life for themselves if an attorney is good at this.
Support Staff and Virtual Law Firms
Partners in a traditional law firm are used to having people who help them work around them at all times. They have associates who can work on the less complex tasks. They have assistants, paralegals, proofreaders, etc. These people help partners focus on the higher-level aspects of their work.
In a virtual law firm, you do not have anyone like that. Virtual partners have to do all of the work traditional partners have supporting staff for and often spend hours on work tasks they have not done since they were junior associates in their first law firm, and they might have less time to spend on higher-level tasks.
Virtual lawyers can always hire people to help them with more mundane tasks. After all, they are collecting more money from the business they generate, so they can always hire supporting staff. The problem is that they usually have no experience in hiring or training people, so building a good team might be problematic.
Those partners who have always worked mostly by themselves and never needed a lot of supporting staff to help can greatly benefit from this system. They can profit more from the same work they have been doing for years.
Should Virtual Partners Lower Their Rates?
When you take the previous point into account, the efficiency of a virtual partner is significantly lower than that of a traditional partner, as they have to do a lot of administrative work on top of providing legal services.
You might start to wonder whether this should be reflected in the billing rate for your clients. Should you charge partner rates for research work done by junior associates in a traditional law practice? What about the tasks that paralegals would do? Because the partners do everything in virtual firms, clients might get higher bills than if a lot of their work were done by associates or paralegals with significantly lower rates.
Some partners might consider this when setting their rates in a virtual law firm. However, others look at it differently. Partners have gained their skills through years of experience and can be much more efficient in their work than someone who has been in the legal profession for a year or two. A task that would take a junior associate several days can often be done within a few hours by a partner, so they can argue that they are still saving money for their clients.
Technical Equipment and IT Support
In a traditional law firm, the attorney is provided everything they might need for work, and the only thing they need is their mind and time. In a virtual law firm, the attorney gets access to the law firm's website and a secure client portal; however, they have to secure everything else. They have to buy their computers, the software they need, backup all the data and handle any technical issues that might come up.
Fortunately, most virtual law firms have at least some kind of IT support, so if your system malfunctions, you will probably be able to get some help from the firm. They also invest a lot of money to have secure platforms to minimize issues. Moreover, the increased percentage of virtual partners can be used for any costs associated with the technical side of running a virtual law practice.
Sharing Work in a Virtual Law Firm
It is normal to share work among other attorneys in a traditional law firm. Referring to work might not be as common among virtual lawyers; however, this depends on the virtual law firm and the attorneys working there.
Without meeting in person with other attorneys every day, it might be more difficult to get work from others. The virtual environment is not as inviting for debates about referring clients.
That does not mean that they do not happen in virtual firms. Some attorneys in virtual firms can still have great relationships between themselves. Virtual firms also often offer an incentive to refer work in a referral percentage for the attorney sharing the work.
Will You Make More Money After Switching to a Virtual Firm?
The major reason why partners switch to a virtual law firm is that they want to earn more money from the business they generate. In virtual firms, attorneys collect a higher percentage of their billings, so they understandably expect to earn money after the switch.
The truth is, this happens in only a few cases for various reasons. Even when partners have good relationships with clients, they often want a law firm with a brand name, so they will not switch with the partner or leave them shortly after switching to a virtual law office. They might also leave them because their bills suddenly increase without the low rates of associates and paralegals, or the quality of the work dwindles because the partner is suddenly alone without the help of anyone.
Gaining new clients is often more difficult without a huge brand name behind you. Many partners, therefore, start losing business and, at the same time, are not getting enough new business to keep up the same salary. Even attorneys who can keep up or increase their earnings when they switch to a virtual office usually lose business eventually.
However, suppose a partner has exceptionally great relationships with clients and has talked to them about the possible changes that might come with switching to a virtual law firm. In that case, it is possible to keep most of them. And with collecting 80% of the billings instead of less than half of them, there is the possibility of increasing your salary as a virtual lawyer.
Benefits in Virtual Law Firms
It is common to get many different benefits in a traditional law firm. Virtual law firms do not usually offer the same perks, and joining one can mean losing the benefits you have been enjoying for years.
That, however, does not mean that there are no benefits offered in virtual firms. They often have good relationships or agreements with various companies, such as insurance ones, that provide great deals for virtual attorneys from these firms. Every traditional firm is different, so you need always to ask beforehand to inform yourself about possible benefits and be able to use them.
Relationships With Colleagues in Virtual Firms
Friendships in the professional environment are extremely important. The group you spend most of your time with really influences how you think about the world and oftentimes even how successful you can get. There are certain environments, whether it is certain law schools, certain families, companies, or locations, that are just connected with success. People in these environments share the way they think about the world and success and share their ways of achieving success.
The same applies to law firms. Some traditional law firms are just associated with success, and the social relationships inside these firms have a lot to do with it. Being around attorneys who are among the best in their profession can push attorneys forward and set them out to have a successful career.
Creating and maintaining such friendships can be difficult in virtual firms because you are not meeting anyone in person daily. Although these firms develop databases and might organize in-person meetings, it is not the same as working in a traditional office environment. However, this all depends on the attorneys themselves. Some attorneys are great at networking and can create professional relationships without being in the office. Others are naturally more introverted, and this model suits them because they are doing their best work on their own.
Does Virtual Law Firm Actually Work?
Every company or industry that considers trying the virtual route probably asks whether it is actually a viable way to do things. Many news stories have been about companies like IBM, Yahoo!, or Hewlett Packard. They have previously tried remote work on a big scale but then asked their employees to return to the office because they needed to increase collaboration and productivity.
This, of course, changed with the pandemic when many companies were forced to go completely virtual. However, asking whether the virtual or in-person way of working is better and more productive still stands. Understandably, meeting in the office will facilitate more collaboration than when everyone is at their own home.
And virtual law firms deal with the same issue. Productivity, efficiency, and collaboration can decrease compared to a traditional model. It is not a model that works for everyone. However, there are some people and some virtual law firms that can find success practicing law through computer and phone calls only.
Is a Virtual Law Firm Better or Worse Than a Solo Practice or Own Law Firm?
If you want to leave the big law firm world, you might be considering more options than a virtual law firm, such as being a solo practitioner or owning a new law firm.
Many attorneys with big books of business opt for being solo practitioners because they do not see that the value a virtual law firm can bring them is worth the 20% of their several-million-dollar business they generate a year.
Others choose to start their practice because they can grow it and hire other attorneys under them. Like this, they can become a successful small firm and do not have to give percentages to anyone because they are the head of their firm.
However, some attorneys want to feel like they are a part of a group (without having to meet with the group every day), need assistance with a billing system for their clients, or want to access an established virtual portal and feel like the percentage of their billings is worth it. In that case, the attorney is a great candidate for a virtual law firm.
Hiring in Virtual Firms
Many attorneys are interested in knowing whether hiring in virtual firms is all about the amount of portable business they have. In traditional firms, it is normal for the attorney to go through many interviews to find out whether they fit the firm's culture and type of clients, which usually takes months. The amount of business a lateral attorney brings is still the most important thing; however, it does not stop the firm from having an extremely long recruitment process.
In a virtual law firm, the amount of business an attorney brings is the most important factor in whether the firm will want to hire them. And they do not waste any time! If the attorney's business is big enough to awaken any strong interest, they will want to hire them as soon as possible.
Going Back to a Traditional Law Firm
It is known that going into any other practice setting than a traditional large law firm means you will have a problem going back. It is no different with virtual law firms. Leaving a large firm for a virtual one means that you are not committed enough to the traditional law practice. The environment in big prestigious firms is also usually very unique, and leaving it for any amount of time can negatively impact your productivity. Returning to a traditional law firm might be problematic, especially if you have lost some business in the firm or lowered your billing rates significantly.
However, if you have a book of business big enough, you will always be able to find your way back into a large firm, whether you are going from a virtual law firm or an in-house position.
Bar Dues, Insurance, and Continuing Education Expenses in Virtual Practice
While these expenses are normal in a traditional firm, you can forget about them in a virtual law firm model. Instead, virtual attorneys collect more money directly as their share of the business.
Marketing and Branding of the Virtual Firm
Law firms that are traditional usually have decades of business and branding behind themselves, which helps them attract new clients. They also have marketing departments and big budgets they invest in branding and marketing. They also invest time and effort into developing their relationships with the local community and aim to become a household name in their area.
Virtual law firms do not operate like that. Every attorney fends for themselves in these, so advertising the whole firm does not make sense. Every attorney has to build relationships with their clients and find ways of attracting new ones.
Conclusions
A virtual law firm is a curious setting in the legal profession that seems like a great opportunity but can backfire if the attorney considering joining it does not get informed about all aspects of this business. Maintaining the business and quality of work can easily dwindle in the virtual setting, and virtual partners need sales and legal skills to survive. That means that a virtual law firm is not for everyone, and partners and other lawyers should consider the disadvantages and advantages of this setting to find out if this career move is the right step for them.
